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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  New World Development Company Limited    17   HK0000608585

NEW WORLD DEVELOPMENT COMPANY LIMITED

(17)
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New World Development : Annual Report 2020

10/27/2020 | 04:35am EST

Content

  1. Corporate Structure
  2. Financial Highlights
  3. Chairman's Statement
  1. CEO's Report
  1. Major Property Projects in Hong Kong
  1. Major Property Projects in Mainland China
  1. Directors' Profile
  1. Senior Management Profile
  2. Corporate Sustainability
  1. Corporate Governance Report
  1. Investor Relations
  1. Corporate Information
  2. Report of the Directors
  1. Management Discussion and Analysis
  1. Independent Auditor's Report
  1. Consolidated Income Statement
  2. Consolidated Statement of Comprehensive Income
  3. Consolidated Statement of Financial Position
  1. Consolidated Statement of Changes in Equity
  1. Consolidated Statement of Cash Flows
  1. Notes to the Financial Statements
  1. Five-yearFinancial Summary
  1. Principal Projects Summary
  1. Glossary of Terms

Disclaimer

The photographs, images, drawings or sketches shown in this annual report represent an artist's impression of the development concerned only. They are not drawn to scale and/or may have been edited and processed with computerised imaging techniques. Prospective purchasers should make reference to the sales brochure for details of the development. The vendor also advises prospective purchasers to conduct an on-site visit for a better understanding of the development site, its surrounding environment and the public facilities nearby.

All parties engaged in the production of this annual report have made their best efforts to ensure the highest accuracy of all information, photographs, images, drawings or sketches herein contained as to the printing of this annual report and to minimise the existence of clerical errors. Readers are invited to make enquires to sales personnel or consult relevant professionals for verification of doubts or particulars of specific items.

If there is any inconsistency or conflict between the English and the Chinese versions, the English version shall prevail.

12

New World Development Company Limited

Annual Report 2020

13

Annual Report 2020

17

Victoria Dockside

th

anniversary

When Tsim Sha Tsui waterfront was still known as Holt's Wharf in the early 20th century, it already played a pivotal role in the city's rise to the busiest port in the world, establishing Hong Kong's reputation as the Gateway to the East. In 1971, New World Development bought the site of Holt's Wharf from Swire Group and Blue Funnel Line. Following the opening of New World Centre in 1978, this area became a stronghold for international brands in the city and hosted some of the most innovative "happenings" Hong Kong ever witnessed. Forty years on, now as Victoria Dockside created by the cultural enterprise New

World Group, it is set to trigger a new wave of disruptions in design, the arts,19701978 culture and sustainability. It will be the game-changer that will once again, break

through traditions to create a new paradigm for the world.

Victoria Dockside

A GAME-CHANGING GLOBAL ART AND DESIGN DISTRICT

Victoria Dockside is a 3 million-square-foot art and design district, and a US$2.6 billion redevelopment project on Hong Kong's iconic Tsim Sha Tsui waterfront by New World Development. Fully opened in August 2019 after a 10-year redevelopment, Victoria Dockside is now anchored by cultural-retail destination K11 MUSEA, and is home to luxury residences and artisanal home K11 ARTUS, next-generation workspace K11 ATELIER, and ultra-luxury hotel Rosewood Hong Kong. The district is fringed by two redesigned public spaces Avenue of Stars and Salisbury Garden to form a full waterfront community.

The history of this site dates back to 1910 when it was Hong Kong's most important freight and logistics hub Holt's Wharf. In 1978, it was redeveloped into New World Centre, Hong Kong's first multiplex and a landmark that turned Tsim Sha Tsui into a tourism and cultural hotspot. Victoria Dockside has been described by media outlets as "Hong Kong's most anticipated opening".

Corporate Structure

New World Group

New World Development Company Limited

( HK Stock Code: 0017 )

Property Development and Investment in Hong Kong

NWS Holdings Limited

New World China Land Limited

( HK Stock Code: 0659 )

61%*

100%

Roads

Aviation

Property Development and Investment

Construction

Insurance

in Mainland China

* The percentage of interest held by the Group as at 30 June 2020

24 New World Development Company Limited

Financial Highlights

FY2020

FY2019

HK$ m

HK$ m

Revenues

59,007.8

76,763.6

Segment results(1)

13,918.7

19,977.8

Changes in fair value of and gain on transfer to investment properties

1,653.2

10,305.7

Underlying profit

6,588.9

8,814.1

Dividend per share (HK$)(2)

Interim

0.56

0.56

Final

1.48

1.48

Full-year

2.04

2.04

As at

As at

30 June

30 June

2020

2019

HK$ m

HK$ m

Total assets

600,195.9

503,284.9

Cash and bank balances (including restricted bank balances)

67,435.6

63,731.6

Undrawn facilities from banks

39,303.3

31,435.5

Net debt(3)

116,458.6

88,288.0

Net gearing ratio(4) (%)

41.6

32.1

RESULTS HIGHLIGHTS

  • Underlying profit amounted to HK$6,588.9 million notwithstanding a very challenging operating environment due to social incidents in 1H FY2020 and COVID-19 in 2H FY2020
  • Maintain prevailing sustainable and progressive dividend policy
  • Robust 19% year-on-year growth in revenues of property investment segment of the Group following the opening of K11 MUSEA and K11 ATELIER King's Road in FY2020 despite rental concessions granted to tenants
  • High property development gross margin of 57% achieved in both Hong Kong and Mainland China, reflecting the strong brand equity of the Group
  • Stringent cost control efforts evidenced by the 8% year-on-year decrease in recurring administrative and other operating expenses
  • Non-coreasset disposals amounted to approximately HK$10.6 billion in FY2020, exceeded target for the year, will continue non-core assets disposal to unlock value and enhance asset portfolio

Remarks:

  1. Include share of results of joint ventures and associated companies, but exclude changes in fair value of and gain on transfer to investment properties
  2. On 23 June 2020, every four issued shares of the Company were consolidated into one share of the Company (each a "Consolidated Share") and the number of Consolidated Shares was rounded down to the nearest whole number by disregarding each and every fractional Consolidated Share which would otherwise arise (the "Share Consolidation"). The impact of share consolidation is reflected on the interim, final and full-year dividend per share in FY2019 and the interim dividend per share in FY2020
  3. The aggregate of bank loans, other loans, fixed rate bonds and other borrowings less cash and bank balances
  4. Net debt divided by total equity

Annual Report 2020

25

Chairman's Statement

The Group is fully confident in the development of the Nation and has a strategic focus on the Greater Bay Area.

By completing its unique ecosystem through its old city redevelopment projects in Mainland China and major projects and premium residences in Hong Kong,

it promotes society development and enhances quality of life, creating more shared value for shareholders and the society.

26 New World Development Company Limited

Chairman's Statement

TO OUR SHAREHOLDERS

Xunzi, a thinker in the Warring States Period in China, once mentioned the importance of learning. In "Xunzi, An Exhortation to Learning", the gentleman says, "In learning there can be no respite." Blue derives from indigo plant yet it is bluer than the plant. Ice comes from water yet it is colder than water. Through steaming and bending, you can make wood as straight as an ink-line into a wheel. And after its curve conforms to the compass, even when parched under the sun it will never become straight again as the steaming and bending have made it a certain way. Hence wood becomes straight when it comes under the ink-line, and metal becomes sharp when it is brought to the whetstone. Likewise, the gentleman will become keen minded and his conduct will be without fault when he learns extensively and examines himself thrice a day.

To gain a firm foothold in today's fickle world, apart from a solid foundation, one must also have a humble attitude and the courage to challenge, and keep learning and making progress.

2020 marks the 50th anniversary of the founding of New World Group. Since its founding in 1970, the Group has been rooted in Hong Kong with the backing of the Nation, and has been through thick and thin during which it has established milestones one after another through laying a solid foundation of core property business and constantly pursing innovations and changes with a human-centric corporate philosophy and a dedicated team.

In the 1970s, the Group developed the New World Centre, the then new landmark in Hong Kong at the former site of the Holt's Wharf on the waterfront of Tsim Sha Tsui. It received wide popularity and brought fresh vibe to Tsim Sha Tsui and became a cultural melting pot. Despite the passing of time and changes taken place in society and culture, New World has always upheld its humility and remained focus, learnt trends through the tiniest details and embraced innovation boldly on the foundation of its success in the property development market.

Half a century later, while preserving and inheriting the culture, we recreated the New World Centre. With a new look and orientation towards the cultural tastes of the new generation, the brand-new and groundbreaking Victoria Dockside has once again become a landmark of culture and arts in Hong Kong, reimagining different aspects of life such as shopping, commerce, housing.

2020 is also the final year of the National 13th Five-Year Plan and the year designated to attain the well-rounded goal of building a society of moderate prosperity. At the same time, the plan also demanded acceleration in the development of the Guangdong-HongKong-Macao Greater Bay Area. Despite the threat posed by the epidemic, the Group is fully confident in the development of the Nation. In recent years, it has increased its investments in the Greater Bay Area. While strengthening the growth momentum of its business, the Group has been completing its unique ecosystem by injecting art and cultural elements into its old city redevelopment projects in Mainland China and major projects and premium residences in Hong Kong, in order to promote society development and enhance quality of life, creating more shared value for shareholders and the society.

Dr. Cheng Kar-Shun, Henry

Chairman

Hong Kong, 30 September 2020

Annual Report 2020

27

CEO's Report

28 New World Development Company Limited

CEO's Report

BUSINESS REVIEW

Hong Kong Property Development

Last year, the COVID-19 outbreak overshadowed Hong Kong's economy which was already challenged on multiple fronts. Nevertheless, under such tough circumstances, the Hong Kong property development market benefited from the strong pent-up demand for local housing, the raise of mortgage cap under the mortgage insurance, quantitative easing in the U.S. and U.S. interest rate cut to near zero. Such factors, together with tight land supply in Hong Kong, expedited home buyers' pace of home purchase and facilitated the stable development of property market.

In FY2020, the Group's revenues and segment results of property development in Hong Kong, including joint development projects, amounted to HK$4,541.9 million and HK$2,592.1 million, respectively. The contributions were attributable to residential projects including MOUNT PAVILIA, The Masterpiece, FLEUR PAVILIA and the Double Cove series.

2%

7%

11%

32%

13%

66%

69%

Hong Kong Landbank Total Attributable GFA

Hong Kong Agricultural Landbank

As at 30 June 2020

Total Attributable Land Area

As at 30 June 2020

Approximately 9,081,000 sq ft

Approximately 16,509,000 sq ft

Hong Kong Island

Kowloon

Yuen Long District and

North District

Tuen Mun District

New Territories

Sha Tin District and

Sai Kung District

Tai Po District

Annual Report 2020

29

CEO's Report

During the year under review, the Group's attributable c o n t r a c t e d s a l e s i n H o n g K o n g a m o u n t e d t o HK$13,162.6 million. The attributable contracted sales were contributed by residential projects including

MOUNT PAVILIA, FLEUR PAVILIA, ATRIUM HOUSE and The Masterpiece.

The Group owns rare and superior saleable resources in the market. Its key major residential project involving more than 3,000 units at Tai Wai Station in Sha Tin, Hong Kong will be launched in phases in 2020 and 2021. Its first two phases, comprising a total of approximately 2,200 units, will be launched after the issue of pre-sale consent, of which the pre-sale consent for the 783 units of the project's first phase has been obtained, garnering extensive interests from the market. Furthermore, two Grade A office projects in West Kowloon with a total GFA of approximately 900,000 sq ft are also planned to be launched in 2020 and 2021. In addition, as at 30 June 2020, the Group had a total of 144 residential units available for sale in Hong Kong.

The Group has been actively reviewing its business and asset portfolios, and works to identify opportunities of non-core asset disposal to unlock values. During the year under review, the Group completed the disposal of non-core assets with total considerations over HK$10 billion, including two shopping malls located in Kowloon

Bay and Tseung Kwan O respectively, 45% interest in a company that holds certain properties at Shun Tak Centre in Sheung Wan, and the Group's interest in serviced apartment EIGHT KWAI FONG in Happy Valley which was completed in 2015. Going forward, the Group will remain focused on developing its core business and optimise its businesses and assets through non-core disposal which can provide more resources for its core business continuously.

30 New World Development Company Limited

CEO's Report

Major Non-core Asset Projects Disposed of in FY2020

Total

Considerations

(HK$ billion)

Economic interests in Telford Plaza II, Kowloon Bay and PopCorn 2, Tseung Kwan O

3.0

Changsha La Ville New World

2.4

A number of non-core assets and businesses, including the shares of Beijing Capital International

Airport Company Limited and 60% interest in New World First Ferry Services Limited

1.1

EIGHT KWAI FONG, a serviced apartment in Happy Valley

1.2

45% interest in a company that holds certain properties in Shun Tak Centre, Sheung Wan

2.4

Annual Report 2020

31

CEO's Report

As at 30 June 2020, unrecognised attributable income from contracted sales of properties in Hong Kong amounted to HK$12,295.2 million, of which HK$7,029.2 million, HK$1,173.0 million and HK$4,093.0 million were to be booked in FY2021, FY2022 and FY2024, respectively. Key projects expected to be booked in FY2021 include ATRIUM HOUSE in Yuen Long, ARTISAN GARDEN in Ma Tau Kok and Reach Summit in Yuen Long, and key project expected to be booked in FY2022 includes TIMBER HOUSE in Ho Man Tin. Among the projects mentioned, ARTISAN GARDEN and TIMBER HOUSE were sold out and over 90% of the units at ATRIUM HOUSE and Reach Summit were sold already. Key projects expected to be booked in FY2024 include MOUNT PAVILIA and FLEUR PAVILIA.

enticed many tenants for the advantages of newly completed commercial buildings with reasonable rentals.

Meanwhile, the retail industry was hit hard by social distancing measures, rising unemployment rate due to corporate redundancy, as well as plummeting tourist arrivals under travel restrictions. The impact was even greater for shopping malls and brands targeting tourists. In response, many landlords offered rental concessions to support their tenants. Recently, Hong Kong has witnessed an easing epidemic situation, as local consumer sentiment gradually recovers with rebounding footfall in shopping malls catering to local customers. This has propped up the performance of retail and rental properties.

Hong Kong Property Investment and Others

Tension in international geopolitical relations prompted enterprises to revisit their development plans. Meanwhile, the epidemic outbreak since early 2020 dealt a heavy blow to economy, forcing countries to impose different levels of social distancing measures to suppress the virus spread and leaving quite a few businesses to suspend operations.

Affected by the epidemic, various sectors responded to worsening market conditions with stricter cost management, redundancies and office space downsizing, which led to the shrinking demand for office space. The significant rental climb over the years in traditional business districts such as Central bore the brunt of economic headwinds. Tenants reduced their rented area or relocated to fringe areas, driving the vacancy rate higher in Central. Nonetheless, owing to this trend of decentralisation, West Kowloon and Island East have

During the year under review, the Group's revenues of property investment in Hong Kong amounted to HK$2,590.5 million, representing an increase of 33%, mainly due to a broader rental income base after the full commencement of operation of its large-scale integrated project Victoria Dockside in Tsim Sha Tsui, Kowloon and the Grade A office building K11 ATELIER King's Road in Quarry Bay during the year under review.

Victoria Dockside, a new global landmark located in the core area of Tsim Sha Tsui Waterfront in Kowloon, was fully opened during the year under review. Created by 100 local and international creative powers, K11 MUSEA formally commenced its operation as a new cultural retail landmark in late August 2019, presenting brand

32 New World Development Company Limited

CEO's Report

new museum-retail experience adored by the local younger generation. Over 90% has been leased. Despite the social events and epidemic situation in Hong Kong, K11 MUSEA still recorded an average monthly footfall of

1.4 million, with a strong quarter-on-quarter rebound of 12% in footfall in the second quarter of 2020, marking its success. As for Grade A office K11 ATELIER, about 80% has been rented out.

Adjacent to Quarry Bay MTR Station on Island East, K11 ATELIER King's Road is one of the first buildings in the world to be awarded three platinum level green and healthy building certifications, including the WELL Certified™ Platinum, the LEED Platinum® and the BEAM Plus New Buildings V1.2 Provisional Platinum. The Grade A office building, with a total GFA of approximately 490,000 sq ft, commenced operation during the year under review, currently around 50% has been leased.

The operation commencement of K11 MUSEA and K11 ATELIER King's Road has brought about a total area of more than 1.5 million sq ft to the Group's property investment flagships portfolio in Hong Kong. Both property projects will provide full year contribution in FY2021, with the remaining leasable area to generate more growth momentum to the rental income which has entered an acceleration stage.

Hong Kong Landbank

Land supply is dwindling in Hong Kong. According to the Land Sale Programme announced by the Hong Kong Government, only 15 residential sites can be launched in 2020, of which five are rolled over land parcels, to provide only 7,530 flats, together with only six commercial sites amounting to a total GFA of approximately 830,000 sq ft. The Government works to promote a multifaceted land policy, such as Land Sharing Pilot Scheme and New Development Areas. The Group is carefully studying relevant policies to pursue suitable land and continuously provide quality resources for the long-term development of its core business.

On the other hand, the Group made use of diversified channels to replenish its landbank, by participating in public tenders, actively undertaking old building acquisitions and farmland conversions in order to provide sustainable development resources for its core business.

In August 2020, State Theatre Building, a residential and commercial property located at 277-291 King's Road, North Point, which the Group's non-wholly owned subsidiary holds over 90% ownership, was approved for a compulsory sale by the Lands Tribunal. The project covers a site area of approximately 36,000 sq ft.

As at 30 June 2020, the Group had a landbank with a total attributable GFA of approximately 9.08 million sq ft in Hong Kong available for immediate development, of which approximately 4.21 million sq ft was for property development use. Meanwhile, the Group had an agricultural landbank with a total attributable land area of approximately 16.51 million sq ft pending land use conversion.

Eight projects with a total GFA of approximately 1.8 million sq ft located in Yuen Long and Fanling are under active negotiation with the authority on land use conversion, of which a total GFA of approximately 0.5 million sq ft has entered the final stages.

Rooted in Hong Kong, the Group takes driving social advancement and contributing to Hong Kong's long-term development as an important part of its vision of creating shared value. Hence, the Group is actively partnering with social enterprises to develop transitional social housing, to provide appropriate assistance to families in need of housing in Hong Kong.

Annual Report 2020

33

CEO's Report

Property

Property

Development

Investment and

Total

Others Total

Total

Attributable

Attributable

Attributable

Landbank by District

GFA

GFA

GFA

As at 30 June 2020

(sq ft '000)

(sq ft '000)

(sq ft '000)

Hong Kong Island

165.3

-

165.3

Kowloon

1,842.1

1,099.0

2,941.1

New Territories

2,207.4

3,767.4

5,974.8

Total

4,214.8

4,866.4

9,081.2

Total

Total

Attributable

Agricultural Landbank by District

Land Area

Land Area

As at 30 June 2020

(sq ft '000)

(sq ft '000)

Yuen Long District and Tuen Mun District

12,419.7

11,420.9

North District

2,488.8

2,184.1

Sha Tin District and Tai Po District

1,938.0

1,884.1

Sai Kung District

1,180.0

1,019.8

Total

18,026.5

16,508.9

Mainland China Property Development

Under the COVID-19 outbreak in early 2020, many projects were ground to a halt and sales offices suspended operation in a lot of locations. Instead, quite a few property developers have moved their sales and marketing activities online. Against the backdrop that the epidemic is under control in a short period of time, various property developers have resumed work and reopened sales offices, unleashing the pent-up demand for housing purchase. Data released by the National Bureau of Statistics suggested the gradual recovery of sales. Cities at various tiers invariably recorded higher housing prices in June 2020, as the year-on-year decline of commercial housing sales and area continued to narrow nationwide, with residential properties experiencing the smallest decline. On the other hand, the Central Government has repeatedly reaffirmed its stance that housing was for living in rather than speculation, that city-specific policies shall be implemented to promote steady and healthy

development of the property market, and that financing shall be tightened for property developers. Some cities with surging house prices have recalibrated their regulatory policies. Hence, the market generally expects house prices to remain stable.

In FY2020, the Group's revenues and segment results of property development in Mainland China, including joint development projects, amounted to HK$14,665.6 million and HK$8,409.7 million, respectively. The contributions were mainly attributable to the residential projects in Guangzhou, Foshan and Shenyang.

Despite the epidemic-induced slowdown of property sales in Mainland China in early 2020, the Group maintained strong sales performance. During the year under review, the total contracted sales area of properties in Mainland China was approximately 800,000 sq m, with total sales proceeds amounting to RMB18.18 billion. The average selling price of overall

34 New World Development Company Limited

CEO's Report

residential contracted sales exceeded RMB38,000 per sq m. As for the geographical distribution of contracted sales proceeds, Southern region led by the Greater Bay Area was the largest contributor, accounting for over 60%, followed by North-eastern and Central regions which accounted for 16% and 14%, respectively. Contribution was mainly delivered by sales of residential

projects in the Greater Bay Area, including Shenzhen Prince Bay BAYHOUSE, Guangzhou Park Paradise and Guangzhou Covent Garden. For the Shenzhen Prince Bay BAYHOUSE project, the Group staged an innovative move by launching online sales services during the epidemic period, delivering desirable sales results.

Residential

Non-residential

FY2020

Contracted Sales

Contracted Sales

Area

Proceeds

Area

Proceeds

Region

(sq m '000)

(RMB m)

(sq m '000)

(RMB m)

Southern Region (i.e. the Greater Bay Area)

120.3

6,089.2

110.6

5,270.3

Central Region

370.1

2,530.7

4.9

19.2

Eastern Region

11.1

534.2

-

-

Northern Region

17.2

225.4

16.4

590.9

North-eastern Region

74.2

2,008.1

78.4

912.2

Total

592.9

11,387.6

210.3

6,792.6

On the other hand, the Group continued with its strategy to dispose of non-core assets. In September 2019, the Group entered into an agreement to dispose of the entire interest in Hunan Success New Century Investment Company Limited at the consideration of RMB2,185 million subject to the terms and conditions contained therein. The asset of this company is Changsha La Ville New World. The disposal enables the Group to realise cash resources and unlock asset value at fair market value.

As of 30 June 2020, the Group's unrecognised gross income from contracted sales of properties in Mainland China amounted to RMB9,129.1 million, of which RMB4,985.9 million was to be booked in FY2021 and RMB4,143.2 million to be booked in FY2022.

During the year under review, the total area of projects completed in Mainland China (excluding carpark) amounted to approximately 400,000 sq m, which was mainly located in the Greater Bay Area and Shenyang. The area of completion is expected to reach 1.37 million sq m in FY2021.

Annual Report 2020

35

CEO's Report

FY2020 Project Completion in Mainland China - Property Development

Total

Total

(excluding

(including

Region

Project/Total GFA (sq m)

Residential

Commercial

carpark)

carpark)

Guangzhou

Guangzhou Park Paradise District 5 Land No. 2

-

2,920

2,920

2,920

Foshan

Guangzhou Foshan Canton First Estate CF30

21,325

-

21,325

21,325

Guangzhou Foshan Canton First Estate CF31

44,020

-

44,020

44,020

Wuhan

Wuhan New World • Times Site B

55,073

-

55,073

114,229

Shenyang

Shenyang New World Garden Phase 2E Building 14

55,235

-

55,235

55,235

Anshan

Anshan New World Garden Phase 1B2

60,438

7,573

68,011

68,011

Total

236,091

10,493

246,584

305,740

FY2020 Project Completion in Mainland China - Property Investment, Hotel and Others

Total

Total

(excluding

(including

Region

Project/Total GFA (sq m)

Commercial

Hotel

carpark)

carpark)

Guangzhou

Guangzhou Park Paradise District 5 Land No. 1

22,763

-

22,763

35,365

KHOS Guangzhou

6,787

53,594

60,381

80,672

Shenyang

Shenyang New World Garden Phase 2E

-

-

-

40,878

KHOS Shenyang

-

69,751

69,751

69,751

Anshan

Anshan New World Garden Phase 1B2

-

-

-

18,316

Total

29,550

123,345

152,895

244,982

36 New World Development Company Limited

CEO's Report

FY2021 Project Completion Plan in Mainland China - Property Development

Total

Total

(excluding

(including

Region

Project/Total GFA (sq m)

Residential

Apartment

Commercial

Office

carpark)

carpark)

Guangzhou

Guangzhou Park Paradise

42,586

-

-

-

42,586

48,388

District 3 Batch B

Foshan

Guangzhou Foshan Canton First

30,210

-

-

-

30,210

30,210

Estate CF27B

Guangzhou Foshan Canton First

4,328

-

-

-

4,328

4,328

Estate CF07

Guangzhou Foshan Canton First

59,860

-

-

-

59,860

63,560

Estate CF19C

Shenzhen

Prince Bay Land DY02-02

-

-

-

54,789

54,789

54,789

Prince Bay Land DY02-04

-

55,000

-

-

55,000

55,000

Ningbo

Ningbo New World Plaza Land No. 7-10

137,652

-

25,973

-

163,625

269,790

Ningbo New World Plaza Land No. 11

-

-

9,702

57,055

66,757

90,010

Ningbo New World Plaza Land No. 12

-

-

8,085

12,331

20,416

52,900

Ningbo New World Plaza Land No. 5

-

-

1,400

85,306

86,706

128,198

Beijing

Beijing New View Commercial Centre

-

-

9,063

12,231

21,294

25,367

Shenyang

Shenyang New World Centre - SA1

-

107,589

-

-

107,589

107,589

Shenyang New World Centre - SA2

-

104,142

-

-

104,142

104,142

Shenyang New World Centre - SA3

-

75,354

-

-

75,354

75,354

Shenyang New World Garden

108,954

-

-

-

108,954

108,954

Phase 2C - 1

Anshan

Anshan New World Garden Phase 1B3

91,830

-

14,358

-

106,188

133,636

Anshan New World • The Grandiose

9,297

-

-

-

9,297

9,297

Phase 1B1

Anshan New World • The Grandiose

19,367

-

-

-

19,367

19,367

Phase 1B2

Total

504,084

342,085

68,581

221,712

1,136,462

1,380,879

FY2021 Project Completion Plan in Mainland China - Property Investment, Hotel and Others

Total

Total

(excluding

(including

Region

Project/Total GFA (sq m)

Commercial

Office

Hotel

carpark)

carpark)

Shenzhen

Prince Bay Land DY02-02

25,000

-

-

25,000

58,857

Prince Bay Land DY02-04

24,840

-

-

24,840

64,642

Ningbo

Ningbo New World Plaza Land No. 5

-

-

41,269

41,269

41,269

Wuhan

Wuhan New World Centre Phase 3 - Wuhan K11

32,294

59,434

-

91,728

140,969

Shenyang

Shenyang New World Garden Phase 2C - 1

21,160

-

-

21,160

21,160

pentahotel Shenyang

-

-

29,924

29,924

29,924

Total

103,294

59,434

71,193

233,921

356,821

Annual Report 2020

37

CEO's Report

Mainland China Property Investment and Others

For the purpose of containing the spread of the epidemic, the Central Government promptly adopted prevention and control measures to various degrees, including closure of some venues and suspension of work and classes to avoid crowding. The resulting decline in footfall and even suspension of operation in shopping malls led commercial property owners to shift parts of their business online, where marketing took place in the form of live broadcast to stimulate consumption desire and maintain customer loyalty. Shopping malls saw a gradual uptick in footfall after reopened in various places.

The Group's unique brand K11 has also taken the initiative to develop a new digital operation model by launching the online membership WeChat mini programme "K11 GO". The programme engages over 100 tenant brands under K11 nationwide, which collaborated with the K11 operations team to host a number of live broadcast events to diversify sales channels. In the meantime, the Group fully capitalised on its unique ecosystem and presence in both Mainland China and Hong Kong, to provide mainland consumers with one-stopcross-border shopping experience of Hong Kong products via the WeChat mini programme "Hong Kong K11 × Shop Express".

In FY2020, the Group's revenues of property investment in Mainland China amounted to HK$1,759.0 million, representing a 2% increase mainly due to full-year contribution from Guangzhou New World • NEW PARK, which opened at the end of December in 2018 and the increase in average rent of Shenyang K11, whereas major projects in the Group's investment properties portfolio recorded solid performance in overall occupancy rate.

Wuhan K11, the Group's second shopping mall project in Wuhan, is scheduled to commence operation in phases starting from the end of 2020. The project covers a total area of approximately 240,000 sq m, including an 83,000 sq m art mall, a 56,000 sq m K11 ATELIER office building and 11th Avenue, K11's first outdoor block for leisure and downshifting, which renews its leadership in the retail consumer market of Central China.

Being an active investor on the Mainland and a creator of new consumption and office models, the Group will have a series of K11 and D • PARK commercial projects complete construction and commence operation successively. Among them are a number of key projects in the Greater Bay Area, such as Prince Bay and Qianhai in Shenzhen as well as Panyu in Guangzhou, which will broaden the Group's recurring rental income base and consolidate its development in the Greater Bay Area.

Mainland China Landbank

In the Report on the Work of the Government, the Central Government mentioned development initiatives such as promoting new urbanisation and urban renewal, and fast-tracking regional development strategies such as the Guangdong-HongKong-Macao Greater Bay Area, integration of the Yangtze River Delta and coordinated development of the Beijing-Tianjin-Hebei Region. Following the acceleration of new urbanisation and regional development, population movement has further gravitated towards core cities in metropolitan areas, such as Guangzhou and Shenzhen in the Greater Bay Area. This has ramped up local housing demand, albeit in tandem with sluggish land supply in these core areas. Hence, urban renewal plays an important role by offering mainly residential land at reasonable cost in prime locations.

With strategic coverage in key cities of the Greater Bay Area and other metropolitan areas in Mainland China, the Group relied on its superior brand and seasoned professional team to obtain or jointly develop premium land parcels and projects in Guangzhou and Shenzhen, the hearts of the Greater Bay Area, celebrating fruitful results. Currently, landbank in the Greater Bay Area accounts for half of the Group's core landbank in Mainland China.

The Group stands out as the most active Hong Kong developer in the market of old city redevelopment in Mainland China which was traditionally dominated by Mainland property giants. In June 2020, the Group renewed its presence in Zengcheng District of Guangzhou as it became the intended cooperative enterprise for Xiajie Village in Licheng Street, following the remodelling project of Economic Belt at Man Kam To

38 New World Development Company Limited

CEO's Report

Crossing in Lo Wu District of Shenzhen, the Xili Project in Nanshan District of Shenzhen, the Shancun Project in Liwan District of Guangzhou, the Nanji Village Project in Haizhu District of Guangzhou, and the Tagang Village Project in Zengcheng District of Guangzhou. Located in downtown Zengcheng, the new project is designated as the future district public service centre with a total area of over one million sq m after redevelopment. The project will develop into an integrated residential and industrial zone that accommodates quality living, business office, distinctive commerce and top class hotel. The above old city redevelopment projects are expected to be included in the Group's landbank successively starting in 2022, which will significantly boost its sustainable development resources.

The Group has a wide range of channels to expand its landbank. In addition to old city redevelopment, land is also acquired through public auction and tender and cooperation with different enterprises. In September 2019, the Group obtained the Tagang Village Project on Yongning Street in Zengcheng District of Guangzhou with the reserve price of RMB3.4 billion. The project covers a total GFA of over 320,000 sq m in Zengcheng Economic and Technological Development Zone, an important node of the Guangzhou-Shenzhen Science

and Technology Innovation Corridor. The Zone features a cluster of new infrastructure industries such as new energy vehicles, IT and fintech, presenting tremendous development potential for the future.

Other than the Greater Bay Area, the Group has also extended its coverage to Ningbo and Hangzhou in the Yangtze River Delta as well as its central city Shanghai, in an effort to complete the Group's strategic layout in Eastern China and make it another growth driver besides the Guangdong-HongKong-Macao Greater Bay Area. In July 2019, the Group acquired the remaining 51% interest in the commercial and residential complex project Ningbo New World. Meanwhile, the Group also successfully acquired a land parcel for commercial and residential purpose in Wangjiang New Town, Shangcheng District, Hangzhou with a total GFA of more than 450,000 sq m through public tender. The land parcel is planned to develop into a large-scale urban complex integrating commerce, office and residential buildings and hotels, where K11 Art Mall and Rosewood Hotel will be introduced for the first time in Hangzhou.

In August 2020, the Group successfully acquired a land parcel in Huaihai Middle Road of Huangpu District, Shanghai with approximately RMB4.1 billion. Covering a total GFA of approximately 130,000 sq m, the project sits at the heart of the Huaihai Middle Road Business District and constitutes the first land parcel launched in Huaihai Road in more than two decades. The project is designed to be a high-end commercial complex that embodies both artistry and modernity.

As at 30 June 2020, the Group had a landbank (excluding carpark) with a total GFA of approximately 6.48 million sq m available for immediate development in Mainland China, of which approximately 3.39 million sq m was for residential use. In particular, core property development projects were primarily located in Guangzhou, Shenzhen, Foshan, Wuhan, Ningbo, Hangzhou, Beijing and Shenyang, constituting a landbank (excluding carpark) with a total GFA of approximately 5.71 million sq m, of which 50% was located in the Greater Bay Area and approximately 1.84 million sq m was for residential use.

Annual Report 2020

39

CEO's Report

Total GFA

(excluding

Residential

As at 30 June 2020

carpark)

Total GFA

Region

(sq m '000)

(sq m '000)

Southern Region (i.e. the Greater Bay Area)

2,857.5

1,840.1

Central Region

710.2

281.1

Eastern Region

955.5

287.6

Northern Region

610.2

254.5

North-eastern Region

1,345.9

723.5

Total

6,479.3

3,386.8

Of which, Core Projects

5,714.4

2,762.2

Hotel Operations

In FY2020, the Group recorded a loss in its hotel operations mainly due to the COVID-19 outbreak prompting various regions to impose travel restrictions. The ensuing plunge in tourist arrivals battered the hotel industry in both Hong Kong and Mainland China. This also affected the average occupancy and room rates of the Group's hotels in Hong Kong which were oriented towards high-end business travellers. However, as the local epidemic situation is gradually under control, the Hong Kong Government has begun to gradually relax social distancing measures, while actively discussing the feasibility of travel bubbles with neighbouring countries and regions, which is expected to bring some support to the hotel industry. In response to the epidemic, the hotel industry has rolled out different staycation programmes and discounts to attract local customers who cannot spend their holidays abroad due to travel restrictions, and offer them leisure and recreational experience. The Group's hotels have also launched relevant accommodation and catering packages, and integrated the ecosystem and brand resources to create synergy, improve customer loyalty and cross-selling. The hotel industry in Mainland China also saw gradual recovery driven by domestic inter-provincial travel.

As at 30 June 2020, the Group owned a total of 17 hotel properties in Hong Kong, Mainland China and Southeast Asia, providing more than 7,400 rooms.

Four Core Businesses under NWSH

After the completion of FTLife Insurance on 1 November 2019, the core businesses of NWSH became Roads, Aviation, Construction and Insurance, which were also inevitably affected by the COVID-19 epidemic during the year under review.

Roads

Despite a stable interim result, Roads segment in the second half of FY2020 was adversely affected by the outbreak of COVID-19 and the unprecedented toll fee exemption policy implemented for all toll roads by the Central Government for a period of 79 days between 17 February 2020 and 5 May 2020. As a result, together with the impact of Renminbi depreciation, Road segment results declined in FY2020. While protective measures in relations to this policy, such as extension of concession period, are expected to be given, negotiation with the Central Government is still underway. Overall traffic volume and toll revenues of NWSH's existing projects declined 22% and 23% year-on-year, respectively, in FY2020. Yet, both traffic flow and toll revenues have been recovering rapidly since the resumption of the toll fee collection in May 2020. Together with the contribution from newly acquired Changliu Expressway,

40 New World Development Company Limited

CEO's Report

June 2020's overall traffic volume of the NWSH's roads portfolio grew approximately 3% year-on-year with toll fee income of the portfolio almost reaching the same level as the month of December 2019.

The four anchor expressways, including Hangzhou Ring Road, Tangjin Expressway (Tianjin North Section), Guangzhou City Northern Ring Road and Beijing-Zhuhai Expressway (Guangzhou-Zhuhai Section) collectively contributed over 80% for the Roads segment. While the traffic flow during FY2020 was hit by the outbreak of COVID-19,Beijing-Zhuhai Expressway (Guangzhou- Zhuhai Section) was further impacted by the traffic diversion of Nansha Bridge and prohibition of certain types of large size vehicles using Humen Bridge. In June 2020, excluding Beijing-Zhuhai Expressway (Guangzhou- Zhuhai Section), the overall traffic volume for the other three expressways resumed to a growth of close to 1% year-on-year. As for the three expressways in Central China acquired in recent years, namely Suiyuenan Expressway (acquired in January 2018), Sui-Yue Expressway (acquired in December 2018) and Changliu Expressway (acquired in July 2019), aggregately contributed approximately HK$100 million in FY2020.

Aviation

Aviation segment principally engages in commercial aircraft leasing business through NWSH's full service leasing platform Goshawk Aviation Limited ("Goshawk") after the divestment of the remaining interest in Beijing Capital International Airport Co., Ltd. ("BCIA").

In FY2020, Aviation segment results declined. In addition to the absence of dividend income from BCIA, less gain was recorded from aircraft trading in FY2020 given the current market condition.

As at 30 June 2020, together with the direct orders of 40 narrow-body aircraft delivering in 2023-2025 from the two major aircraft manufacturers, the number of aircraft owned, managed and committed by Goshawk increased from 223 as at 30 June 2019 to 233, with combined appraised value amounted to approximately US$11.7 billion. Goshawk continues to be a global leading commercial aircraft lessor in terms of fleet value with one of the youngest fleet and one of the longest average remaining lease term in the industry. The 162 aircraft on book, which increased from 154 as at 30 June 2019, has an average age of 4.4 years and an average remaining lease term of 6.3 years.

Given the diversified portfolio that comprises of 62 airlines in 35 countries, as well as stringent measures on

risk management, including but not limited to maintaining an appropriate mix of aircraft assets, monitoring lessees' operational and financial performance for prompt risk identification, and engaging lessees proactively on collection issues/lease restructuring with necessary and adequate actions taken, risks arising from COVID-19 outbreak have been well-managed. The collection rate from airline customers during the first half of year 2020 was 78%.

Construction

Construction segment results decreased, mainly due to challenging business environment and rising competition. As at 30 June 2020, gross value of contracts on hand of the Construction segment edged down 5% to approximately HK$52.6 billion, while the remaining works to be completed decreased HK$5.5 billion to HK$36.1 billion. About 62% of the remaining works to be completed are from private sector that includes both commercial and residential projects, and the remaining 38% are government and institutional related projects. New projects contracted in FY2020 amounted to approximately HK$8.8 billion, which included but not limited to, the commercial development in Kai Tak Area, the office development at Murray Road and foundation works for public housing development at Long Bin Phase 1, Yuen Long and at Ko Chiu Road, Yau Tong.

Insurance

The acquisition of FTLife Insurance by NWSH was completed on 1 November 2019, marking NWSH's important step in entering the insurance industry. Eight-month segment results amounted to HK$819.2 million was recorded subsequent to the completion of acquisition. During the year under review, while business from Mainland Chinese Visitors was severely impacted by the border closure and epidemic containment measures, sales targeting the Hong Kong market remained resilient and well-supported by new products, such as Voluntary Health Insurance Scheme, Qualifying Deferred Annuity Policy, Reward Pro, Fortune Saver, Regent Prime and Regent Elite insurance products. With the early signs of positive contribution from the synergies and support from the Group, Annual Premium Equivalent ("APE") dropped 12% year-on- year in the first half of year 2020, outperforming Hong Kong overall industry's drop of 44%. Agency business and partnership contributed 51% and 49% of FTLife Insurance's total APE respectively. Total gross written premium grew 19% and Value of New Business ("VONB") margin, representing VONB as a percentage of APE, was 22% in the first half of year 2020.

Annual Report 2020

41

CEO's Report

Despite industry-wide disruptions and a persistently low interest rate environment, FTLife Insurance's financial position remains sound. As at 30 June 2020, solvency ratio was 542%, which is well above the minimum regulatory requirement of 150%. Embedded value was HK$17.7 billion, compared to HK$17.3 billion as at 31 December 2019. Total asset value and net asset value (excluding the goodwill arising from business combination) were HK$69.5 billion and HK$18.0 billion, respectively.

OUTLOOK

Last year, the global economy was battered by a host of factors such as U.S.- China tensions, geopolitics and the COVID-19 epidemic. Countries plunged into economic recession and many businesses resorted to downsizing to cut costs. Some even closed down or went bankrupt. Soaring unemployment rates and shrinking consumption forced governments to launch different economic relief initiatives to support corporate operation and safeguard people's livelihood.

Even as countries devoted massive amounts of manpower and material in a race against time to develop vaccines, the pandemic sustained its sprawling spread, prompting governments of various localities to adopt stringent social distancing measures and travel restrictions. This exerted varying degrees of impact on different sectors, with those centred on tourists, including retail, hospitality and aviation, mired in predicament. Such impact also extended to the relevant operations of the Group. Nevertheless, as a constant advocate of creating shared value, the Group took the initiative to shoulder its social responsibility by offering tenants rental concessions to weather the difficult times together.

Looking ahead, the uncertainties and negative factors are expected to linger, as market sentiments remain dominated by the ebb and flow of U.S.- China relations and the evolving pandemic. Given the unpredictability of when these factors will subside, New World Group will actively examine its development directions and market conditions, leverage its edge and extensive resources under the prevailing development strategy, and proactively identify areas of breakthrough to turn crises into opportunities and create growth opportunities in adverse conditions.

Owning a portfolio of premium saleable resources in Hong Kong and Mainland China, the Group plans to launch its key residential project by phase at Tai Wai MTR Station in Sha Tin, Hong Kong that involves over 3,000 residential units, as well as its Grade A office projects in Cheung Shun Street and Wing Hong Street in West Kowloon. Phases 1 and 2 of the Tai Wai Station project are well poised to be launched and will make its debut upon the issue of pre-sale consent. Shenzhen Prince Bay BAYHOUSE, a commercial apartment project located at Prince Bay of Shenzhen in the heart of the Greater Bay Area, attained stellar sales results through online sales services during the epidemic, showcasing the Group's product quality, sales execution and innovation capabilities. In FY2021, the Group will successively launch its Zengcheng Comprehensive Development Project in the eastern transport hub of Zengcheng District of Guangzhou which will extend the exceptional results of the Prince Bay Project.

Through active disposal of non-core assets and businesses, the Group concentrates on developing its core business, continuously optimising its asset portfolio and returns, enhancing corporate efficiency and creating more value for shareholders. Following its disposal of non-core assets worth over HK$10 billion in FY2020, the Group has an excess of HK$13 to HK$15 billion of assets available for disposal in FY2021, which will generate extra cash flow to support its core business development.

42 New World Development Company Limited

CEO's Report

The new cultural retail landmark K11 MUSEA in Victoria Dockside of Tsim Sha Tsui Waterfront and K11 ATELIER King's Road, a Grade A office project adjacent to Quarry Bay MTR Station in Island East Business District commenced operation in FY2020, which enhanced the Group's investment property portfolio and brought about an additional area of more than 1.5 million sq ft. Both projects will make full year contribution in FY2021, marking the harvest period of growth in recurring rental income that the Group is entering. In the future, the Group will see the successive completion of investment property projects such as Hong Kong SKYCITY, as well as a pipeline of K11 projects in the Greater Bay Area and in key cities of Mainland China. Such completion will add about five million sq ft to the area of investment property portfolio in Hong Kong, and offer an impressive boost of more than 10 million sq ft to the area of investment property portfolio in Mainland China, thereby elevating the Group's recurring income and providing more stable growth momentum to its business performance.

Dedicated to its development in key cities of the Greater Bay Area and other metropolitan areas, the Group has been an early mover with strategic presence in cities such as Guangzhou and Shenzhen. Through old city redevelopment, the Group can secure land at prime locations at more reasonable costs, whilst improving the experience of life for local citizens. Leveraging an outstanding team with extensive experience, the Group managed to become the most active Hong Kong developer in the old city redevelopment market with a proven track record. As of this fiscal year, the Group became the intended cooperative enterprise of six old city redevelopment projects across the Greater Bay Area, the land of which will be successively included in the landbank from 2022 onwards, to offer a continuous stream of saleable resources to propel the Group's development in the Greater Bay Area.

Having completed the acquisition of FTLife Insurance during this fiscal year, NWSH has been providing steady cash flow to the Group with their four core businesses including Roads, Aviation, Construction and Insurance. NWSH, boasting ample resource and adequate financing capability, has been executing the Group's strategy of non-core assets disposal to inject momentum into its core business. Stepping into FY2021, NWSH already successfully disposed of its entire interest in New World First Bus Services Limited and Citybus Limited, at the consideration of HK$3.2 billion, as an extension of the Group's strategy to sell non-core assets.

Financially strong and healthy, the Group had total capital resources of approximately HK$106.7 billion as at

30 June 2020, including approximately HK$67.4 billion of cash and bank balances (including restricted bank balances) and approximately HK$39.3 billion of undrawn facilities from banks. The Group manages cash flow in an active and prudent manner, and works to attain higher cost efficiency, diversify financing channels, balance risks and lower operating costs. As a result, its recurring administrative and other operating expenses declined by approximately 8% during the year under review. All refinancing of borrowings due in FY2021 has been taken care of. In the foreseeable future, equity raising is not necessary for the Company.

Rooted in Hong Kong and Greater China for five decades, the Group has surmounted numerous challenges and difficulties with well-established foundation and innovative thinking. Confronted with prevailing adversity, the Group shares the weal and woe with society and stakeholders via a number of social projects, including partnering with social enterprises to develop transitional homes for citizens in need of housing. The Group also tapped into its talents and technology to produce medical masks and distribute them to the public via "Mask To Go" dispensers, with a view to giving back to society through its strengths and technology. Confident that Hong Kong is bound to pull through and regain its former glory, the Group will remain committed to Hong Kong, engage in the Greater Bay Area and employ innovative and sustainable means to drive its growth, creating more shared value to shareholders and society at large.

Dr. Cheng Chi-Kong, Adrian

Executive Vice-chairman and Chief Executive Officer Hong Kong, 30 September 2020

Annual Report 2020

43

Major Property Projects

in Hong Kong

Major Property Development Projects

Major Property Investment and Other Projects

1

4A-4P Seymour Road, Mid-levels

1

Manning House, Central

2

ARTISAN GARDEN, 68 Kowloon City Road,

2

New World Tower, Central

Ma Tau Kok

3

K11 ATELIER King's Road, North Point

3 TIMBER HOUSE, 74 Waterloo Road,

Ho Man Tin

4

Hong Kong Convention and Exhibition Centre,

4

New Kowloon Inland Lot No. 6582,

Shopping Arcade, Wan Chai

5

Grand Hyatt Hong Kong

Cheung Shun Street, Cheung Sha Wan

5

New Kowloon Inland Lot No. 6572,

6

Renaissance Harbour View Hotel

Wing Hong Street, Cheung Sha Wan

7

Pearl City, Causeway Bay

6 New Kowloon Inland Lot No. 6574, 4B3, Kai Tak

8 Methodist House, Wan Chai

7 New Kowloon Inland Lot No. 6552, 4C2, Kai Tak

9

K11

ATELIER of Victoria Dockside, Tsim Sha Tsui

8

New Kowloon Inland Lot No. 6576, 4B1, Kai Tak

Rosewood Hong Kong & Residences of Victoria Dockside,

Tsim Sha Tsui

9

Yau Tong Redevelopment Project, Kowloon East

K11

ARTUS of Victoria Dockside, Tsim Sha Tsui

K11

MUSEA of Victoria Dockside, Tsim Sha Tsui

10 Reach Summit, Sereno Verde Phase 5,

99A Tai Tong Road, Yuen Long

10

K11, Tsim Sha Tsui

11

ATRIUM HOUSE,

Hyatt Regency Hong Kong, Tsim Sha Tsui

11

pentahotel Hong Kong, Kowloon

99 Shap Pat Heung Road, Yuen Long

12

Tai Wai Station Property Development,

12

KOHO, Kwun Tong

STTL No. 520, Sha Tin

13

THE FOREST, Mong Kok

13 Lung Tin Tsuen (Phase 2), Yuen Long

14 ARTISAN HUB, San Po Kong

14 Lung Tin Tsuen (Phase 4), Yuen Long

15 ATL Logistic Centre, Kwai Chung

15 Tong Yan San Tsuen (Phase 3), Yuen Long

16 D•PARK, Tsuen Wan

16 Tong Yan San Tsuen (Phase 4), Yuen Long

17 Hyatt Regency Hong Kong, Sha Tin

17 Sha Po North (Phase 2), Yuen Long

18

Citygate, Tung Chung

18

DD110, Kam Tin, Yuen Long

Novotel Citygate Hong Kong

19

DD221, Sha Ha, Sai Kung

19

Tung Chung Town Lot No. 11, Tung Chung

20

PARK SIGNATURE, Yuen Long

21

21 Luk Hop Street, San Po Kong

22

New Kowloon Inland Lot No. 6505,

King Lam Street, Cheung Sha Wan

23

SKYCITY Project

Major Property Projects in Hong Kong

10

15

11 13 14

1618

20 17

New Territories

17

12

16

19

Kowloon

11

4

5

22

14

21

15

23

13

7

12

8

3

2

6

9

9

10

18

1

2

4

5

6

3

19

1

8

7

Lantau Island

Hong Kong Island

44

New World Development Company Limited

Annual Report 2020

45

Major Property Projects

in Mainland China

19 20

21 22

15

16

17

18

14

10

1113

12

1 2 3 5 9

6 4 7 8

Major Property Projects in Mainland China

Major Property Development Projects

1

Guangzhou Covent Garden Phase 3 Remaining

12 Yiyang New World Scenic Heights Phase 1G

Portion

Yiyang New World Scenic Heights Phase 1F

Guangzhou Covent Garden Remaining Phases

Yiyang New World Scenic Heights Phase 2B

Yiyang New World Scenic Heights Phase 2C

2

Guangzhou Park Paradise Phase 5B

Yiyang New World Scenic Heights Phase 2A

Guangzhou Park Paradise Remaining Phases

Yiyang New World Scenic Heights Remaining

Phases

3 Guangzhou Zengcheng Comprehensive

Development Project

13

Ningbo New World Plaza Land No.7-10

Ningbo New World Plaza Land No.11

4

Guangzhou Panyu Hanxi Comprehensive

Ningbo New World Plaza Land No.12

Development Project

Ningbo New World Plaza Land No.5

Ningbo New World Plaza Land No.4

5

Guangzhou Zengcheng International Community

Ningbo New World Plaza Land No.6

Project

Ningbo New World Plaza Land No.1

Ningbo New World Plaza Land No.2

6

Canton First Estate CF27B

Ningbo New World Plaza Land No.3

Canton First Estate CF07

Canton First Estate CF19C

14

Hangzhou Wangjiang New Town Project

Canton First Estate CF03

Canton First Estate CF21

15

Beijing New View Commercial Centre

Canton First Estate CF32

Beijing New View Commercial Centre

Canton First Estate CF35

Remaining Phases

Canton First Estate Remaining Phases

16

Beijing Xin Yu Commercial Centre

7

Shenzhen Qianhai Project

Beijing Xin Yu Commercial Centre

Remaining Phases

8 Shenzhen Prince Bay Project DY04-01

Shenzhen Prince Bay Project DY04-02

17

Langfang New World Garden District 2

Shenzhen Prince Bay Project DY04-04

Shenzhen Prince Bay Project DY02-02

18

Jinan New World Sunshine Garden District BC

Shenzhen Prince Bay Project DY02-04

19

Shenyang New World Garden Phase 2C1

9

Huizhou Changhuyuan Phase 4

Shenyang New World Garden Phase 2C2

Shenyang New World Garden Phase 2FG

10

Wuhan New World Centre Phase 3

20

Shenyang New World Centre

11 Wuhan New World • Times Phase 2

21 Anshan New World Garden Phase 1B3

22 New World • The Grandiose Phase 1B1 New World • The Grandiose Phase 1B2

and 1B3

New World • The Grandiose Phase 2C

46

New World Development Company Limited

Annual Report 2020

47

Directors' Profile

Dr. Cheng Kar-Shun, Henry

GBM, GBS (Aged 73)

Mr. Doo Wai-Hoi, William

JP (Aged 76)

Appointed as Director in October 1972, Executive Director in 1973, became Managing Director from 1989 and Chairman from March 2012. Dr. Cheng is the chairman of the Executive Committee and Nomination Committee and a member of the Remuneration Committee of the Board of Directors of the Company. Dr. Cheng is the chairman and executive director of NWS Holdings Limited and Chow Tai Fook Jewellery Group Limited, the chairman and non-executive director of New World Department Store China Limited and FSE Services Group Limited, the vice-chairman and non-executive director of i-CABLE Communications Limited, and a non-executive director of DTXS Silk Road Investment Holdings Company Limited, all of them are listed public companies in Hong Kong. He was an independent non-executive director of HKR International Limited and Hang Seng Bank Limited up to his resignation on 31 March 2018 and retirement on 10 May 2018 respectively, the chairman and non- executive director of Newton Resources Ltd up to his resignation on 9 April 2018 and a non-executive director of SJM Holdings Limited up to his retirement on 11 June 2019, all of them are listed pubic companies in Hong Kong. Dr. Cheng is a director and honorary chairman of New World China Land Limited and a director of certain subsidiaries of the Group. He is a director of Cheng Yu Tung Family (Holdings) Limited, Cheng Yu Tung Family (Holdings II) Limited, Chow Tai Fook Capital Limited, Chow Tai Fook (Holding) Limited and Chow Tai Fook Enterprises Limited, all of them are substantial shareholders of the Company. Dr. Cheng is the chairman of the Advisory Council for The Better Hong Kong Foundation. He was a Standing Committee Member of the Twelfth Chinese People's Political Consultative Conference of The People's Republic of China. Dr. Cheng was awarded the Gold Bauhinia Star and the Grand Bauhinia Medal in 2001 and 2017 respectively by the Government of the Hong Kong Special Administrative Region. Dr. Cheng is the father of Dr. Cheng Chi-Kong, Adrian and Ms. Cheng Chi-Man, Sonia, the brother-in-law of Mr. Doo Wai- Hoi, William, the brother of Mr. Cheng Kar-Shing, Peter and the uncle of Mr. Cheng Chi-Heng.

Appointed as the Vice-chairman and Non-executive Director in July 2013. Mr. Doo is a non-executive director of Lifestyle International Holdings Limited and an independent non-executive director of Shanghai Industrial Urban Development Group Limited, both being listed public companies in Hong Kong. Mr. Doo is also a director of certain subsidiaries of the Group. He is the chairman and director of Fungseng Prosperity Holdings Limited. Mr. Doo is a Justice of the Peace appointed by the Government of the Hong Kong Special Administrative Region. He is also the Honorary Consul General of the Kingdom of Morocco in Hong Kong and Macau, and a Governor of the Canadian Chamber of Commerce in Hong Kong. He was promoted to the Officier de l'Ordre National de la Légion d'Honneur by the Republic of France in 2019. Mr. Doo is the brother-in-law of Dr. Cheng Kar-Shun, Henry and Mr. Cheng Kar-Shing, Peter, and the uncle of Dr. Cheng Chi-Kong, Adrian, Ms. Cheng Chi-Man, Sonia and Mr. Cheng Chi-Heng.

48 New World Development Company Limited

Directors' Profile

Dr. Cheng Chi-Kong, Adrian

JP (Aged 40)

Appointed as an Executive Director in March 2007, became Executive Director and Joint General Manager from March 2012, re-designated as Executive Vice-chairman and Joint General Manager from April 2015, redesignated as Executive Vice-chairman and General Manager from March 2017 and re-designated as Executive Vice-chairman and Chief Executive Officer from May 2020. Dr. Adrian Cheng is a member of the Executive Committee and the chairman of the Sustainability Committee of the Board of Directors of the Company. Dr. Cheng is an executive director of NWS Holdings Limited, New World Department Store China Limited and Chow Tai Fook Jewellery Group Limited, and a non-executive director of Giordano International Limited and New Century Healthcare Holding Co. Limited, all being listed public companies in Hong Kong. Dr. Cheng is also a director and executive chairman of New World China Land Limited, the chairman of New World Group Charity Foundation Limited and a director of certain subsidiaries of the Group. In addition, he is a director of Chow Tai Fook (Holding) Limited and Chow Tai Fook Enterprises Limited, both are substantial shareholders of the Company. He was a non-executive director of i-CABLE Communications Limited, a listed public company in Hong Kong, up to his resignation on 2 July 2019.

Dr. Cheng oversees the strategic direction for the Company's property development and investment activities. He has launched New World's The Artisanal Movement since January 2015, and is currently overseeing the Company's large-scale developments including Victoria Dockside and Skycity. In 2008, Dr. Cheng launched the K11 brand, a museum-retail complex that is at the nexus of art and commerce and has since extended K11's reach across retail, hospitality, offices and non-profit art education through K11 Art Foundation and K11 Craft & Guild Foundation. He also directs early-stage funding to start-ups and technology-driven platforms.

Dr. Cheng is a member of the Tianjin Municipal Committee of The Chinese People's Political Consultative Conference of The People's Republic of China, the chairman of China Young Leaders Foundation and the honorary chairman of K11 Art Foundation. He was the vice-chairman of the 11th and 12th committee of the All-China Youth Federation. He was acknowledged by Fortune as one of "40 Under 40" global business stars and a "Young Global Leader" by the World Economic Forum in 2012. Dr. Cheng is a Justice of Peace appointed by the Government of the Hong Kong Special Administrative Region since 2016 and was made an Officier in the Ordre des Arts et des Lettres by the French Government in 2017. Dr. Cheng holds a Bachelor of Arts Degree (cum laude) from Harvard University, and was conferred the Honorary Doctorate of Humanities by the Savannah College of Art and Design in 2014. Dr. Cheng worked in a major international bank prior to joining the Group in September 2006 and has substantial experience in corporate finance. He is the son of Dr. Cheng Kar-Shun, Henry, the brother of Ms. Cheng Chi-Man, Sonia, the nephew of Mr. Doo Wai-Hoi, William and Mr. Cheng Kar-Shing, Peter, and the cousin of Mr. Cheng Chi-Heng.

Annual Report 2020

49

Directors' Profile

Appointed as a Director in November 1985 and became an Independent Non-executive Director in 1999. Mr. Yeung is a member of the Audit Committee and the Remuneration Committee of the Board of Directors of the Company. He is also an independent non-executive director of Miramar Hotel and Investment Company, Limited, a listed public company in Hong Kong.

Mr. Yeung Ping-Leung, Howard

(Aged 63)

Mr. Cha Mou-Sing, Payson

JP (Aged 78)

Appointed as a Director in April 1989 and became an Independent Non- executive Director in 1999. Mr. Cha is a member of the Audit Committee, the Remuneration Committee and the Sustainability Committee of the Board of Directors of the Company. Mr. Cha is the chairman of HKR International Limited, the non-executive chairman of Hanison Construction Holdings Limited and Million Hope Industries Holdings Limited, all of them are listed public companies in Hong Kong. He is also an independent non- executive director of Eagle Asset Management (CP) Limited - Manager of Champion Real Estate Investment Trust which is listed on The Stock Exchange of Hong Kong Limited, the chairman of Mingly Corporation and an independent non-executive director of Hong Kong International Theme Parks Limited. Mr. Cha is a Justice of Peace in Hong Kong.

50 New World Development Company Limited

Directors' Profile

Mr. Cheng Kar-Shing, Peter

(Aged 67)

Mr. Cha Mou-Zing, Victor

(Alternate Director to

Mr. Cha Mou-Sing, Payson) (Aged 71)

Appointed as a Director in October 1994. Mr. Cheng is also an independent non-executive director of King Fook Holdings Limited, a listed public company in Hong Kong. He is a director of Cheng Yu Tung Family (Holdings) Limited, Cheng Yu Tung Family (Holdings II) Limited, Chow Tai Fook Capital Limited, Chow Tai Fook (Holding) Limited and Chow Tai Fook Enterprises Limited, all of them are substantial shareholders of the Company. Mr. Cheng is a director of New World China Land Limited, New World Hotels (Holdings) Limited, NWS Service Management Limited and certain subsidiaries of the Group. Mr. Cheng is committed to community services and is serving as the chairman of Chow Tai Fook Charity Foundation, the chairman of Chow Tai Fook Medical Foundation Limited, the chairman of Antonia Welfare Fund Limited, the vice-chairman of Hong Kong Economic Exchange and a director of Green Council. He is the University Assembly member of University of Macau. He is a Fellow of The Hong Kong Institution of Engineers, Hong Kong Institute of Arbitrators, Hong Kong Construction Arbitration Centre and The Chartered Institute of Arbitrators. He is a CEDR Accredited Mediator and on the lists of the Mediators of Hong Kong Mediation Accreditation Association Limited, Hong Kong International Arbitration Centre, Hong Kong Mediation Centre and Financial Dispute Resolution Centre. He is on the Panel of Arbitrators of South China International Economic and Trade Arbitration Commission/Shenzhen Court of International Arbitration, an Arbitrator of Huizhou Arbitration Commission, a member of Society of Construction Law Hong Kong and a member of Hong Kong Institute of Mediation. Mr. Cheng is the brother of Dr. Cheng Kar-Shun, Henry, the brother-in-law of Mr. Doo Wai-Hoi, William, the father of Mr. Cheng Chi-Heng, and the uncle of Dr. Cheng Chi-Kong, Adrian and Ms. Cheng Chi-Man, Sonia.

Appointed as an Alternate Director to Mr. Cha Mou-Sing, Payson in September 2000. Mr. Cha is the deputy chairman and managing director of HKR International Limited, a listed public company in Hong Kong. He was an independent non-executive director of SOHO China Limited, a listed public company in Hong Kong, up to his resignation on 17 August 2018. He has extensive experience in the textile manufacturing and real estate businesses.

Annual Report 2020

51

Directors' Profile

Appointed as a Non-executive Director in August 2004 and was redesignated as Independent Non-executive Director in November 2007. Mr. Ho was an Alternate Director of the Company from 7 January 2004 to 29 August 2004. Mr. Ho is the chairman of the Remuneration Committee and a member of the Audit Committee of the Board of Directors of the Company. He is also an independent non-executive director of King Fook Holdings Limited (a listed public company in Hong Kong), and an executive director of Honorway Investments Limited and Tak Hung (Holding) Company Limited.

Mr. Ho Hau-Hay, Hamilton

(Aged 69)

Mr. Lee Luen-Wai, John

BBS, JP (Aged 71)

Appointed as an Independent Non-executive Director in August 2004. Mr. Lee is the chairman of the Audit Committee, and a member of the Remuneration Committee and the Nomination Committee of the Board of Directors of the Company. Mr. Lee is the managing director and chief executive officer of Lippo Limited, an executive director and the chief executive officer of Lippo China Resources Limited and Hongkong Chinese Limited, as well as an independent non-executive director of UMP Healthcare Holdings Limited, all being listed public companies in Hong Kong. Mr. Lee was a non-executivenon-independent chairman of Healthway Medical Corporation Limited, a company listed on the sponsor-supervised listing platform of the Singapore Exchange Securities Trading Limited, up until his retirement on 26 April 2019. Mr. Lee is a Fellow of The Institute of Chartered Accountants in England and Wales, the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants. He was a partner of Price Waterhouse (now PricewaterhouseCoopers) in Hong Kong and has extensive experience in corporate finance and capital markets. Mr. Lee is an Honorary Fellow of the City University of Hong Kong, a Justice of Peace in Hong Kong and was awarded the Bronze Bauhinia Star by the Government of the Hong Kong Special Administrative Region. He serves as a member on a number of Public Boards and Committees including the Chairman of the Investment Committee of the Hospital Authority Provident Fund Scheme, a member of the Public Service Commission and the Chairman of the Hospital Governing Committee of Hong Kong Children's Hospital.

52 New World Development Company Limited

Directors' Profile

Mr. Liang Cheung-Biu, Thomas

(Aged 73)

Ms. Ki Man-Fung, Leonie

GBS, SBS, JP (Aged 73)

Appointed as a Non-executive Director in August 2004 and was redesignated as Independent Non-executive Director in March 2012. Mr. Liang is a member of the Audit Committee and the Nomination Committee of the Board of Directors of the Company. Mr. Liang is an independent non-executive director of Miramar Hotel and Investment Company, Limited (a listed public company in Hong Kong), a director and the group chief executive of Wideland Investors Limited and a member of the Board of Trustees of Wei Lun Foundation Limited. Mr. Liang is a member of the Council of The Chinese University of Hong Kong, a member of the Court of the Hong Kong Baptist University and a member of the Board of Governors, The Hang Seng University of Hong Kong. He has extensive experience in financial management, corporate finance, banking, real estate development and equity investment.

Appointed as a Non-executive Director in December 2008 and was redesignated as Executive Director in March 2012 and re-designated as Non-executive Director in June 2018. Ms. Ki has been the managing director of New World China Enterprises Projects Limited (a subsidiary of the Company) since 1997 and is also a director of certain subsidiaries of the Group. Ms. Ki is an independent non-executive director of Sa Sa International Holdings Limited, a listed public company in Hong Kong. She was an independent non-executive director of Clear Media Limited, a listed public company in Hong Kong, up to her retirement on 7 September 2019. Ms. Ki is also a director of Chow Tai Fook Charity Foundation. Ms. Ki has more than 30 years' experience in integrated communication and marketing services. She was the founder, partner and chairman/ chief executive officer of Grey Hong Kong Advertising Limited and Grey China Advertising Limited. Ms. Ki is committed to the community and public services. She was the first chief executive of The Better Hong Kong Foundation. She is currently a director of PMQ Management Company Limited, founder and honorable president of Wu Zhi Qiao Charitable Foundation, a member of the Asian Advisory Board of Cheng Yu Tung Management Institute, Richard Ivey School of Business (University of Western Ontario, Canada), a member of the Advisory Board of the EMBA Programme of The Chinese University of Hong Kong, the honorary consultant for the School of Hip Hop of Youth Outreach and a member of Hong Kong Institute of Construction Management Board. Ms. Ki is a recipient of Honorary University Fellowship from The Open University of Hong Kong and The University of Hong Kong. She has been awarded the honour of Beta Gamma Sigma by the Faculty of Business Administration of The Chinese University of Hong Kong, and Justice of the Peace, the Silver Bauhinia Star and the Gold Bauhinia Star by the Government of the Hong Kong Special Administrative Region. She was a National Committee Member of the 12th Chinese People's Political Consultative Conference of The People's Republic of China and a member of the 10th, 11th and 12th CPPCC of Yunnan Provincial Committee. She will retire as Non-executive Director on 1 October 2020.

Annual Report 2020

53

Directors' Profile

Mr. Cheng Chi-Heng

(Aged 42)

Ms. Cheng Chi-Man, Sonia

(Aged 39)

Appointed as an Executive Director in June 2010. Mr. Cheng is a member of the Executive Committee of the Board of Directors of the Company. He also acts as director of certain subsidiaries of the Group. Mr. Cheng is an executive director of Chow Tai Fook Jewellery Group Limited, a listed public company in Hong Kong. Mr. Cheng is a director of Chow Tai Fook (Holding) Limited and Chow Tai Fook Enterprises Limited, both are substantial shareholders of the Company. Mr. Cheng worked in Yu Ming Investment Management Limited from 1999 to 2000 as a corporate finance executive. He obtained his Bachelor of Arts Degree majoring in Economics from the University of Western Ontario, Canada in 1999. He is the son of Mr. Cheng Kar-Shing, Peter, the nephew of Dr. Cheng Kar-Shun, Henry and Mr. Doo Wai-Hoi, William, and the cousin of Dr. Cheng Chi-Kong, Adrian and Ms. Cheng Chi-Man, Sonia.

Appointed as an Executive Director in March 2012. Ms. Cheng is a member of the Executive Committee of the Board of Directors of the Company. She currently oversees the hotel division and the project management division of the Group. She is a director of New World China Land Limited and certain subsidiaries of the Group. Ms. Cheng is a non-executive director of Chow Tai Fook Jewellery Group Limited, a listed public company in Hong Kong. Before joining the Group in 2008, Ms. Cheng worked in a major international investment bank and a global US private equity firm specialising in real estate investments. Ms. Cheng holds a Bachelor of Arts Degree with a concentration in Applied Mathematics from Harvard University in the U.S.A.. Ms. Cheng is the chief executive officer of Rosewood Hotel Group and chairman of the advisory committee of the School of Hotel and Tourism Management at The Chinese University of Hong Kong. She is a member of the Y. Elites Association, the Young Presidents' Organization, the Hong Kong United Youth Association and a non-official member of the Family Council and the Advisory Committee on Gifted Education. She is also a member of the Thirteenth Guangzhou Municipal Committee of The Chinese People's Political Consultative Conference of The People's Republic of China. Ms. Cheng is the daughter of Dr. Cheng Kar-Shun, Henry, the sister of Dr. Cheng Chi-Kong, Adrian, the niece of Mr. Doo Wai-Hoi, William and Mr. Cheng Kar-Shing, Peter, and the cousin of Mr. Cheng Chi-Heng.

54 New World Development Company Limited

Directors' Profile

Mr. Sitt Nam-Hoi

(Aged 66)

Mr. Ip Yuk-Keung, Albert

(Aged 68)

Appointed as an Executive Director in June 2018. Mr. Sitt is a member of the Executive Committee and the Sustainability Committee of the Board of Directors of the Company. Mr. Sitt joined the Group and was appointed as Head of Projects (Hong Kong) of the Company in February 2011. He is currently the senior director of the Project Management Department of the Company, director and chief design officer of New World China Land Limited and director of certain subsidiaries of the Group. Before joining the Company, he was the project director of a listed public company in Hong Kong which he worked for over 25 years. Before that, Mr. Sitt had been working in Buildings Department of the Government of the Hong Kong Special Administrative Region. Mr. Sitt obtained his Bachelor of Architecture and Bachelor of Arts in Architectural Studies from the University of Hong Kong. He is a Registered Architect, an Authorised Person and is responsible for overseeing all project management matters for all property development projects of the Group in Hong Kong. He has extensive project management experience and participated in various significant projects in Hong Kong and mainland China.

Appointed as an Independent Non-executive Director in June 2018. Mr. Ip is a member of the Audit Committee, the Nomination Committee and the Sustainability Committee of the Board of Directors of the Company. Mr. Ip is an independent non-executive director of Power Assets Holdings Limited, Lifestyle International Holdings Limited and Hutchison Telecommunications Hong Kong Holdings Limited, all being listed public companies in Hong Kong. He is also a non-executive director of Eagle Asset Management (CP) Limited, as manager of Champion Real Estate Investment Trust (a listed real estate investment trust). He was the executive director and chief executive officer of LHIL Manager Limited which is the trustee-manager of Langham Hospitality Investments (a listed fixed single investment trust) and Langham Hospitality Investments Limited until his resignation on 1 April 2019. In addition, he was an independent non-executive director of Shenzhen Investment Holdings Bay Area Development Company Limited (a listed public company in Hong Kong), Hopewell Holdings Limited (a listed public company in Hong Kong until its delisting on 3 May 2019) and TOM Group Limited (a listed public company in Hong Kong) up to his resignation in May 2018, May 2019 and August 2020 respectively. Mr. Ip is an international banking and real estate executive with 33 years of experience at Citigroup, First National Bank of Chicago, Wells Fargo and Merrill Lynch in Hong Kong, Asia and the United States. His areas of expertise are in real estate, corporate banking, risk management, transaction banking and wealth management. Mr. Ip is an Adjunct Professor of City University of Hong Kong, The Hong Kong University of Science and Technology, The Hang Seng University of Hong Kong and the School of Hotel and Tourism Management at The Chinese University of Hong Kong, an Adjunct Distinguished Professor in Practice of University of Macau, a Council Member of The Hong Kong University of Science and Technology, Honorary Advisor of School of Humanities and Social Science at The Hong Kong University of Science and Technology, a trustee of the Board of Trustees at Washington University in St. Louis, and a Vice Chairman of the Board of Governors of World Green Organisation. Mr. Ip holds a Bachelor of Science degree at Washington University in St. Louis (summa cum laude) and Master of Science degrees at Cornell University and Carnegie-Mellon University. He is an Honorary Fellow of Vocational Training Council.

Annual Report 2020

55

Directors' Profile

Ms. Huang Shaomei, Echo

(Aged 51)

Ms. Chiu Wai-Han, Jenny

(Aged 49)

Appointed as an Executive Director in May 2020. Ms. Huang is a member of the Executive Committee of the Board of Directors of the Company. She joined the Group as the deputy chief executive officer of New World China Land Limited in October 2015 and promoted to Director & Chief Executive Officer of New World China Land Limited in February 2020. Ms. Huang is also a director of certain subsidiaries of the Group. She has over 20 years of experience in the real estate sector, having served in a consulting capacity for large-scale urban infrastructures, urban planning and urban renewal in mainland China for extensive periods, providing the Government of The People's Republic of China with professional recommendations on property development and urban planning. Prior to joining the Group, Ms. Huang held senior position with an international consulting firm. She was appointed as managing director (Southern China) of a Hong Kong-listed property developer, overseeing its property development throughout the southern China region. She has proven experience in China's real estate sector. Ms. Huang is a member of Guangdong Province Committee of the Chinese People's Political Consultative Conference of The People's Republic of China, and a Deputy Secretary-General of Silk Road Chamber of International Commerce.

Appointed as an Executive Director in May 2020. Ms. Chiu is a member of the Executive Committee of the Board of Directors of the Company. She joined the Group in 2004 and is currently the Senior Director - Human Resources of the Company. Ms. Chiu is responsible for planning and driving full spectrum of strategic human resources direction, including talent acquisition, talent development and management, reward management and human resources partnering services. Prior to joining the Group, she had taken up managerial role in renowned corporations in information and communications technology services and property development industries. Ms. Chiu was graduated from The Chinese University of Hong Kong. She is an Associate Member of The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute. Ms. Chiu possesses over 20 years of experience in human resources and corporate management.

56 New World Development Company Limited

Senior Management Profile

Mr. Wong Man-Hoi

BSc(Eng)(Hon), LLB(Hon) (Aged 61)

Ms. Lo Pui-Ying

(Aged 70)

Appointed as the Company Secretary of the Company in January 2011. Mr. Wong joined the Company in November 2000 and has headed the Legal Department (now Legal and Company Secretarial Department) since November 2001. He is currently the Senior Director - Legal of the Company. Mr. Wong is a member of the Law Society of Hong Kong and has been a qualified solicitor in Hong Kong since 1994. Before joining the Company, Mr. Wong worked as a solicitor specialising in real estate practice. Mr. Wong obtained his Bachelor of Science (Engineering) Degree from the University of Hong Kong in 1981 and Bachelor of Laws Degree from the University of London in 1990.

Ms. Lo is currently the Owners' Representative-Hotel Division of the Company. Ms. Lo has been in the hotel industry since 1969 and held various positions in the Hyatt Regency and Excelsior hotels before joining the Group in 1978. Ms. Lo acted as the financial controller of the New World Hotel in Kowloon for three years before joining New World Harbour View Hotel (later renamed Renaissance Harbour View Hotel) in 1988 as Director of Finance. She also held a group controller position for New World Hotels International Limited (a former hotel management company of the Company) until 1997 when the position ceased to exist. Ms. Lo joined Foreign Holiday Philippines, Inc. and Marina Square Properties, Inc. in 2003 and 2005, respectively, as group financial controller, treasurer and co-leader of the pre-opening and operation team for a hotel and casino property investment in the Philippines. She rejoined the Company in 2007. Ms. Lo has previously been certified as a Certified Hotel Administrator (CHA) in the American Hotel and Motel Association (AHMA) from November 1990 to October 2000. She has also previously acted as a Fellow and Founder Member of the Hotel Controllers & Accountants Association (Hong Kong) founded in 1991. She has served respectively a member of Management Committee and Executive Committee of The Federation of Hong Kong Hotel Owners in 2012 and 2014 till now.

Note: The above members of the senior management are senior functional directors of the Company. Various businesses and corporate functions of the Group are under the responsibility of other heads of business units and functional departments.

Annual Report 2020

57

Corporate Sustainability

About This Section

REPORTING PERIOD

This section provides an overview of the Group's Environmental, Social and Governance ("ESG") performance during the reporting period of 1 July 2019 to 30 June 2020 and, where specified, the latest initiatives after FY2020 as well.

REPORTING SCOPE

Our "Sustainability Reporting Scope" includes NWD's businesses over which the Group has majority financial ownership and operational control. This coverage includes our businesses under NWD, NWCL and K11 Group Limited, as well as individually listed subsidiaries NWSH1 and NWDS1, which have more comprehensive sustainability disclosures in their respective reports. FTLife Insurance is newly added to the Sustainability Reporting Scope during the reporting period.

New World Sustainability Vision 2030 ("SV2030") targets cover the majority of the "Sustainability Reporting Scope". "SV2030 Green Targets Scope" focuses primarily on the major businesses with mature performance data and over which we can exert operational influence for developing environmental impact reduction roadmaps. Wellness and caring targets have a broader group focus to ensure our businesses create shared value for all stakeholders.

SUSTAINABILITY WEBSITE

In the past, NWD published a standalone sustainability report on the Company's website annually. Starting from FY2020, we will no longer issue an online sustainability report in order to focus on impact reporting in this annual report section. Supplementary information is available on the Company's website under the sustainability section (https://sustainability.nwd.com.hk/).

1 Please refer to these companies' sustainability reports for their scoping definition.

ESG REPORTING STANDARDS

This section references the following ESG standards and frameworks:

  • Environmental, Social and Governance Reporting Guide (ESG Reporting Guide) set out in Appendix 27 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ("HKEx")
  • Global Reporting Initiative Sustainability Reporting Standards ("GRI Standards") - Core Option
  • Recommendations of the Task Force on Climate-related Financial Disclosures ("TCFD")
  • The Ten Principles of the United Nations Global Compact ("UNGC")

REPORT ASSURANCE

Data and information contained in this section as well as the environmental and social performance data on our website have been independently assured by the Hong Kong Quality Assurance Agency ("HKQAA") in accordance with the ISAE 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and the ISAE 3410, Assurance Engagements on Greenhouse Gas Statements issued by the International Auditing and Assurance Standards Board to ensure accuracy and credibility. Additionally, HKQAA has conducted an independent verification of the Greenhouse Gas emissions inventory for our commercial and retail properties with reference to ISO 14064-1:2006. Please refer to p.96-97 for the independent assurance statement.

CONTACT US

We welcome your feedback on this Corporate Sustainability section and other sustainability related matters. Please contact us at sustainability@nwd.com.hk.

58

New World Development Company Limited

Corporate Sustainability

Message From Management

In FY2020, the global community saw unprecedented challenges from the COVID-19, signs of an economic downturn, and a climate emergency. While their full impact is yet to be captured, corporates must naturally evolve from "business as usual" and adapt to the new normal.

It has always been New World Group's goal to contribute to society through the power of business. Today, more than ever, we are committed to building sustainable communities through our business ecosystem, for all stakeholders. These communities and, in fact, our businesses are built for the people, by the people. Integrating ESG into our businesses via SV2030 in the past few years has enabled us to stay aligned to our Group and the world's priorities and be accountable to all stakeholders. At our Group's 50th anniversary this year, our commitment to Creating Shared Value ("CSV") for all stakeholders is particularly relevant as we define our way forward.

Climate emergency is a business risk. To better position ourselves, we are taking systematic actions to eventually decarbonise our portfolio towards required level of science- based targets ("SBT"), as well as managing and disclosing our climate risks according to the TCFD's recommendations. As a responsible business, we are also inviting tenants and business partners to take part in this decarbonisation journey to reduce our environmental impact together. Key performance indicators ("KPIs") under the SV2030 pillars of Green, Wellness and Caring have also been established for our leadership team and employees to ensure the Group is acting towards these common goals. As Hong Kong's first real estate developer to have joined the World Business Council for Sustainable Development ("WBCSD") and a new signatory of the UNGC, we will leverage global insights and partnerships to realise sustainable cities and communities and improve the overall well-being of our stakeholders.

It is also our hope to foster a diverse and inclusive community culture. Last year, we announced that we would donate farmland for developing an innovative social project that would alleviate housing problems in Hong Kong. More

recently, we have appointed two female executives as board members and are introducing workplace initiatives to encourage a more gender-diverse and fair environment.

During the COVID-19 outbreak, our Group demonstrated resilience, unity and love for the world, and the will to innovate, through swift responses such as becoming the first blue-chip in Hong Kong to set up a relief fund, procuring protective masks and sanitising supplies for our employees, partners and tenants, as well as donating funds and emergency supplies to the epicentres around the world. To create shared value with stakeholders in need, we also repurposed our Hong Kong facilities and began to manufacture masks for different communities. These Made-in-Hong Kong masks were then distributed through smart-technology dispensers to those in need via Non-Governmental Organisations ("NGO") partners. To minimise business disruptions, digitalisation of our internal work processes and sales channels has become the new norm. These initiatives were made possible by our dedicated teams and growing network of ecosystem partners. The global pandemic offers us a window to learn, innovate, collaborate and grow together. I would like to take this opportunity, to thank my team for their dedication to excellence, innovation and unity during these challenging times.

Stepping into a new year with unknown challenges, our team remains hopeful - when others see crisis, we see opportunity. By adopting a growth mindset, connecting with all stakeholders and aligning to our long-term sustainability vision and other Group priorities, we are confident that our commitment to CSV, together with striving for best practice in ESG, will allow our Group to stay ahead and thrive for many more decades.

Dr. Cheng Chi-Kong, Adrian

Executive Vice-chairman and Chief Executive Officer

Chairperson, Sustainability Committee and

Group Sustainability Steering Committee

Annual Report 2020

59

Corporate Sustainability

Overview of SV2030

GREEN - Moving us towards a greener future

SDG 11.6 Reduce adverse environmental impact of cities

NewWorld Group - Halve our environmental impact in energy and carbon emissions intensity

(against baseline year FY20151)

FY2020:

17%

Energy intensity

22%

Carbon emissions intensity

(MWh/million HK$ revenue)1

(tCO2e/million HK$ revenue)1

SDG 11.6

SDG 11.6

(FY2030 target:

50%)

(FY2030 target:

50%)

NewWorld Construction (against baseline year FY20152)

FY2020:

Waste-to-landfill intensity

Water intensity

46%

(tonnes/million HK$ revenue)2

9%

(m3/million HK$ revenue)2

SDG 11.6

SDG 11.6

(FY2030 target:

15%)

(FY2030 target:

25%)

Green Buildings SDG 11.6

  • 27 BEAM Plus building certificates3, with 20 of those achieving Very Good/Gold or above4
  • 17 LEED building certificates5 achieved Gold or above
  • 3 China Green Building Evaluation Labels ("Two-Star" or above)6
  • 2 SITES certificates at Gold level

WELLNESS - Promoting health in body and mind

SDG 3.4 Promote physical / mental health and well-being

SDG 3.9 Promote healthy built environments which reduce hazardous chemicals and pollution

Improved the well-being of

Lost-time injury rate (LTIR)8

10 million stakeholders7

1.7 per 100 employees

SDG 3.4

SDG 3.4

(FY2030 target: 20 million)

(FY2030 target: maintain at/below 3.0)

Occupational Health & Safety training

WELL Buildings:

37,309 hours

8 building certificates9, with 7 of

SDG 3.4

those achieving Gold or above

SDG 3.4, 3.9

CARING - Creating shared value for our communities and culture

SDG 4.4 Upskill individuals for employment, decent jobs and entrepreneurship

SDG 4.7 Promote education on sustainable development, sustainable lifestyles and global citizenship SDG 11.3 Enhance inclusive and sustainable urbanisation

SDG 11.4 Protect cultural and natural heritage

Enhanced the quality of life of 107 million stakeholders7

SDG 11.3, 11.4

(FY2030 target: 300 million)

Provided >190,000

Average 18.9 training hours

volunteering hours7

per employee SDG 4.4

SDG 4.4

(FY2030 target:

Sustainability-related training

>340,000 hours)

12,399 hours SDG 4.7

SMART - Using innovation to unlock potential

SDG 17.16 Enhance global and multi-stakeholder partnerships to support the SDGs through knowledge, technology and resource sharing

138 active patents10

  1. Covers the SV2030 Green Targets Scope. NWSH and NWDS also disclose their environmental targets in their annual sustainability report. Using revenue as the intensity metrics was due to the diverse business nature of the Group's portfolio and that revenue is the common thread that can be adopted across sectors.
  2. Covers New World Construction Company Limited only.
  3. Counting the number of Provisional Assessment and Final Assessment certificates for both New Buildings and Existing Buildings as at 30 June 2020.
  4. This number was adjusted due to inadvertent clerical errors in our Sustainability Report 2019 regarding the BEAM Plus certification levels of Victoria Dockside properties namely, K11 ATELIER, K11 MUSEA and K11 ARTUS - all should be Provisional Silver rating under BEAM Plus New Buildings V1.1 as at 30 June

5

2019. A clarification announcement has been posted on

HKEx website.

Counting both pre-certified and certified projects as at 30

June 2020. This number excludes expired pre-certificates.

  1. This number excludes expired labels as at 30 June 2020.
  2. Cumulative number from baseline year FY2015 to FY2020 covering the Sustainability Reporting Scope.
  3. Lost-timeinjury rate represents the number of injuries per 100 employees per year.
  4. Counting both pre-certified and certified projects as at 30 June 2020.
  5. Counting the number of active patents granted since FY2015 and held by New World Group under the Sustainability Reporting Scope as at 30 June 2020, excluding design registrations/patents.

60

New World Development Company Limited

Corporate Sustainability

FY2020 Major Achievements & ESG Highlights

NWD Became a Signatory of:

NWD is the First Real Estate Company in Hong Kong to join

Major Recognitions from Sustainability Benchmarks and Indices

1st listed on Dow Jones Sustainability

Asia Pacific Index in 2019

Sustainalytics

Rated as an ESG "Outperformer"

in 2018 and 2019

Ranked 1st among 12 diversified listed

Member since 2014-2015

businesses in Eastern Asia in 2019

A constituent of MSCI HK-Listed

A constituent of the

Southbound Country ESG Leaders Index1

FTSE4Good Index Series

ESG HIGHLIGHTS

NWD • Established sustainability KPIs for senior executives and employees in 2020

  • Appointed two new female executive directors to join the Board and empower women leadership and gender diversity in May 2020
  • First Hong Kong blue-chip to set up a pandemic relief fund of HK$10 million to support local communities and offer over 11 million masks donations as of FY2020 through #LoveWithoutBorders
  • Impact Kommons, Hong Kong's 1st startup accelerator focused on the United Nations Sustainable Development Goals ("UN SDGs") admitted five startups out of over 50 international applicants and secured seven ongoing/successful integrations within the New World Ecosystem
  • Raised a five-year HK$1 billion sustainability-linked loan, 1st in Asia to link with GRESB performance in November 2019

NWSH • Announced its 1st sustainability-linked loan of HK$1 billion in June 2020

K11 • Launched Nature Discovery Park - Hong Kong's 1st urban biodiversity museum and sustainability-themed education park at K11 MUSEA, with over 26,000 visitors since its opening in late 2019

  • Launched nation-wide community caring effort, Love Power, to provide customers with telehealth support, mental well-being activities, as well as access to healthcare supplies, resulting in over RMB5 million and 200,000 masks donated and over 200,000 customers engaged

NWCL • Published its 1st green property management guide for residential properties to enhance environmental management

  • Held a series of climate change workshops for about 200 employees across different regions in Mainland China from July to October 2019

1 THE INCLUSION OF NEW WORLD DEVELOPMENT COMPANY LIMITED IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF NEW WORLD DEVELOPMENT COMPANY LIMITED BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Annual Report 2020

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Corporate Sustainability

Corporate Sustainability | New World Ecosystem & Sustainable Property Lifecycle

New World Ecosystem & Sustainable Property Lifecycle

New World Group elevates the modern living culture through building a holistic ecosystem of sustainable communities, infrastructure, services and lifestyle-related businesses that enrich the lives of our stakeholders.

Insurance

Healthcare & Wellness

Properties

Art & Cultural

Aviation

Construction

Oces

Residential

Education

Retail

Hotels

Facilities Management

Roads

Sustainable Property Lifecycle

The Group is taking steps to standardise sustainable practices during different stages of property development, with an aim to deliver impact and customer experience based on the SV2030 pillars of Green, Wellness, Smart and Caring.

DESIGN & BUILD

ENGAGE

To create shared value with all shareholders and enrich our businesses, we actively engage tenants, customers and other stakeholders to promote and support the adoption of sustainable practices within the communities we serve.

STAGE 4

The Group's policies outline its sustainable

STAGE 1

building certification commitments (e.g. BEAM

Plus, LEED, WELL, etc.) for new and existing

projects, as well as approaches to manage

climate risks and other environmental and social

impacts along the supply chain.

OPERATE

SUSTAINABLE FINANCING

We strive to reduce our adverse environmental

and social impacts during the operation stage

of our managed properties through continuous

Through different kinds of sustainable financing instruments in

resource efficiency enhancements and measures

line with international frameworks and standards, we drive capital

STAGE 3

to improve health and well-being of our building

towards impactful projects such as green and healthy buildings

users.

and other sustainable projects in our ecosystem businesses.

STAGE 2

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New World Development Company Limited

Annual Report 2020

63

Corporate Sustainability

Sustainable Finance

Sustainable finance is a core part of our approach to integrating sustainability considerations into our business and property lifecycle. Through a broad application of sustainable finance including sustainability-linked instruments, we support projects that deliver both environmental and social impacts. These impacts are monitored and reported regularly with the help of integrating ESG and standardising sustainability into corporate policies and procedures. Further details and updates are available on the Sustainable Finance section on our sustainability website.

Sustainability-linked Loan

NWD raised a five-yearsustainability-linked loan of HK$1 billion in November 2019, with interest rate discount linked to the annual achievement of environmental impact reduction targets (refer to the table below) and GRESB performance indicators.

NWD'S ENVIRONMENTAL IMPACT REDUCTION PERFORMANCE

Baseline

Performance

FY2020

% change against

(FY2018)

Performance

the baseline

Greenhouse gas (GHG) emissions1

0.06

-33%

0.09

(tonnes CO2e/sq m)

Energy consumption1 (MWh/sq m)

0.14

0.10

-29%

Water consumption1 (m3/sq m)

0.90

0.83

-8%

Waste from New World Construction Company

2.56

1.09

-57%

Limited ("NWCON") in Hong Kong

(tonnes/million HK$ revenue)

NWSH also announced its first sustainability-linked loan2 of HK$1 billion in June 2020 to support its ongoing ESG integration.

Green Bond

Under the New World Development Green Finance Framework (September 2018), NWCL issued a US$310 million green bond in December 2018 at a coupon rate of 4.75% due 2023. In FY2020, the bond received the Green Finance Certificate (Post-issuance Stage) from the HKQAA.

ALLOCATION OF GREEN BOND PROCEEDS

Category

Projects

Proceeds Allocated

Green Buildings

NEW WORLD ZENGCHENG

US$206.4 million

(67%)

COMPREHENSIVE

DEVELOPMENT PROJECT3

Green Buildings

QIANHAI CTF FINANCE TOWER3

US$101.7 million

(33%)

Total Allocated Proceeds

US$308.1 million

(100%)

Total Net Proceeds4

US$308.1 million

(100%)

NEW WORLD ZENGCHENG COMPREHENSIVE DEVELOPMENT PROJECT3

Project

Location

Guangzhou, China

GFA

284,328 sq m

Nature

Office, retail, serviced apartments and hotel

Funding Transaction

Aggregated amount of proceeds earmarked:

US$194.2 million

Remaining balance:

US$12.2 million

Certifications

• China Green Building Evaluation Standard - Certificate of Green Building Design Label

"Two-Star" obtained for the whole project in December 2019

• LEED® for Building Design and Construction: Core and Shell Development

precertification Gold - Commercial portion (two office towers including retail, hotel and

serviced apartments) obtained in November 2018

Energy Performance

Estimated annual energy savings exceeding LEED baseline performance5 by 12% or more

Water Efficiency and

Estimated annual potable water savings exceeding LEED baseline performance by over

Savings

40%

  1. GHG emissions, energy and water consumption cover NWD's existing buildings. New buildings will be counted within the target scope after two years of operation.
  2. For further information, visit https://sr.nws.com.hk/pdf/en/NWS%20sustainability%20linked%20loan.Eng.pdf
  3. The project names are subject to finalisation before official opening.
  4. Total net proceeds received are US$308.1 million out of the US$310 million green bond.
  5. Using ASHRAE 90.1-2010 as baseline (LEED v4 Building Design and Construction: Core and Shell Development).

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Corporate Sustainability | Sustainable Finance

Project

QIANHAI CTF FINANCE TOWER1

Location

Shenzhen, China

GFA

176,300 sq m

Nature

Office and retail

Funding Transaction

Aggregated amount of proceeds earmarked:

US$96.0 million

Remaining balance:

US$5.7 million

Certifications

• China Green Building Evaluation Standard - Certificate of Green Building Design Label

"Three-Star" obtained for the whole project in June 2020

• LEED® for Building Design and Construction: Core and Shell Development

precertification Gold - South Tower and North Tower plus Retail Podium obtained in

October 2018

• WELL PrecertifiedTM Gold - North Tower plus Retail Podium obtained in November

2018

Energy Performance

Estimated annual energy savings exceeding LEED baseline performance2 by 18% or more

Water Efficiency and

Estimated annual potable water savings exceeding LEED baseline performance by over 45%

Savings

Green Loan

Terms for NWD's first green loan for K11 ATELIER King's Road dated March 2018 were renegotiated in December 2019, resulting in an increased loan size from HK$3.6 billion to HK$5.0 billion due 2024. Under the New World Development Green Finance Framework (September 2018), a second three-year green loan was also obtained in May 2020 to support new green building projects.

ALLOCATION OF NWD'S GREEN LOAN (2018)

Category

Projects

Amount

Green Buildings

K11 ATELIER KING'S ROAD

HK$2.5 billion3

Total Drawdown Amount

HK$2.5 billion

Loan Facility

HK$5.0 billion

K11 ATELIER KING'S ROAD

Project

Location

Hong Kong

GFA

487,504 sq ft

Nature

Office

Certifications

• BEAM Plus New Buildings V1.2 Provisional Platinum obtained in September 2016

• LEED Platinum® obtained in August 2019

• WELL CertifiedTM Platinum obtained in December 2019

ALLOCATION OF NWD'S GREEN LOAN (2020)

Category

Projects

Amount

Green Buildings

CHEUNG SHUN STREET, CHEUNG SHA WAN1

HK$500 million3

Total Drawdown Amount

HK$500 million

Loan Facility

HK$500 million

CHEUNG SHUN STREET, CHEUNG SHA WAN1

Project

Location

Hong Kong

GFA

529,185 sq ft

Nature

Office

Certification

• BEAM Plus New Buildings V1.2 Provisional Gold obtained in February 2019

• LEED® for Building Design and Construction: Core and Shell Development

precertification Gold obtained in January 2019

• WELL PrecertifiedTM Platinum obtained in April 2019

  1. The project names are subject to finalisation before official opening.
  2. Using ASHRAE 90.1-2007 as baseline (LEED v2009 Building Design and Construction: Core and Shell Development).
  3. Figure represents amount utilised in specified project.

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65

Corporate Sustainability

Response to COVID-19

While long-term business strategy is the backbone of the sustainable growth of every corporation, so much of the ESG advancement also depends on its commitment to responding quickly to new challenges and pivoting for the good of the society.

At the end of January 2020, when the COVID-19 outbreak triggered a severe shortage of medical supplies, NWD - understanding the importance of CSV, and committed to giving back - set up a HK$10 million anti-epidemic fund to support our overseas partners, the underprivileged in Hong Kong, and our employees across the Group. Since the outbreak, a total of RMB50 million has been donated to those in need in Hong Kong and to the healthcare sector in Mainland China.

  1. task force, led by Executive Vice-chairman and CEO Adrian Cheng, was also formed overnight to devise creative business solutions to battle the pandemic. Its first initiative was the launch of the #LoveWithoutBorders campaign, a shared support platform that aims to bring love to the needy and share resources with local communities amidst the pandemic.

Through #LoveWithoutBorders, NWD adapted quickly and set up multiple local face mask production lines to produce over 200,000 Made-in-Hong Kong adult and kid face masks per day. In May 2020, the first batches were distributed in Hong Kong for free via our innovative "Mask To Go" dispensers. Debuting these automated dispensers meant that low-income families could for the first time gain easy, safe and stable access to the much-needed face masks through a simple scan-and-collect design over a period of 20 weeks. With the help of our NGO partners such as Society for Community Organisation, St. James' Settlement, and The Salvation Army, our face masks have reached over 40,000 beneficiaries across 18 districts, adding colours and positive energy to the lives of those in need.

At the height of Hong Kong's second wave of COVID-19, NWD through #LoveWithoutBorders also made available its Pentahotel Hong Kong, Kowloon to medical staff in public hospitals. Free accommodation for professionals, including doctors, nurses and other health-care workers, was opened up as a salute to the unsung heroes.

Another important milestone of #LoveWithoutBorders was a worldwide donation of our face masks. As the pandemic continued to affect people's livelihood globally, our steady supply of self-made face masks was proved a timely innovation to help alleviate the chronic shortage of medical supplies. An expedited shipment of over two million face masks to UNICEF and countries including France, Italy, South Korea and the United Kingdom was quickly made. By June 2020, through #LoveWithoutBorders and together with over 100 NGOs in Hong Kong and abroad, we have distributed over 11 million masks to our employees and those in need. We plan to continue with our benevolent efforts until we have seen this through together.

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Corporate Sustainability | Response to COVID-19

Having made these face masks available to the general public in Hong Kong, we also initiated a "You Buy a Box, We Donate a Box" campaign in August 2020 to make positive social progress with every purchase.

It is our long-term vision to use the power of business to give back to the society. In these unprecedented times, this vision has become all the more important and is the guiding star of our work. We must support each other and share resources whenever and in whichever way we are able to, because acts of benevolence not only benefit businesses, but the overall well-being of our community. It is therefore of utmost importance to give every stakeholder the same degree of attention as our shareholders, which we believe is at the core of CSV. In CSV and eliminating boundaries to resources, we at NWD look forward to creating a better community for the society and the long-term growth of our business for many more generations to come.

#LoveWithoutBorders embodies our vision of using the power of business to give back to society. It has led us to set up our own mask production lines, to invent the first "Mask To Go" dispensers and smart redemption card system in Hong Kong, and to collaborate with non-profit organisations in finding an easy and convenient way of distributing face masks to low-income families for free.

  • Dr. Adrian Cheng, Executive Vice-chairman and Chief Executive Officer

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67

Corporate Sustainability

Sustainability Governance

We believe the integration of sustainability principles and considerations into our governance framework is critical to our long-term success. ESG risks and their impact to the Group and its stakeholders are managed by policies and procedures, with regular performance monitoring, training and disclosures to ensure a high level of accountability.

Strengthening Governance of

Sustainability Issues

While the organisational structure of sustainability management from board to operational levels remains unchanged compared to last year's (see the chart below and details on our sustainability website), we have reinforced SV2030 as a Group-wide exercise and strengthened our accountability by establishing relevant KPIs for our CEO, business units ("BUs") and NWD departments and their teams. We believe this will motivate our employees to take concerted efforts towards our SV2030 targets and also bring our Group closer to linking the remuneration of top management to sustainability performance. Empowered by our Sustainability Committee and Group Sustainability Steering Committee, regular training and support in action plan development and budgeting are provided to all parts of the Group.

Given the climate emergency and our Group's responsibilities to mitigate climate impacts in our operations, the Board of Directors has endorsed our ongoing assessment and disclosure of climate risks as per TCFD recommendations. The Board will also be updated regularly on the latest climate risks and opportunities, so as to provide guidance and support to our teams.

MATERIAL TOPICS

  • Bribery and Corruption
  • Corporate Governance

Multiple Channels for Flagging Different ESG Risks

While our Group Risk Management Framework, which requires NWD departments and other major BUs to assess risk levels for a final review by the Audit Committee still applies, there are short and medium term ESG risks that demand more prompt flagging and responses. As such, we have launched a mobile-friendly "Issue Alert System", which categorises an incident's risk level based on user's input and immediately alerts relevant departments and management by real-time notification and email to take actions. Risk-flagging training sessions are held regularly to increase all employees' awareness and sensitivity to risk management. These measures have allowed us to address and mitigate reputational risks, health and safety impacts and provide better customer service. Issues logged by the alert system are compiled and assessed for management and board reporting.

To help employees better understand ESG risks, new and existing employees are assigned to take mandatory e-learning modules on the Group's ESG policies including those related to bribery and corruption, health and safety, whistleblowing and sustainable procurement. All employees are required to pass the corresponding policy quizzes to ensure effective implementation.

For further information on our risk management framework, please refer to p.110-115.

BOARD OF DIRECTORS

Audit Committee

Sustainability Committee

Risk Management &

Sustainability Governance

Internal Control

& ESG Risk Management

Group Risk Management

Group Sustainability

Committee

Steering Committee

Group Audit and Management

Group Sustainability

Services Department

Department

NWD Departments &

Group Sustainability

Heads of Business Units

Task Force

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New World Development Company Limited

Corporate Sustainability | Sustainability Governance

Proactive Engagement For Deeper Stakeholder Relationships

Understanding our stakeholders' needs and concerns improves our business resilience and helps us stay relevant. We proactively seek stakeholders' feedback on how well we integrate SV2030 into our sustainability initiatives with the objective of CSV.

Stakeholder Groups

Ways We Engage

Employees

Surveys, interviews and focus groups

• Intranet, employees' mobile apps and e-newsletters

• Training activities and talent development programmes

• Employees' competitions and team-building activities

• Town hall meetings and forums

• Task forces and committees

• SV2030 action plan development and implementation facilitation

• Volunteering in the community

• Early risk flagging mechanism and semi-annually key risk reporting mechanism

Whistleblowing system

Tenants

Sustainable Tenancy Pledge (guidance on fitting-out,energy-saving, waste reduction and

employee/customer engagement)

Surveys and interviews

• Meetings, seminars and visits

• Tenant mobile apps such as WorkPro (NWCL), K11 ATELIER (within K11 app) and

Nework (within Artisanal Living app)

Customers

Surveys and customer service hotlines

• Company events and visits

• Club memberships such as New World CLUB, NWCL Club, KLUB 11 and Donut Kids Club

• Customer mobile apps such as Artisanal Living and K11 app

Social media

Corporate websites

Local

Corporate websites

Communities

Public/community events

• Community initiatives such as New World Springboard Programme

Volunteering

Supply Chain

Tendering and procurement processes

Partners

Training and briefings

• Audits and performance review

Surveys and meetings

Shareholders and

Annual General Meetings and results announcements

Investors

Annual and interim reports

Corporate websites

• Roadshows and investor meetings

Regular newsletters

• ESG awards and ratings

Media

Surveys

• Media interviews and releases

• Company events and visits

• Feedback and responses to media enquiries

Academic and

Technical site visits

Professional Institutions

Membership

• Regular meetings and dialogues

• Conference presentations and participation

Non-governmental

Joint projects

Organisations

Surveys

• Regular meetings and dialogues

• Company events and visits

Government and

Responses to public consultations via professional institutions

Regulators

Regular meetings and dialogues

Peer Companies

Surveys

• Company events and visits

• Exchange in professional institutions

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Corporate Sustainability | Sustainability Governance

Finding Strategic Focus Among Priority ESG Issues

We conducted a stakeholder engagement and materiality assessment in FY2020 to identify our latest ESG priorities among 20 broad issues which are also addressed by our industry peers. Approximately 540 responses to our online surveys from both internal and external stakeholders in Hong Kong and Mainland China were assessed by our third-party consultant. Ten in-depth interviews were also conducted by the consultant with our global partner organisations and contractors and suppliers to gain further insights into their expectations for our performance, as well as our potential opportunities and barriers to drive ESG from their perspectives.

The findings of the assessment are communicated internally with the Sustainability Committee, senior management and Group Sustainability Steering Committee to inform our regular strategy review. The top three material issues to internal and external stakeholders, namely bribery and corruption, corporate governance and occupational health and safety, are consistent with FY2019 results. The rankings are outlined in the table below.

Material Topics

How We Address

Boundary

(1 being the most important)

Inside the Group

Outside the Group

1.

Bribery and Corruption

Sustainability Governance p.68-71

Influencing the Supply Chain p.85

2.

Corporate Governance

Sustainability Governance p.68-71

Empowering Our People p.84

3.

Occupational Health and Safety

Empowering our People p.83

Influencing the Supply Chain p.85

4.

Talent Management

Empowering our People p.81

5.

Innovation

Safeguarding the Environment p.75-77, 79

Empowering our People p.81

Caring for the Customers p.86

Fostering Sustainable Communities p.88-89

6.

Financial Performance

Financial Highlights p.25

7.

Customer Wellness, Health and Safety

Caring for the Customers p.86-87

8.

Employee Wellness and Engagement

Empowering our People p.82-83

9.

Energy and Carbon Management

Safeguarding the Environment p.75-77

Influencing the Supply Chain p.85

Caring for the Customers p.87

10.Responsible Supply Chain Management

Influencing the Supply Chain p.85

11.Human Rights and Grievance Mechanisms

Empowering our People p.84

12.Community Development and Engagement

Fostering Sustainable Communities p.88-89

13.Customer and Tenant Engagement

Caring for the Customers p.86-87

14.Waste Disposal and Recycling

Safeguarding the Environment p.79

Caring for the Customers p.87

15.Use of Materials and Biodiversity

Safeguarding the Environment p.80

16.Diversity and Equal Opportunities

Empowering our People p.84

17.Adaptability to Climate Change Impacts (Emerging Topic)

Safeguarding the Environment p.75-78

18.Community Wellness (Emerging Topic)

Fostering Sustainable Communities p.88

19.Ageing Population

Caring for the Customers p.86

20.Water Consumption (Emerging Topic)

Safeguarding the Environment p.78

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MATERIALITY MATRIX

Top Priorities

Importance to stakeholders #

Moderately

Important

Highly Important

Critical

Important

3

1

7

2

9

14

4

8

5

15

12

10

6

17

11

16

13

20

18

19

Green  Wellness  Smart  Caring  Transversal

Importance to business continuity and development ^

  • Importance to stakeholders is determined by external stakeholders' rating of the material issues in terms of their importance to the society/environment and their relevance to NWD.
  • Importance to business continuity and development is determined by internal stakeholders' rating of the likelihood and level of potential impact of the issues affecting NWD's business continuity and development.

NEW AND UPDATED ESG-RELATED POLICIES

Implementation progress of our ESG-related policies is checked yearly with a major review to be conducted by our Group Audit and Management Services Department every three years. Review findings will be shared with the Group Sustainability Steering Committee and board-level Sustainability Committee and Audit Committee. A review was initiated in FY2020 which resulted in updates on existing policies and drafting of new ones based on the latest industry standards and operational needs. Approved policies are available on our sustainability website. Ongoing training is provided to all employees on these policies and processes.

New policies have also been published to ensure that we keep up with the latest requirements:

  • Biodiversity Policystates our commitment to safeguarding the health of our ecosystem and measures to minimise adverse environment impacts in our operation.
  • Climate Change Policystates our commitment to combating climate change, improving resilience, our alignment to the recommendations of TCFD and our ambition to set SBT.
  • Waste Management Policyillustrates the areas of focus in waste management and promotes a circular economy.
  • Water Policyacknowledges that water is an essential but a constrained resource to our business and society and therefore we will introduce water efficiency measures and standardise water management.

Significant changes to existing policies include:

  • Human Rights Policynow recognises human rights as defined by international standards and local regulation and aligns with the UNGC's principles.
  • Sustainable Building Policyreflects our elaborated lifecycle approach to manage environmental impacts in new and existing buildings, climate change actions, tenant engagement efforts, as well as smart, caring and wellness initiatives concerning the built environment.

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Corporate Sustainability

Project Highlights - Taking Sustainable Building and Craftsmanship to New Heights

Promoting Sustainable Cities and

Communities by Preserving Cultural Heritage

Our properties provide a platform for promoting sustainable cities and communities, in support of SDG 11. Our aim is not only to strategically reduce our operational environmental impact but also to preserve the cultural and natural heritage of our business locations. This approach is reflected in NWCL's brand positioning - "Soul of the City". Under the guidance of the Central Government and Greater Bay Area policies, and through community partnerships, NWCL balances sustainability, innovation and cultural preservation in urban renewal.

Zengcheng Project, Guangzhou

BUILDING A NEW LANDMARK FOR OLD CITY

ZENGCHENG, GUANGZHOU

The Group has been engaged in Greater Bay Area redevelopment projects including Xili in Nanshan, Shenzhen; Shancun in Liwan, Guangzhou; Nanji Village in Haizhu, Guangzhou and Tagang Village in Zengcheng, Guangzhou. On 8 June 2020, NWCL announced that it will invest RMB20 billion as the intended cooperative enterprise for the redevelopment project of Xiajie Village on Licheng Street of Zengcheng, Guangzhou.

Xiajie Village is one of the oldest in Zengcheng to have maintained

classic architectural elements such as ancient brick residences and

large ancestral hall. The Xiajie Village project actively preserves these Olive Kernal Carving1 elements and historical passageways of the neighbourhood while

injecting modern elements to engage new residents and visitors, including hotel, residence, office, retail and other leisure amenities. The Group also dedicates efforts to revitalise olive kernel carving - a national intangible heritage craftsmanship originated in Zengcheng.

1 Guangzhou Olive Kernel Carving Heritage Base listed in Licheng, Gucunzhiyou, 30th August 2017,

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Corporate Sustainability | Project Highlights

Cao Xueqin Residence in Beijing

REBUILDING A HISTORICAL RESIDENCE IN BEIJING

A city's future development is anchored in its cultural heritage. Qing Dynasty official records revealed the historical residence of the famous Chinese writer Cao Xueqin in Beijing. In 2019, NWCL confirmed to launch this unique rebuilding project.

Given the historical value of the site, NWCL introduced Building Information Modeling ("BIM") technology to simulate design scenarios for visualisation before actual works began, and to preserve comprehensive project data for future learning. Offsite pre-installation processes also took place to ensure the accuracy of on-site installation, improve project quality and reduce resource wastage.

The project embodies the Group's cultural aspirations by bringing traditional culture to life and promoting sustainable development building on our heritage.

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Corporate Sustainability

Safeguarding the Environment

Reinforcing our Support for the TCFD

Having adopted TCFD's recommendations since FY2019, NWD pledged its support to the TCFD officially in FY2020. We will continue to follow closely any status reports and relevant materials published by the TCFD and align our disclosures with market best practices. Below is a summary of our climate-related risks disclosure.

Focus Area

Governance

Strategy

Risk Management

Metrics and Targets

Our Approach

Board oversight: The Sustainability Committee meets at least twice a year to oversee climate-related strategies, policies, actions and disclosure.

Management's role: The Group Sustainability Steering Committee supports climate action planning and internal policy setting, as well as coordinates responses to climate-related risks and opportunities across BUs for disclosure.

Group Sustainability Department: Coordinates Group-wide efforts to assess physical and transition climate risks and opportunities for strategic planning by the Management and the Board.

Please refer to p.68 for our sustainability governance structure.

Policies and guidelines: The Group's latest Climate Change Policy and updated Sustainable Building Policy outline our commitments to addressing climate-related risks and opportunities in our businesses, raising climate change awareness among our internal and external stakeholders and incorporating protection measures and resilient designs against local climate risks over building lifespan. We are currently forming more partnerships through industry groups and developing climate resilient building design guidelines to capture these opportunities.

Generally, NWD addresses sustainability issues throughout the property lifecycle from design and build, financing, operation to building user engagement stages. With reference to TCFD's recommendations, we are actively identifying viable pathways to decarbonise under the 1.5°C scenario and fulfil SBT requirements by increasing renewable energy adoption and reducing Scope 3 emissions1. Please refer to p.77 for details.

Physical risks: In FY2019, we assessed the impact of climate-related risks (flooding, extreme wind, water stress and heat stress) on 14 major properties in the Greater Bay Area under two Intergovernmental Panel on Climate Change ("IPCC") Representative Concentration Pathway ("RCP") scenarios: a medium-risk scenario where global average temperature increases by no less than 2.5°C (RCP 6.0) and an extreme scenario where temperature increases by over 4.0°C (RCP 8.5). Based on our project locations, no severe climate risks were identified. We have implemented quick wins related to regular inspections, maintenance and audits, and have developed a hardware enhancement plan for flood risk prevention. Please refer to p.77 for details.

Transition risks: We developed an internal climate change policy to better manage our risk responses. The policy states our approach to climate change as well as our adaptation and resilience measures. We will actively monitor and respond to regulatory changes and industry standards related to our business locations.

Opportunities: Based on the insights from our risk assessments, we will capture the opportunities to incorporate climate-friendly building and service designs, engage our tenants, customers and suppliers to take climate actions, promote innovative technologies to reduce our environmental impact and utilise sustainable finance to accelerate our efforts to combat climate change.

Climate-related risks are incorporated into the Group's risk management framework and ESG materiality assessment by different stakeholders. The Group Sustainability Department initiates the monitoring and follow-up of both transition and physical climate-related risks and suggests strategic responses with relevant sites to BUs' management. At the end of FY2020, an assessment was conducted to quantify the financial impacts of climate risks. Findings and updates are reported regularly to the management and the Board. For details, please refer to p.68.

In FY2019, we established 2030 reduction targets based on FY2015 levels for carbon, energy, water and waste on an intensity basis (denominated per million HK$ revenue) and started to disclose our progress annually. For details, please refer to p.75, 78-79.

Departmental contributions towards reduction targets are linked to yearly performance evaluations and employee remuneration. We will explore the possibility of linking the management's remuneration with these targets.

We have completed a feasibility assessment in order to set SBT for NWD's property and construction businesses within the next three years. Please refer to p.77 for details of our roadmap.

1 Scope 3 emissions: indirect emissions (not in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions (Corporate Value Chain (Scope 3) Accounting and Reporting Standard).

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Towards a Decarbonised Future

MATERIAL TOPICS

  • Energy and Carbon Management
  • Adaptability to Climate Change Impacts
  • Innovation

Climate change poses unprecedented challenges for business operations and human survival. Our core property business has opportunities as well as responsibilities to reduce its carbon footprint and therefore operating costs through energy efficiency improvements. While we are working towards our SV2030 energy and carbon emissions intensity reduction targets, we are also exploring viable ways to further decarbonise under the Paris Agreement's 1.5ºC scenario.

Carbon Emissions lntensity Reduction %

Baseline year

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

0%

-10%

-20%

-30%

-40%

-50%

2020 Progress

2025 Milestone

2030 Target

-22%

-39%

-50%

-60%

(Unit: tCO2e/million HK$ revenue)

FY2020 Performance Compared to FY20151

17%

Energy intensity (MWh/million HK$ revenue) (FY2030 target:50%)

22%

Carbon emissions intensity

(tCO2e/million HK$ revenue) (FY2030 target:50%)

For the Sustainability Reporting Scope, the Group's total energy consumption and carbon emissions in FY2020 reduced by 7% and 4%, respectively, compared to FY2019. We believe this is a combined result of our sustainability initiatives and COVID-19 impacts.

Sustainability Reporting Scope - Total Energy and Carbon Emissions

ENERGY

FY2020 TOTAL: 5,877,063 GJ

12% 4%73%11%

FY2019 TOTAL: 6,336,786 GJ

13% 3%73%11%

FY2018 TOTAL: 6,378,720 GJ

10%

3%

74%

13%

NWD

NWCL

NWSH

NWDS

CARBON EMISSIONS

FY2020 TOTAL: 589,299 tCO2e

By FY2020, energy intensity and carbon emissions intensity of the SV2030 Green Targets Scope reduced by 17% (MWh/million HK$ revenue) and 22% (tCO2e/million HK$ revenue), respectively, compared to the FY2015 baseline. The reduction percentage as at FY2020 is lower than that of FY2019. Given SV2030 Green Targets were projected based on a business-as-usual scenario, we will continue to monitor our business operations under the new normal and update the carbon reduction trajectory as needed.

19%

7%

57%

17%

FY2019 TOTAL: 615,518 tCO2e

17%

5%

60%

18%

FY2018 TOTAL: 623,039 tCO2e

13%

5%

60%

22%

NWD

NWCL

NWSH

NWDS

1 Covers the SV2030 Green Targets Scope. NWSH and NWDS also disclose their environmental targets in their annual sustainability reports. Revenue was selected as the intensity metric due to the diverse business nature of the Group's portfolio and that revenue is the common thread across sectors.

Annual Report 2020

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Corporate Sustainability | Safeguarding the Environment

Key Initiatives in FY2020

• PROPERTY & CONSTRUCTION

SV2030 Green Targets Scope Properties' Performance

FY2020

FY2019

Energy intensity

99

136

(kWh/sq m)

Carbon emissions intensity

57

76

(kgCO2e/sq m)

Significant reductions in the energy intensity (kWh/sq

  1. and carbon emissions intensity (kgCO2e/sq m) of our properties in SV2030 Green Targets Scope were recorded in FY2020 due to lower usage during COVID-19. This scope has saved over HK$11.3 million in utilities, compared to FY2019. Various measures have been implemented to improve our building energy efficiency, including chiller system enhancement, building management system ("BMS") upgrade, installation of our patented real-time building energy monitoring system - Eco-World at new sites, sensors and energy valves installation, etc.

Our Group supports the transition towards a low carbon future. We will explore further adoption of Renewable Energy ("RE") in our premises and relevant investments offsite. During FY2020, two of our signature projects within the Sustainability Reporting Scope have installed rooftop solar systems and joined the Feed-in Tariff (FiT) schemes of the power companies:

Hong Kong Golf & Tennis Academy ("HKGTA"):

  • Generation capacity of 110 kWp
  • Joined FiT scheme of CLP Power Hong Kong Limited
  • Generated over 22,000 kWh of RE since installation in April 2020

Hong Kong Convention and Exhibition Centre ("HKCEC"):

  • Generation capacity of 10 kWp
  • Joined FiT scheme of HK Electric
  • Generated over 4,000 kWh RE since installation in February 2020

Hong Kong Golf & Tennis Academy

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New World Development Company Limited

Corporate Sustainability | Safeguarding the Environment

For our construction businesses, Hip Hing Construction Co., Ltd. ("Hip Hing") has replaced traditional diesel generators with the Enertainer, a connected battery system, to power construction activities at various project sites. This innovative system can avoid direct air pollutants, improve energy efficiency and significantly reduce carbon emissions, noise level and fire hazards during construction. For example, at one of the project sites, the Enertainer achieved about 80% reduction of net carbon footprint and up to 85% energy savings.

solar panels generating 1,500 watts power, to supply electricity for lighting system and passenger information facilities for as long as 7.5 hours a day. Additionally, we are taking steps to install chargers at bus terminals to facilitate mid-day charging for electric buses.

Future Plans and Ongoing Measures

  • Set SBT for NWD's construction and property portfolio within the next three years:
    o We will continue to drive down Scope 1 and 2 emissions according to the energy efficiency initiatives planned under SV2030.
    o For Scope 3 emissions, we will install sub-meters to further understand tenant energy consumption and work with our supply chain partners to track embodied carbon in construction materials in both Hong Kong and Mainland China, using local tools and relevant methodologies. Please refer to Influencing the Supply Chain on p.85 for more details.
    o To reduce our unavoidable emissions, we are looking to increase investment in renewables, such as enhancing onsite renewable generation capacity by installing more solar panels or wind turbines onsite as well as procuring offsite renewable energy.

Climate risk resilience is being considered throughout the property lifecycle. Please refer to the TCFD section for more details on p.74.

To accelerate our alignment to the Paris Agreement, we have completed a feasibility study of developing SBT and identified downstream leased assets and embodied carbon1 in building materials as the sources of our material scope 3 emissions.

In light of the global industry's ambition of "Advancing Net Zero", we pledged our support for Hong Kong Green Building Council's relevant initiative and will monitor recommended best practices to achieve the goal for all buildings to operate at net zero by 2050.

• TRANSPORTATION

The transportation sector remains a major contributor to our Group's overall energy consumption and carbon emissions. Our bus companies in Hong Kong introduced the first double-decker equipped with 20 pieces of

  • Enhance our properties' climate resilience and adaptability in the next two years:
    o Flood risk protection hardware such as flood gates will be installed for selected properties covered in our climate risk scenario analysis according to consultant's recommendations.
    o Climate resilience design guidelines for new buildings will be established.
  • Provide training and engagement in energy and carbon management and climate issues:
    o Different internal stakeholders ranging from board executives to individual employees have been engaged in various trainings on climate change, SV2030 progress, energy and carbon reduction initiatives, etc. Please refer to Empowering our People section for more details on p.81.

1 Embodied carbon: carbon emissions associated with materials and construction processes throughout the whole lifecycle of a building or infrastructure (World Green Building Council).

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Corporate Sustainability | Safeguarding the Environment

Managing Water Resources and Climate-related Risks

Water is recognised to be a constrained but essential resource, both for business sustainability and more broadly, for society and the environment - especially within the Greater Bay Area which faces a triple threat of water shortage, climate change and population growth. A recent study1 has shown that eight of 11 Greater China cities, including Guangzhou and Hong Kong, are dry and face extremely high levels of water pollution in the Dongjiang River. Given that the Dongjiang supplies water to five Greater Bay Area cities including Hong Kong, its ongoing pollution will have a devastating impact on our freshwater availability.

As early as 2030, these rising risks could threaten key sectors that drive the region's GDP, including real estate. To prepare and align ourselves with global standards and best practices, careful water management, planning and cohesive resilience strategies will need to be implemented. We aim to set a group-level water target in the near future.

Compared to FY2019, the Group's water consumption increased by almost 1,000,000 m3. The increase was mainly due to the inclusion of new construction sites that were undergoing water-intensive foundation works as well as new properties in operation. Additionally, NWDS' decrease in water consumption from FY2019 was mainly due to temporary closure of some of the department stores, shortening of business hours and restricted business for Food and Beverage ("F&B") tenants during COVID-19.

MATERIAL TOPICS

  • Water Consumption
  • Adaptability to Climate Change Impacts

FY2020 Performance Compared to FY20152

9%

Water intensity (m3/million HK$ revenue) (FY2030 target:25%)

Sustainability Reporting Scope - Total Water Consumption

FY2020 TOTAL: 5,687,628 m3

29%

35%

22%

14%

FY2019 TOTAL: 4,679,137 m3

26%

26%

27%

21%

FY2018 TOTAL: 4,324,609 m3

17%

21%

34%

28%

NWD

NWCL

NWSH

NWDS

Key Initiatives in FY2020

• RISK ASSESSMENT AND RESPONSES

As part of the climate risk scenario analysis of our building portfolio in the Greater Bay Area, climate-related water risks, namely flooding and water stress, are evaluated.

    • Flooding: Only minor impacts related to flood risk are observed in the long-run for properties in Hong Kong that are located close to the coastline (i.e. susceptible to sea-level rise). This is predominantly due to Hong Kong's robust drainage network and sufficiently high seawalls. To become more flood-resilient, we have implemented quick-win measures for each site, such as regular inspections, audits and maintenance and have identified hardware enhancement plan for flood risk prevention.
    • Water stress: No immediate and significant risks were identified relating to the location of our assessed properties.
  • "SPONGE CITY" DESIGN STRATEGY

We implement sponge city features in our properties to redistribute water and tackle flooding. Ningbo New World is one of the latest examples in Mainland China with features include a bio-retention pond, a rain-water garden, permeable pavements and ecological rooftop, making this a green landmark in the city. Collectively, these sponge city design features contribute a water retention capacity of approximately 1,800 m3 and ease the burden of the municipal water drainage. More importantly, they help delay the peak discharge during flooding by 10-15 minutes.

Ningbo New World

Future Plans and Ongoing Measures

  • Install flood risk protection hardware such as flood gates for selected properties covered in the climate risk scenario analysis according to consultant's recommendations.
  • Install water-efficient fixtures to reduce our consumption.
  • Install sub-meters at new projects and major refurbishments to collect more comprehensive water data for preparation of setting a Group-wide water target in the future.
  1. China Water Risk, 2019, Thirsty And Underwater: Rising Risks in Greater Bay Area
  2. The water intensity target covers NWCON only.

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New World Development Company Limited

Corporate Sustainability | Safeguarding the Environment

Avoiding Waste at Source

Waste management is an unavoidable challenge across the globe, in particular for the areas with high-density development and experiencing rapid urbanisation. Our Group is making increasing efforts to avoid and reduce waste across our business activities. Initiatives are taken to align with global standards especially in reducing construction waste. Given the emerging trend in mandating waste separation and recycling, our property managers and operators are proactively engaging with key stakeholders to raise general awareness and strengthen internal guidelines to prepare for these changes.

FY2020 Performance Compared to FY20151

46%

Waste-to-landfill intensity

(tonnes/million HK$ revenue) (FY2030 target:15%)

Sustainability Reporting Scope - Total Waste

FY2020 TOTAL: 1,461,165 tonnes

9.7%

9.6%

80.0%

0.7%

FY2019 TOTAL: 912,464 tonnes

5.4%6.9%

86.5%

1.2%

FY2018 TOTAL: 1,015,484 tonnes

5.7

%

92.9%

1.0%

0.4%

NWD

NWCL

NWSH

NWDS

Waste generated from our construction activities in Hong Kong and Mainland China constitutes approximately 84% of the Group's total. The significant increase in waste volume compared to FY2019 attributes to the commencement of new projects which produced a high volume of construction and demolition waste. Due to the nature of construction, the waste-to-landfill volume varies significantly across different stages. In FY2020, NWCON's waste-to-landfill intensity decreased by 46% compared to the FY2015 baseline, as a high proportion of waste was sent to government public fills from multiple project sites at the foundation stage.

Key Initiatives in FY2020

  • DIGITALISATION OF CONSTRUCTION BUSINESS WORKFLOW

Using BIM as the core technology, Construction Information Anywhere ("CIA") is a web-based platform designed for project management with three major modules - Project Management, Cost Management and Programme Management. NWCON has adopted CIA for all projects to improve collaboration among multi- disciplinary project stakeholders. Further to BIM's benefit of reducing abortive works from design simulation, CIA allows non-technical project stakeholders to gain access to the latest project information. Additionally, NWCON has adopted Novade system to digitalise project management processes which resulted in 2.1 million pieces of paper reduction during FY2020.

MATERIAL TOPICS

    • Waste Disposal and Recycling
    • Innovation
  • HKCEC THINK BEFORE PLASTIC

After the success of our Think Before Plastic campaign to tackle the problem of disposable plastics, HKCEC extended its efforts to reduce paper use by introducing digital food menus, QR codes with information on restaurants and order forms to replace paper ones for exhibitors.

  • PARTNERSHIP ON WASTE SOLUTIONS
    • Through the Sustainable Tenancy Pledge launched by K11 Hong Kong in FY2019, we have been working together with our tenants to improve waste management. The latest edition of these services is our complimentary food waste recycling bins and onsite food waste composting for F&B tenants at K11 ATELIER King's Road.
    • In January 2020, NWD joined WBCSD and selected to participate in their dedicated circular economy workstream. This is to support change in the industry and across our supply chain through innovation.

Future Plans and Ongoing Measures

  • Adopt circular economy as the theme for an upcoming Shenzhen project.
  • Reduce construction wastes through the continuous application of BIM to minimise abortive works.
  • Recycle/reuse materials in construction activities, e.g. through the use of metal formwork.
  • Improve our waste data collection granularity and quality to establish a Group-wide waste target in the near future.
  • Continue to work with all relevant stakeholders, including employees, suppliers, customers and tenants, to reduce waste through targeted campaigns and incentives across our businesses.

1 Waste-to-landfill intensity target covers NWCON only.

Annual Report 2020

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Corporate Sustainability | Safeguarding the Environment

Protecting Biodiversity

The World Economic Forum 2020 listed major biodiversity loss and ecosystem collapse as one of the top five global risks for the next ten years1. Extraction of natural resources and pollution are among the key drivers of biodiversity loss, with severe implications for the economy and public health and well-being, as well as for our supply chain. Hong Kong, despite its urban density, is one of the most biodiverse cities in the world. Starting with our Group's headquarters, we hope to protect biodiversity by enhancing our operations and raising public awareness.

SUSTAINABLE LANDSCAPE FOR THE COMMUNITY

With this in mind, a Group-level Biodiversity Policy is introduced to illustrate our commitment to protecting the natural environment throughout the design and operation of our products and services. We strive for Sustainable SITES Initiative ("SITESTM") certification by the U.S. Green Building Council where possible - a framework for sustainable landscape development projects with a focus on landscape, ecosystems and biodiversity. Salisbury Garden and Avenue of Stars of the Tsim Sha Tsui Waterfront Revitalisation have achieved SITESTM v2 Gold certification.

PROMOTING BIODIVERSITY TO FUTURE GENERATIONS

Nature Discovery Park's vision is recognised by the HKSAR Government which held a public exhibition there in October 2019 during the annual Hong Kong Biodiversity Festival and attracted more than 5,000 visitors.

MATERIAL TOPICS

  • Use of Materials* and Biodiversity
    • Refer to p.85 Influencing the Supply Chain

Nature Discovery Park, Hong Kong's first urban biodiversity museum and sustainability-themed education park at K11 MUSEA, has engaged over 26,000 visitors since opening last year. The Park offers guided green tours, urban farming workshops and farm-to-table experiences. The Park hosts over 180 plants with a majority of local species and butterfly food plants to maintain the integrity of urban butterfly habitats. The farm at the Park supports the local and organic food movement by sharing agricultural knowledge with the community and tenants. To educate future generations on the importance of local biodiversity in Hong Kong, the Park launched the Little Nature Ambassador Programme in partnership with The Jane Goodall Institute (Hong Kong) and local social enterprises - a programme suited for children aged 2-6 with four online modules covering various aspects of biodiversity in August 2020. The Park is also supporting the University of Hong Kong's School of Biological Sciences in their local species research and development of education tools and leadership programmes to educate the public about the abundance of local insect species and the ecosystem of Hong Kong.

We will continue to consider biodiversity protection in our operational practices through setting in-house guidelines and promoting public awareness in Greater China with reference to international standards.

Learning about nature with a multi-sensory learning kit in the Little Nature Ambassador Programme.

1 World Economic Forum, 2020, Burning Planet: Climate Fires and Political Flame Wars Rage political-flame-wars-rage>.

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New World Development Company Limited

Corporate Sustainability

Empowering Our People

We are motivated to create a working context where people thrive and talents are well-developed. Ultimately, we aim to foster a culture that empowers employees to create shared value for different stakeholders and prepares our team for the future of work.

Grooming an Innovative and Resilient Workforce

We are committed to supporting our people to realise their career ambitions. We welcome talents that are entrepreneurial and demonstrate a growth mindset. Aspiring to become the employer of choice, we invest in training and development to build a productive and future-ready workforce.

Key talent attraction initiatives in FY2020:

• A. Entrepreneur Park held in Guangzhou engaged

about 90 entrepreneurs on the topics of wellness,

sustainability and shared value and drove potential

synergies and collaborations between these

entrepreneurs and the Group.

• New World Group's first-ever Virtual Internship

Programme 2020 during COVID-19 welcomed around

100 interns to join our virtual tours and e-learning

MATERIAL TOPICS

  • Talent Management
  • Innovation

GROUP EMPLOYEE PROFILE

Age Group

16.4%

26.4%

57.2%

Under 30 years old 30-50 years old Over 50 years old

during their onboarding journey.

Key training initiatives in FY2020:

All employees are encouraged to join design thinking

workshops, to promote a human-centric approach to

understanding customers' unarticulated needs and

generating new ideas beyond customers' expectation.

E-learning platform is launched to cover all BUs of

the Group. A total of 134 modules on themes such

as corporate policies and guidelines (including ESG

policy quizzes), business focus and productivity are

offered. In the first year, around 88,000 courses were

Geographical Region

44.1%

0.1%

55.8%

completed.

• Senior executives from major BUs joined our first

Sustainability Forum in January 2020, Activating

Change in A New World Order, to connect with

experts on climate change.

• Over 10,000 employees in Hong Kong and Mainland

China participated in a series of CSV and ESG training

with additional strategy development sessions for

senior executives.

• Briefings on SV2030 progress and climate resilience

for the Sustainability Committee, as well as for

relevant operation teams.

• NWCL organised its first workshop for some 200

department representatives across different regions

in China to deepen their understanding of climate

issues.

Employee appraisal is an essential part of sustainable employee development. Our key approaches include:

  • Conducting a 360-degree evaluation of employees' core competencies.
  • Evaluating line managers on their abilities to manage and lead team performance, to uphold our priority on talent grooming.
  • Establishing SV2030 KPIs for the Group, departments and individual managerial employees. These KPIs include green targets, the number of sustainability events organised or attended, and other measurable goals and performance will be considered in year-end appraisal and bonus calculation.
  • Establishing Objectives and Key Results ("OKR") for the Group and BUs to encourage employees to be ambitious and think about their long-term impact.

Hong Kong

Mainland China

Others

AVERAGE TRAINING HOURS

18.9 hrs per employee

(26% from last year)

Male

Female

17.8

hrs

20.9 hrs

Management

Non-management

19.4 hrs

18.8 hrs

training hours

12,399 hrs

Sustainability-related

Moving forward, e-learning will be a key mode of training. To equip our employees with the mentality to overcome new challenges, we will launch a new initiative, "From Question to Innovation", which empowers employees to adopt a growth mindset, develop an inquisitive mind and find new solutions in a volatile business environment.

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Corporate Sustainability | Empowering Our People

Listening to the Needs of Employees

After a few years of promoting SV2030, our employees at different levels of responsibility, demonstrate an awareness of the Group's priority in sustainability and understand their input contributes to the greater good. Our success depends on them, and so we keep an open dialogue and try out new forms of engagement to nurture a sense of belonging and address their ever-changing needs.

MATERIAL TOPICS

  • Employee Wellness* and Engagement
    • Refer to the next page (p.83)

KEY EMPLOYEE ENGAGEMENT INITIATIVES IN FY2020:

Group Strategic Workshop - "New World

Over 300 senior executives exchanged ideas on the business strategy

in the Greater Bay Area - the Group's core development location, on 12

Ecosystem Co-Creation @ GBA"

September 2019.

Across the Group, 200 ambassadors were recruited to propagate CSV as

CSV Cultivation Journeys

our corporate strategy. Up to 30 business visits have been organised since

late 2019 to help employees understand this concept. Together with online

activities, around 10,000 participants were engaged in FY2020.

New World Group Town Hall - "New World. New Growth"

Over 5,500 employees in Hong Kong and Mainland China joined and had an interactive dialogue with our CEO on 18 June 2020, to understand the latest strategic priorities in response to the challenging business environment due to COVID-19. Major BUs such as NWSH and K11 also held their town hall meetings to cascade the key messages after.

Adrian Cheng shared the Group's strategic priorities during the New World Group Town Hall.

Employees participated in New World Group Town Hall from different office locations.

A culture of alertness is fostered across the Group through online and offline learning to encourage all corporate and frontline employees to communicate proactively on any potential issues, from operational risks to unsatisfactory customer service, or ways to improve the working environment.

We will conduct an employee satisfaction survey by the end of 2020 to understand the needs and expectations of employees to help the Group improve, for example, in the areas of company strategy, corporate culture and employee compensation and benefit. We will also continue to keep employees abreast of the Group's sustainability initiatives through e-newsletter, website and social media and support our employees to translate awareness into actions as we move forward with SV2030.

Empowering our people and developing their leadership skills will strengthen the resilience of our workforce. We believe in pursuing excellent performance by staying focused, aligned and ambitious.

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New World Development Company Limited

Corporate Sustainability | Empowering Our People

Putting Our Employees' Health First

Our employees are our greatest assets: their safety and well-being are our priority. We are committed to providing our employees with the safest working environment possible. Our Health and Safety Policy1 outlines our approaches towards managing and monitoring health and safety risks. For the long-term, investing in initiatives that improve employees' health and well-being makes good business sense.

We closely monitor the impact of COVID-19 on our workforce to ensure business continuity and prioritise our people's health and well-being. A cornerstone of our approach to employees' health and well-being in these challenging times is to rely on innovation and knowledge- sharing to take people out of fear and uncertainty through different initiatives and measures.

MATERIAL TOPICS

  • Employee Wellness and Engagement
  • Occupational Health and Safety

COVID-19 Responses:

NWCON was the1st Company in Hong Kong to halt construction work for two weeks to protect employees and their families

20,000 Protective Kits distributed to

employees in February 2020 as pandemic relief

Injury Rate2 1.7 VS

2.5

Lost-Time

FY2020

FY2019

Key activities during COVID-19:

  • Ongoing communication and information are given to employees regarding the Prevention of Pneumonia and Respiratory Infections since late December 2019.
  • One of the first corporates in Hong Kong to implement flexible work arrangement in January 2020, install automated hand disinfectant at the workplaces, and distribute masks to all employees weekly since the first months of the outbreak.
  • A mandatory health declaration form to monitor the health status of all employees daily was made available via our internal smart office app, and we extended its coverage to our visitors in April 2020.
  • Online web conferencing tools are used to minimise the risk for our employees for meetings and visitors arrangements.
  • Frequent disinfecting is conducted in high footfall areas such as public corridors, pantries and reception areas, whereas carpets and air filters were cleaned every two weeks to foster a healthy workplace.
  • FTLife Insurance offers free medical insurance coverage to the Group's employees in Hong Kong and Macau offices until 31 December 2020.
  • In places where food hygiene is a concern, such as NWDS' four branches of "New World Supermarket", enhanced precautionary measures have been taken, with all our employees required to wear masks and rubber gloves, as well as check their temperatures every four hours.

Key employee wellness programmes in FY2020:

  • Organised two well-being campaigns - Mindful New World and New World Group Well-being Challenge, which promote the mental and physical health of our colleagues through online meditation and fitness programme during social distancing.
  • Hiking trips led by professional hiking coach and social worker to Kamikochi in Japan, Lau Shui Heung, Sai Kung and outlying islands in Hong Kong were organised by Humansa for the Group's colleagues to promote physical and mental health.
  • NWSH offered "Workout within Limits" - a collaboration with OnBoard For Good. Professional fitness trainers were engaged to provide a series of eight office workouts (15 minutes each), via Zoom during office hours in April and May 2020 to promote employee wellness and health.
  • Since 1 July 2019, medical benefits under an outpatient plan have been enhanced by increasing our medical insurance and dental scheme coverage.
  1. one-monthonline programme to encourage employees to keep up their fitness routines by exercising anywhere.
  1. Details are available on our Corporate Website - Sustainability > Sustainability Governance & Policies.
  2. Lost-timeinjury rate represents the number of injuries per 100 employees per year.

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83

Corporate Sustainability | Empowering Our People

Embracing a Diversified and Inclusive Workforce

Sustainable communities consider the needs of different stakeholders. For us to better address these needs, our workforce must understand different perspectives and bring unique values to our stakeholders. We also want our employees to feel respected and encouraged to grow in the workplace. This is why our Group strives to improve our workplace diversity and inclusion.

We are dedicated to recruiting talents from all races, backgrounds and experiences, irrespective of individual differences, such as gender, ethnicity, age, physical abilities, sexual preferences, family status, religion, or gender expression. Employees are also informed about our Human Rights Policy1 and Whistleblowing Policy1 for reporting relevant violation. We are one of the 12 diversified companies in Greater China to have signed the UNGC and the first real estate holding and development company in Hong Kong to endorse the UN-backed Women's Empowerment Principles and are committed to respecting and implementing the principles at all levels of our business. As at 30 June 2020, 35.6% of our workforce is female. With our ongoing commitment to empowering women's leadership, two new female executives joined the NWD board in May 2020, occupying 25% of the seats.

As a caring employer, we echoed the Employment (Amendment) Bill 2019 from the HKSAR Government, which highlights that mothers deserve extra time to recover and that fathers should look after their wives and new- borns. While we have introduced five-day full paid paternity leave in 2018 ahead of the statutory requirement, fully paid maternity leave has also been increased from ten to 14 weeks from FY2020 onwards.

MATERIAL TOPICS

  • Diversity and Equal Opportunities
  • Human Rights and Grievance Mechanisms
  • Corporate Governance

GENDER DIVERSITY

Female

Male

Board Level

25%11.8%

FY2020FY2019

75%88.2%

Employee Level

35.6%36.4%

FY2020FY2019

64.4%63.6%

1 Details are available on our Corporate Website - Sustainability > Sustainability Governance & Policies.

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New World Development Company Limited

MATERIAL TOPICS
• Responsible Supply Chain Management
• Energy and Carbon Management
• Occupational Health and Safety
• Bribery and Corruption

Corporate Sustainability

Influencing the Supply Chain

Through a proactive and standardised supply chain management approach, we ensure ESG considerations are applied fairly and consistently at different stages. As construction remains a core business to our ecosystem, we manage its related risks with a higher level of attention through policies, training and management frameworks. The Group's Sustainability Policy, Sustainable Procurement Policy and Supplier Code of Conduct ("SCoC") are the overarching policies to standardise our practices. During FY2020, we

focused on responsible sourcing and established the data infrastructure required for SBT setting by communicating with construction suppliers closely. In addition, we implemented responsible sourcing and green procurement.

Key Initiatives in FY2020

BUILDING CAPACITY FOR SUSTAINABLE CONSTRUCTION PROJECT MANAGEMENT

Throughout FY2020, NWCON and Hip Hing continued to successfully implement the internationally recognised systems for quality, environmental, energy and occupational health and safety, certified in accordance with ISO 9001, ISO 14001, ISO 50001 and OHSAS 18001. We encourage more suppliers and contractors to seek these certification to safeguard the health and well-being of all our stakeholders, as well as the environment.

NWCON and Hip Hing conducted annual assessments of all their critical suppliers and contractors on health, safety, environmental and other governance aspects. Assessment parameters include environmental impact reduction, fatalities, working conditions of factories, anti-bribery and corruption, and prohibition of child labour and other types of illegal labour. In case of non-compliance, corrective actions are required to be duly implemented. Recurring cases of non-compliance are subject to further actions including suspension from work and tender invitations and re-evaluation of supplier status.

To strengthen ESG awareness and integration throughout the Group's supply chain, a series of training has been rolled out in June 2020 across all seven active construction sites under NWCON. Approximately 1,000 subcontractor workers attended the training to learn about key ESG issues and policies including anti-corruption, human rights, whistleblowing and other topics within the SCoC.

MINIMISING ENVIRONMENTAL IMPACTS THROUGH SUSTAINABLE PROCUREMENT

Starting in FY2020, we imposed explicit requirements to source printing and copying paper certified by the Forest Stewardship Council ("FSC"). All of the temporary wood used by NWCON and all wood used by Hip Hing is either certified by FSC or Program for the Endorsement of Forest Certification Schemes ("PEFC"). All of thermal insulation and fire retardant materials sourced by NWCON have zero ozone-depleting potential, and are free of CFC and HCFC, which minimises climate change impacts. Currently, Hip Hing uses 93.3% biodiesel onsite to reduce their emissions. Additionally, both NWCON and Hip Hing have adopted the Novade system to digitalise construction project management processes, from Environment, Health and Safety ("EHS") management, progress reporting, quality control to documentation maintenance, which results in paper reduction. NWD's central procurement obtained a Level 2 certification from the Hong Kong Green Council's Sustainable Procurement Charter - with reference to ISO 20400 for their practices applied to office supplies purchases.

TRACKING EMBODIED CARBON AND COMMITTING TO SBT

We will continue to deepen our efforts to decarbonise construction activities. Embodied carbon from construction materials is one of the major sources of our Group's Scope 3 emissions. Moving towards SBT, we will track and reduce embodied carbon. During FY2020, six construction projects under NWCON have joined a pilot project using the Construction Industry Council ("CIC") Carbon Assessment Tool to track their embodied carbon. Through this exercise, we have liaised with our supply chain partners and other industry peers, contributing to the local construction industry benchmarking data pool and carbon emissions reduction from building lifecycle with collaborative efforts.

Future Plans and Ongoing Measures

  • Further standardise our supply chain management practices across Hong Kong and Mainland China and especially those related to construction activities.
  • Start to track Scope 3 embodied carbon data from our construction projects in Hong Kong (through CIC Carbon Assessment Tool) and Mainland China (follow the Chinese Construction Industry Carbon Emission Calculation Standard (GBT 51366- 2019)) in preparation for setting SBT.
  • Roll out ESG training for Mainland China construction activities to help colleagues and suppliers better understand their professional responsibilities and rights as outlined in the Group's SCoC and ESG policies.

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85

MATERIAL TOPICS
• Customer and Tenant Engagement
• Innovation
MATERIAL TOPICS
• Customer Wellness, Health and Safety
• Ageing Population

Corporate Sustainability

Caring for the Customers

Voices of customers are our core drivers of innovation and product development under fast-changing market conditions. In particular, we focus on a few customer-related areas - their well-being, how we engage and educate them, their data privacy and our product responsibility.

Promoting Customer Well-being with a Healthy

Environment

SV2030 prioritises wellness as one of its four pillars given the connection between the holistic well-being of individuals, a healthy environment and a healthy community. In FY2020, we launched our first

WELL CertifiedTM Platinum building, K11 ATELIER King's Road. The project has utilised a multi-stage air filtration system (including MERV1 14) to maintain top indoor air quality for the health of building occupants. K11 ATELIER King's Road also has a sky garden with a jogging trail to promote an active lifestyle. Each office floor of the project has a nursing room to provide for the needs and protect the privacy of working mothers. Through K11 ATELIER ACADEMY, the project offers group fitness and mindfulness activities to all tenants. Similarly, K11 KULTURE ACADEMY engages retail customers in shopping malls through group activities that promote their overall well-being and foster a sustainable community.

COVID-19 Responses:

  • K11 MUSEA - implemented hourly disinfection of high-touch surfaces and public facilities; customers receiving hand sanitisers and employees wearing masks during operating hours.
  • Humansa - introduced an exclusive Japan-patented Nano Titanium Photocatalytic Coating service for indoor service areas, which is proven to be harmless to humans and can kill 99.99% of viruses and bacteria, remove odour and stay effective for over one year. It has been widely adopted by the Group's properties in Hong Kong. Humansa also activated emergency response level at the early stage of COVID-19 in all of its elderly homes and substituted physical visits by family members with video calls.
  • NWDS - carried out frequent disinfection at every corner, entry and shopping trolley to ensure customers are protected.

Online-to-Offline ("O2O") Customer

Engagement and Education

While public transit was restricted in Mainland China during the early 2020 pandemic, K11 developed a digital platform, K11 Go, to adapt to the new normal within a month. K11 Go offers a seamless digital

shopping experience for more than one million KLUB 11 Mainland members and creates additional revenue channels through multimedia content and membership privileges to support our tenants, all consolidated within a WeChat mini- application. The platform will continue to be upgraded to deliver an "online to offline to online" user experience. For both Hong Kong and Mainland China, virtual reality was introduced to support K11 office and mall leasing, shopping and exhibitions. In these ways, innovation has enabled us to stay connected with our customers.

Education business

Through the following initiatives, we continue to expand our

>500,000

educational and sustainable lifestyle offerings for different generations:

stakeholders2

K11 KULTURE

Offers courses and workshops to the general public to cultivate lifelong learning in culture and

ACADEMY

art. During the year, 70,354 participants were recorded, including online viewership.

K11 ATELIER

Offered to K11 ATELIER office tenants, programmes that promote work-life integration, wellness

ACADEMY

and cultural activities. During the year, 18,117 participants were recorded, including online

viewership.

Nature Discovery

Offers guided green tours, workshops and urban farming experiences to raise awareness among

Park, K11 MUSEA

the general public of Hong Kong's ecological importance, rich urban biodiversity and to promote

a sustainable lifestyle. During the year, 26,000 visitors were recorded.

D Mind Education

Launched "D Mind & the Prince" - an English learning programme for children aged 0 to 6

which helps parents to build an immersive learning environment for their children to acquire the

language.

Donut and Ah

Aims to promote fun learning through storytelling, it introduced an animation series on the

Meow

English language and science exploration to help children learn from home during the pandemic.

  1. MERV: Minimum Efficiency Reporting Values is derived from a test method developed by the ASHRAE.
  2. Cumulative number from baseline year FY2015 to FY2020 covering the Sustainability Reporting Scope.

86

New World Development Company Limited

Corporate Sustainability | Caring for the Customers

A Mechanism to Uphold Product Responsibility and Data Privacy

Upholding product responsibility, quality delivery of our services and products, and respecting the privacy of our customers helps us build trusting relationships. We protect the rights and well-being of our customers with our quality assurance and recall processes. We regularly gauge our customer satisfaction across our operations through, for example, surveys and mystery shoppers. Our operation teams have established policies and mechanisms to ensure accurate and complete information on our products and services. Employees concerned from, for example, sales and marketing, retail and digital marketing functions, have attended training about responsible marketing and advertising practices as well. Additionally, internal audit would be performed on businesses related to responsible marketing. Hong Kong K11 Art Mall and New World Tower have adopted the ISO 10002 certified procedures to handle customer complaints. We have designated personnel, policies and procedures as well as regular training to uphold data privacy. We have set the procedures to protect and handle proprietary information and intellectual property rights. Cybersecurity measures are introduced gradually to raise employee awareness and strengthen our digital infrastructure. We comply with data privacy laws and regulations and have zero complaints relating to customer data privacy.

Engaging Tenants on Sustainable Practices and Lifestyle

With a fast-growing portfolio of investment properties in Greater China, sharing sustainable practices with tenants is becoming a higher priority.

Since K11 launched the Sustainable Tenancy Pledge (the "Pledge") in Hong Kong in FY2019 to help tenants track their energy usage, save costs and reduce wastage from fitting-out to operation, a mix of office and retail tenants including F&B tenants have joined the Pledge. At K11 MUSEA, the Pledge supported two retail tenants with planning sustainable operations, and commended their sustainability achievements by facilitating their LEED® certifications. While at K11 ATELIER Victoria Dockside, our anchor tenant was the first onboard to install smart energy meters to further analyse the usage of electricity in different areas of their offices. Within six months after installation, they are on track to save HK$6,000 per year in electricity bills and have engaged 10% of their employees to participate in energy-saving actions. These positive outcomes will prepare us for green lease discussion with our tenants.

MATERIAL TOPICS

  • Customer and Tenant Engagement
  • Energy and Carbon Management
  • Waste Disposal and Recycling
  • Customer Wellness, Health and Safety

K11 Sustainable Tenancy Pledge

25 pledged tenants

96%satisfied tenants

100% surveyed and responded at K11 ATELIER Victoria Dockside

A new initiative, Nework, was launched in New World Tower in Hong Kong as a platform to enhance the experience of tenants. Through an app, tenants can book or access a series of value-added facilities such as exclusive common space, nursing rooms and lunch box vending machines. More than 1,000 uses of nursing rooms were recorded since their launch in late 2019, and 14 tenant events were held during the year.

Market uncertainties, as well as the global pandemic, are expected to burden our business as well as our tenants. By prioritising innovative solutions, we hope to stay engaged with our tenants and customers, raise their awareness of driving sustainable business models and improve their well-being. With the initial success of various tenant engagement initiatives, we plan to extend these offerings to more tenants and customers in Greater China.

Annual Report 2020

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Corporate Sustainability

Fostering Sustainable Communities

We actively discover, empower and connect with untapped talents and resources in the community through partnerships to build a better society.

Unveiling Potential to Nurture Communities

The Group leverages partnerships with different community organisations to serve the diverse needs of stakeholders.

MATERIAL TOPICS

  • Community Development and Engagement
  • Community Wellness
  • Innovation

Community/Employee Programmes & Events

>800,000 stakeholders1

KEY COMMUNITY ADVANCEMENT AND ENGAGEMENT INITIATIVES IN FY2020:

Initiative

Theme

Impact

#LoveWithoutBorders

A shared support platform that

Over two million face masks donated to partners and local

brings love to those in need and

communities in South Korea, France, Italy and the United

shares resources with local

Kingdom

communities amidst the COVID-19

First pandemic relief fund by a Hong Kong blue-chip

pandemic

company of HK$10 million to support local communities

• Producing 400,000 face masks a week in Hong Kong

• Set up the first "Mask To Go" dispensers aiming to benefit

over 40,000 beneficiaries across 18 districts in Hong Kong

• Over 10,000 preventative kits containing face masks,

hand sanitiser gels and disinfecting wipes distributed to

low-income families in Hong Kong

Please read p.66-67 for details.

K11 Love Power

A nation-wide campaign in Mainland

Over RMB5 million and 200,000 face masks were

Campaign

China to provide customers health

donated and over 200,000 customers engaged

consultation by phone, activities to

improve their mental well-being,

as well as access to healthcare

supplies during COVID-19

THE FOREST x Sew

THE FOREST, a shopping mall in

54 designers engaged

On Studio Mask

Hong Kong, partnered with Sew on

22 unemployed women

Exhibition

Studio, a social enterprise which

deployed for sewing

supports young designers and

works

women to find second

927 reusable cloth

employment, to host a reusable

masks redeemed

cloth mask exhibition

THE FOREST reusable cloth mask

exhibition.

OnBoard For Good

Empowers Hong Kong retired

4 athletes' startups incubated

athletes to develop their second

80 job matches (14 full-time and 66 part-time)

careers in the business field

• 38 internships and job shadowing opportunities

Over 3,300 attendance

New World Spring-

Continues to improve the social

Cumulative impact since the programme launched in 2012:

board Programme

mobility of students from under-

2,600 student beneficiaries

resourced families while helping

359,000 training hours

teenage beneficiaries plan their

future careers in addition to

providing sports training

NWSH Catch Your 5**

Collaborated with The Salvation

329 beneficiaries

Programme

Army and Dustykid to arouse public

Provided non-academic training to SEN children

awareness to the Special Education

• Parents supporting groups formed in Chai Wan and

Needs ("SEN") children

Lung Hang areas of Hong Kong

1 Cumulative number from baseline year FY2015 to FY2020 covering the Sustainability Reporting Scope.

88

New World Development Company Limited

Corporate Sustainability | Fostering Sustainable Communities

The Group continues to expand our volunteering services across Mainland China. New chapters of NWS Volunteer Alliance were set up in Guangzhou, Hangzhou and Changsha in December 2019. In FY2020, more than 28,000 volunteering hours were recorded across the Group.

Activating Change in Society

Recognising the increasing expectations for the private sector to lead change, we forge partnerships with local and international organisations across sectors to help them scale and identify innovative solutions to drive sustainable development via our daily operations.

Eureka Nova, our Group's startup incubator, launched two accelerator programmes last year. First, by working with our tenant Mizuho Bank, Mizuho Crowd Brain Accelerator was launched to groom 25 startups in fintech, insurance, wellness and other innovative sectors, and offer opportunities to integrate with Mizuho Bank's clients and our Group.

Eureka Nova and the Group Sustainability Department also co-founded Impact Kommons, Hong Kong's first UN SDG- focused accelerator, to help high potential startups align their business models to the four UN SDGs endorsed by our Group, as well as gain access to Business-to-Business ("B2B") partnerships with our BUs and exclusive introductions to investors. The programme selected five startups (listed below) from over 50 global applications and offered eight weeks of intensive workshops, mentorship and consultation.

AESIR

Supports the learning of children with SEN through mixed reality technologies

Catalyser

Provides software for employers to manage their community activities and report on their social impact

En-trak

Develops Internet of Things ("IoT") solutions for commercial buildings to improve energy efficiency

Lify Wellness

Offers the Smart Wellness Beverage Ecosystem - a personalised recommendation supported by IoT

and Artificial Intelligence technology

Urban Spring

Reduces the consumption of single-use plastic bottle by installing its Well (), a smart water station

Impact Kommons fostered initiatives in contribution to the UN SDGs and realised business integrations across our ecosystem with each of the startups, resulting in seven successful projects, including a pilot of En-trak's building efficiency technology for engaging tenants, wellness workshops and product consignment by Lify Wellness and education programme co-development between AESIR and Nature Discovery Park at K11 MUSEA.

In January 2020, Culture for Tomorrow, our Group's non-profit organisation which actualises design and architectural innovation, presented the Sustainability Forum, which convened 30 business leaders to inspire and build knowledge capital on sustainable impact through cross-sector and cross-generational dialogues. As a new member to WBCSD, the event featured her President & CEO Peter Bakker as keynote speaker and different panel discussions aiming to rethink cities, redefine cultures and communities, and realign finance and technology for the purpose. Following the forum, young changemakers in Hong Kong have partnered with Nature Discovery Park and K11 MUSEA to promote sustainable living in the community. We also joined WBCSD projects to exchange industry experience in decarbonising the built environment and gain insights into circular economy standard development.

We see ourselves as part of the global movement to drive systemic change and do so by forming partnerships aligned to SV2030 and our business priorities. Please visit our sustainability website for all of our public commitments and membership.

Embracing Art and Culture

Sustainability Forum held at HACC - a multipurpose art and cultural space at K11 ATELIER King's Road.

It is equally important to preserve fast-disappearing cultural heritage as it is to incubate young artists and popularise art to the community.

Through its pioneering blend of three core values of Art • People • Nature, K11's products and services are rooted in showcasing local and international emerging artists and allowing the public to appreciate art and culture during their customer journey through, for example, connecting artworks with mall merchandise or decoration. These are facilitated by the organisations below:

Organisation

Highlights

Impact

K11 Art

Incubates young contemporary artists and promotes public

• 641 cumulative number of artists/curators

Foundation

art education in Greater China. Several exhibitions have been

supported since 2013

hosted.

• 1,170 exhibition visitors

Co-organised "Carbon's Casualties" - a climate-themed

• About 1,000 visits in the virtual tour online

photography exhibition with The New York Times and

launched "Disruptive Matter" (a circular economy themed

art exhibition) in Hong Kong

K11 Craft

Asia's first and unique creative platform to conserve and

• 10 craftsmen supported since 2018

& Guild

rejuvenate fast-disappearing Chinese craftsmanship.

• HK$1.1 million of donation received

Foundation

An exhibition was hosted to display two types of antique

• HK$2.6 million of craftwork sales through

crafts: baibaoqian (semi-precious stone inlays) and guangcai

K11 platforms

(Canton enamel porcelains).

Annual Report 2020

89

Corporate Sustainability

Content Index for Reporting Guidelines

This Report has been prepared in accordance with the GRI Standards: Core option and complies with all "Comply or Explain" provisions on General Disclosures ("GD") and environmental KPIs of HKEx ESG Reporting Guide.

During the reporting period, there were no confirmed non-compliance incidents or grievances about environmental protection or anti-corruption that would have a significant impact on the Group.

GRI

HKEx ESG

Indicator

Guide

Description

GRI 102: General Disclosures 2016

Organisational Profile

102-1

Name of the organisation

102-2

Activities, brands, products

and services

102-3

Location of headquarters

102-4

Location of operations

102-5

Ownership and legal form

102-6

Markets served

References and Remarks

  • Sections "Corporate Information" and "Management Discussion and Analysis" (p.124, 150-160)
  • "Principal Subsidiaries", "Principal Joint Ventures" and "Principal Associated Companies" under section "Notes to the Financial Statements" contain information about our principal activities (p.282-298)
  • Section "Principal Projects Summary" provides information on quantity of products and services provided including major property development and investment projects in Hong Kong and Mainland China, hotels and infrastructure projects (p.301-315).

102-7

Scale of the organisation

Sections "Financial Highlights", "CEO's Report"

and "Management Discussion and Analysis"

contain information on segment revenues, group

capitalisation and vacancy rates (p.25, 28-43, 150-

160)

Section "Principal Projects Summary" provides

information on major property development and

investment projects in Hong Kong and Mainland

China, hotels and infrastructure projects (p.301-315).

102-8

KPI B1.1

Information on employees

Empowering Our People (p.81)

and other workers

Corporate Website - Sustainability >

Performance & Reporting

102-9

Supply chain

Influencing the Supply Chain (p.85)

102-10

Significant changes to the

Influencing the Supply Chain (p.85)

organisation and its supply

Sections "CEO's Report", "Report of the Directors"

chain

and "Management Discussion and Analysis" contain

information about changes in operations and share

capital in the. Data on significant changes in the

supply chain is not available (p.28-43,125-160).

102-11

Precautionary Principle or

Sustainability Governance (p.68-71)

approach

102-12

External initiatives

Major Achievements and ESG Highlights (p.61)

102-13

Membership of associations

Corporate Website - Sustainability >

Performance & Reporting

Strategy

102-14

Statement from senior

Message from Management (p.59)

decision-maker

102-15

Key impacts, risks, and

Sustainability Governance (p.68-71)

opportunities

Section "Corporate Governance Report" (p.110-119)

Ethics and Integrity

102-16

Values, principles, standards,

Message from Management (p.59)

and norms of behaviour

Governance

102-18

Governance structure

Sustainability Governance (p.68)

90

New World Development Company Limited

Corporate Sustainability | Content Index for Reporting Guidelines

GRI

HKEx ESG

Indicator

Guide

Description

References and Remarks

Stakeholder Engagement

102-40

List of stakeholder groups

Sustainability Governance (p.69)

102-41

Collective bargaining

• Within the scope of the Report, none of our

agreements

employees are covered by collective bargaining

agreements.

102-42

Identifying and selecting

Sustainability Governance (p.68-71)

stakeholders

102-43

Approach to stakeholder

engagement

102-44

Key topics and concerns

• Message from Management (p.59)

raised

Sustainability Governance (p.70-71)

Reporting Practice

102-45

Entities included in the

• "Principal Subsidiaries", "Principal Joint Ventures",

consolidated financial

"Principal Associated Companies" under section

statements

"Notes to the Financial Statements" (p.282-298)

102-46

Defining report content and

• About This Section (p.58)

topic Boundaries

102-47

List of material topics

Sustainability Governance (p.70-71)

102-48

Restatements of information

• Corporate Website - Sustainability >

Performance & Reporting

102-49

Changes in reporting

• About This Section (p.58)

• Corporate Website - Sustainability >

Performance & Reporting

102-50

Reporting period

• About This Section (p.58)

102-51

Date of most recent report

Sustainability Report 2019 was published in

December 2019.

102-52

Reporting cycle

• The report is published on an annual basis.

102-53

Contact point for questions

• About This Section (p.58)

regarding the report

102-54

Claims of reporting in

accordance with the GRI

Standards

102-55

GRI content index

• Content Index for Reporting Guidelines (p.90-95)

102-56

External assurance

• About This Section (p.58)

Verification Statement (p.96-97)

Material Topics

Economic Performance

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 201: Economic Performance 2016

201-1

Direct economic value

generated and distributed

Indirect Economic Impacts

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 203: Indirect Economic Impacts 2016

203-1

Infrastructure investments

and services supported

  • Message from Management (p.59)
  • Sustainability Governance (p.69-71)
  • Section "Consolidated Income Statement" (p.170)
  • Sustainability Governance (p.69-71)
  • New World Ecosystem & Sustainable Property Lifecycle (p.62-63)

Annual Report 2020

91

Corporate Sustainability | Content Index for Reporting Guidelines

GRI

HKEx ESG

Indicator

Guide

Description

References and Remarks

Anti-corruption

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its Boundary

103-2

GD-B7

The management approach

and its components

103-3

KPI B7.1

Evaluation of the

management approach

• Sustainability Governance (p.69-71)

The Group had zero concluded legal cases regarding corrupt practices brought against the Group or its employees during the reporting period.

GRI 205: Anti-corruption 2016

205-1

KPI B7.2

Operations assessed for risks

Sustainability Governance (p.69-71)

related to corruption

Empowering Our People (p.81)

KPI B7.3

Description of anti-corruption

training

Environmental Performance

Materials Use

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-A2

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 301: Materials 2016

301-1

KPI A2.5

Materials used by weight or

volume

Energy

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-A2

The management approach

and its components

103-3

KPI A2.3

Evaluation of the

management approach

GRI 302: Energy 2016

302-1

KPI A2.1

Energy consumption within

the organisation

Water and Effluents

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-A2

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 303: Water and Effluents 2018

303-1

KPI A2.2

Water consumption

KPI A2.4

Issue in sourcing water that

is fit for purpose, water

efficiency initiatives and

results achieved

  • Sustainability Governance (p.69-71)
  • Safeguarding the Environment (p.79)
  • Corporate Website - Sustainability > Performance & Reporting
  • Packaging materials were not considered material for the Group's businesses hence such data are not disclosed.
  • Sustainability Governance (p.69-71)
  • Safeguarding the Environment (p.75)
  • Safeguarding the Environment (p.75)
  • Corporate Website - Sustainability > Performance & Reporting
  • Sustainability Governance (p.69-71)
  • Safeguarding the Environment (p.78)
  • Safeguarding the Environment (p.78)
  • Corporate Website - Sustainability > Performance & Reporting

92

New World Development Company Limited

Corporate Sustainability | Content Index for Reporting Guidelines

GRI

HKEx ESG

Indicator

Guide

Description

References and Remarks

Emissions

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-A1

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 305: Emissions 2016

  • Sustainability Governance (p.69-71)
  • Safeguarding the Environment (p.75-77)

There were no confirmed instances of non-compliances or grievances during the reporting period.

305-1

KPI A1.2

Direct (Scope 1) GHG

emissions

305-2

KPI A1.2

Indirect (Scope 2) GHG

emissions

305-5

KPI A1.5

Reduction of GHG emissions

305-7

KPI A1.1

Nitrogen oxides (NOX),

Sulphur oxides (SOX), and

other significant air emissions

Waste

  • Safeguarding the Environment (p.75-76)
  • Corporate Website - Sustainability > Performance & Reporting

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-A1

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 306: Effluents and Waste 2016

306-2

KPI A1.3 &

Waste by type and disposal

A1.4

method

KPI A1.6

Reduction of waste

Environmental Compliance

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-A3 &

The management approach

KPI A3.1

and its components

103-3

Evaluation of the

management approach

GRI 307: Environmental Compliance 2016

307-1

GD-A1

Non-compliance with

environmental laws and

regulations

Supplier Environmental Assessment

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-B5

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 308: Supplier Environmental Assessment 2016

308-1

KPI B5.2,

New suppliers that were

B5.3 &

screened using environmental

B5.4

criteria

Climate Change

GD-A4

Identification and mitigation

of significant climate-related

issues

KPI A4.1

Significant climate-related

issues

  • Sustainability Governance (p.69-71)
  • Safeguarding the Environment (p.79)

There were no confirmed instances of non-compliances or grievances during the reporting period.

  • Safeguarding the Environment (p.79)
  • Corporate Website - Sustainability > Performance & Reporting
  • Sustainability Governance (p.69-71)
  • Safeguarding the Environment (p.74-80)

There were no significant fines or sanctions for non- compliance with laws and regulations during the reporting period.

  • Sustainability Governance (p.69-71)
  • Influencing the Supply Chain (p.85)
  • Influencing the Supply Chain (p.85)
  • Sustainability Governance (p.71)
  • Safeguarding the Environment (p.74-78)

Annual Report 2020

93

Corporate Sustainability | Content Index for Reporting Guidelines

Social Performance

Employment

GRI 103: Management Approach 2016

103-1

Explanation of the material

Sustainability Governance (p.69-71)

topic and its boundary

• Empowering Our People (p.82)

There were eight non-compliance and 14 grievance

103-2

GD-B1

The management approach

cases during the reporting period.

and its components

103-3

Evaluation of the

management approach

GRI 401: Employment 2016

401-1

KPI B1.2

New employee hires and

• Corporate Website - Sustainability >

employee turnover

Performance & Reporting

Occupational Health and Safety

GRI 103: Management Approach 2016

103-1

Explanation of the material

Sustainability Governance (p.69-71)

topic and its boundary

• Empowering Our People (p.83)

103-2

GD-B2

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 403: Occupational Health and Safety 2018

403-1

KPI B2.3

Occupational health and

• Empowering Our People (p.83)

safety management system

• Influencing the Supply Chain (p.85)

403-3

Occupational health services

403-4

Worker participation,

consultation, and

communication on

occupational health and safety

403-5

Worker training on

occupational health and safety

403-6

Promotion of worker health

403-7

Prevention and mitigation of

• Influencing the Supply Chain (p.85)

occupational health and safety

impacts

403-9

KPI B2.1,

Work-related injuries

• Empowering Our People (p.83)

B2.2 &

• Influencing the Supply Chain (p.85)

B2.3

• Corporate Website - Sustainability >

Performance & Reporting

Training and Education

GRI 103: Management Approach 2016

103-1

Explanation of the material

Sustainability Governance (p.69-71)

topic and its boundary

• Empowering Our People (p.81)

103-2

GD-B3

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 404: Training and Education 2016

404-1

KPI B3.2

Average hours of training per

• Empowering Our People (p.81)

year per employee

• Corporate Website - Sustainability >

Performance & Reporting

404-3

Percentage of employees

receiving regular performance

and career development

reviews

Non-discrimination

GRI 103: Management Approach 2016

103-1

Explanation of the material

Sustainability Governance (p.69-71)

topic and its boundary

103-2

GD-B1

The management approach

and its components

103-3

Evaluation of the

management approach

94

New World Development Company Limited

Corporate Sustainability | Content Index for Reporting Guidelines

GRI

HKEx ESG

Description

References and Remarks

Indicator

Guide

GRI 406: Non-discrimination 2016

406-1

GD-B1

Incidents of discrimination

There were no confirmed instances of non-compliances

and corrective actions taken

or grievances during the reporting period.

Labour Standards

GD-B4

Policies and compliance on

• Sustainability Governance (p.69-71)

child and forced labour

• Influencing the Supply Chain (p.85)

There were no confirmed instances of non-compliances

or grievances during the reporting period.

KPI B4.1

Measures to review

• Influencing the Supply Chain (p.85)

employment practices to

avoid child and forced labour

KPI B4.2

Steps taken to eliminate such

practices when discovered

Community Investment

GD-B8,

Focus areas of contribution

• Fostering Sustainable Communities (p.88-89)

KPI B8.1 &

and resources contributed

B8.2

Supplier Social Assessment

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-B5

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 414: Supplier Social Assessment 2016

414-1

KPI B5.2 &

New suppliers that were

B5.3

screened using social criteria

Customer Health and Safety

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

GD-B6

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 416: Customer Health & Safety 2016

416-1

Assessment of the health and

safety impacts of products

and service categories

• Sustainability Governance (p.69-71)

• Influencing the Supply Chain (p.85)

• Influencing the Supply Chain (p.85)

• Sustainability Governance (p.69-71)

• Caring for the Customers (p.86-87)

There were two non-compliance cases during the reporting period.

• Caring for the Customers (p.86-87)

Customer Privacy

GRI 103: Management Approach 2016

103-1

Explanation of the material

topic and its boundary

103-2

KPI B6.5

The management approach

and its components

103-3

Evaluation of the

management approach

GRI 418: Customer Privacy

418-1

KPI B6.2

Substantiated complaints

concerning breaches of

customer privacy and loss of

customer data

Product Responsibility

KPI B6.1

Percentage of total products

sold or shipped subject to

recalls for safety and health

reasons

KPI B6.3

Practices relating to observing

and protecting intellectual

property rights

KPI B6.4

Quality assurance process

and recall procedures

• Sustainability Governance (p.69-71)

There were no confirmed substantiated complaints or losses of customer data during the reporting period.

• Caring for the Customers (p.87)

We were not made aware of any recall of products for health and safety reasons that have a significant impact on the Group during the reporting period.

Annual Report 2020

95

Corporate Sustainability

Verification Statement - Corporate Sustainability Report

Scope and Objectives

Hong Kong Quality Assurance Agency ("HKQAA") performed a limited assurance engagement on the sustainability disclosures stated in the Corporate Sustainability section of Annual Report 2020 of New World Development Company Limited ("NWD") and the supplementary information on NWD's website under the sustainability section (collectively "The Report") for the period from 1st July 2019 to 30th June 2020.

The Report has been prepared in accordance with the Global Reporting Initiative Sustainability Reporting Standards ("GRI Standards") - Core option and the requirements stipulated in the latest Environmental, Social and Governance Reporting Guide ("ESG Reporting Guide") set out in Appendix 27 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ("HKEx") as well as making reference to the Task Force on Climate-related Financial Disclosures ("TCFD") requirements for disclosing climate change actions.

Our responsibility is to express an assurance conclusion on the completeness, accuracy and reliability of the sustainability data and information stated in the Report. The objectives are to:

  • assess whether the scope of the Report covers all significant aspects;
  • verify whether the Report addresses the Core option of the GRI Standards, the ESG Reporting Guide and the TCFD's recommendations;
  • evaluate accuracy of the selected data and information presented in the Report including Environmental Performance Data, Social Performance Data, numbers on Overview of SV2030, sustainability-linked loan environmental impact reduction performance, etc.; and
  • review whether the data and information management mechanism for preparing the Report is reliable.

Level of Assurance and Methodology

We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and the International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas Statements issued by the International Auditing and Assurance Standards Board. The verification procedure was designed for devising opinions and conclusions to obtain a limited level of assurance. The extent of this verification process undertaken covered the criteria specified in the GRI Standards: Core Option, the ESG Reporting Guide and TCFD's recommendations.

Within the scope of our verification, we conducted the following procedures and activities:

  • reviewing internal systems and processes for collecting, analysing, aggregating and reporting of the performance data,
  • verifying performance data including Environmental Performance Data, Social Performance Data, numbers on Overview of SV2030, sustainability-linked loan environmental impact reduction performance, etc.,
  • interviewing responsible personnel with accountability for preparing the Report, and
  • examining raw data and supporting evidence of the selected samples according to the risk-based sampling plan.

Independence

NWD is responsible for the collection and presentation of the information. HKQAA did not involve in the collection and calculation of data or the compilation of the reporting contents where HKQAA's verification activities are entirely independent from NWD.

Conclusion

Based on the verification procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the information and data stated in the Report has not been prepared, in all material aspects, in accordance with the GRI Standards: Core Option, the ESG Reporting Guide and TCFD's recommendations. The data and information verified are regarded as accurate, consistent, reliable and complete.

Signed on behalf of Hong Kong Quality Assurance Agency

Connie Sham

Head of Audit

Hong Kong Quality Assurance Agency

September 2020

96

New World Development Company Limited

Corporate Sustainability | Verification Statement

Verification Statement - Carbon Audit

Scope and Objectives

Hong Kong Quality Assurance Agency ("HKQAA") conducted an independent verification of the Greenhouse Gas ("GHG") emissions inventory ("Emissions Inventory") of New World Development Company Limited ("NWD"). The GHG Emissions Inventory comprised of 20 Assets and covered the period from 1st July 2019 to 30th June 2020. The aim of this verification was to provide a limited assurance on the completeness and accuracy of the data consolidated in the GHG Emissions Inventory by NWD. The quantification approach is reference to ISO 14064-1:2006'Specification with guidance at the organisation level for quantification and reporting of greenhouse gas emissions and removals'.

The 20 commercial and retail assets included in the GHG Emissions Inventory are 1) Guangzhou K11 Art Mall, 2) Guangzhou K11 ATELIER, 3) Shanghai K11 ATELIER and Art Mall, 4) Wuhan K11 Select, 5) D•PARK, 6) Hong Kong K11 Art Mall, 7) K11 ATELIER Victoria Dockside, 8) Beijing Boading Building Shopping Arcade, 9) Langfang New World Centre, 10) Tangshan New World Centre, 11) Guangzhou Park Paradise, 12) Wuhan New World Centre, 13) Wuhan New World International Trade Tower 1 & 2, 14) Artisan Hub, 15) Hong Kong Golf and Tennis Academy (HKGTA), 16) KOHO, 17) Manning House, 18) New World Tower 1 & 2, 19) The Forest and 20) Youth Square.

Methodology

Within the verification scope, HKQAA reviewed the activity data and supporting evidence of the selected samples out of the 20 assets. The verification was conducted in accordance with ISO 14064-3:2006'Specification with guidance for the validation and verification of greenhouse gas assertions'. The process included an assessment of:

  • The reporting boundaries;
  • The quantification methodology and emission factors;
  • The integrity of the activity data and supporting evidence; and
  • The accuracy and completeness of the GHG calculations.

Integrity and accuracy of the aggregated data was tested by tracing the selected sample data back to its source. The underlying processes for data collection, aggregation, estimation, calculation and internal checking were reviewed and undergone reliability test. Materiality threshold of 10% was adopted for this verification. HKQAA verification team did not partake in the GHG data preparation process.

Conclusion

Based on the verification results, the verification team concluded that no material error or omission was identified in the GHG Emissions Inventory. There is no evidence that the GHG Emissions Inventory is not materially correct and is not a fair representation GHG data and information.

Total GHG emissions of the 20 Assets of NWD from 1 July 2019 to 30 June 2020:

FY2020 GHG Emissions

Tonnes of CO2 equivalent

Scope 1

1,368

Scope 2

83,172

Total (Scope 1 + Scope 2)

84,540

Scope 3

Not Reported

Total (Scope 1 + Scope 2 + Scope 3)

84,540

Signed on behalf of Hong Kong Quality Assurance Agency:

Ms. Connie Sham

Lead Verifier

Date of issuance: 9 September 2020 Hong Kong Quality Assurance Agency

19/F., K. Wah Centre, 191 Java Road, North Point, Hong Kong Contact detail www.hkqaa.org

Annual Report 2020

97

Corporate Governance Report

All along, the Company is committed to maintain a high standard of corporate governance practices to safeguard the interests of its shareholders and enhance the performance of the Group. From time to time, the board of Directors (the "Board") reviews and improves its corporate governance practices in order to ensure that the Group is under the leadership of an effective board so as to optimise return for its shareholders.

CORPORATE GOVERNANCE CODE

Throughout the year ended 30 June 2020, the Company has complied with all the applicable code provisions of the Corporate Governance Code (the "CG Code") as set out in Appendix 14 of the Listing Rules, with the exception of code provisions A.6.4 and E.1.2.

Code provision A.6.4 is in relation to guidelines for securities dealings by relevant employees. Under code provision A.6.4, the Board should establish written guidelines on no less exacting terms than the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") set out in Appendix 10 of the Listing Rules for its relevant employees in respect of their dealings in the securities of the Company. Instead of following the Model Code strictly, the Board has established its own guidelines which are not on no less exacting terms than the Model Code. Such deviation from the CG Code is considered necessary because of the huge size of employees of the Group which is around 44,000 and the Group's diversified businesses. For these reasons, to follow the exact guidelines of the Model Code will cause immense administrative burden to the Company in processing written notifications from the relevant employees who deal in the securities of the Company, which can be avoided under the Company's own guidelines.

Code provision E.1.2 provides that the chairman of the board should attend the annual general meeting. Dr. Cheng Kar-Shun, Henry, the Chairman of the Board, was unable to attend the annual general meeting of the Company held on 19 November 2019 (the "AGM") due to his other engagement. Dr. Cheng Chi-Kong, Adrian, Executive Vice- chairman & General Manager (the Executive Vice-chairman & Chief Executive Officer effective from 1 May 2020) of the Company who took the chair of the AGM, together with other members of the Board who attended the AGM, were of sufficient calibre for answering questions at the AGM and had answered questions at the AGM competently.

DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code as its own code of conduct for securities transactions by its Directors.

Specific enquiries have been made with all Directors who confirmed that they had complied with the required standard set out in the Model Code during the year ended 30 June 2020.

98 New World Development Company Limited

Corporate Governance Report

BOARD GOVERNANCE

Board of Directors

to provide leadership and oversee the management, businesses, strategic directions and nancial performance of the Group

Executive Committee

to oversee the management function and day-to-day operations with the Board's delegated authority; and to monitor the execution of strategic plans and operations of all business units

Audit Committee

to review and supervise the Group's nancial reporting process and risk management and internal control systems; to monitor external auditor's independence and objectivity and effectiveness of the audit process; and to ensure effectiveness of internal audit programme and internal audit function

Remuneration

Committee

to review and recommend to the Board on remuneration policy and structure of all Directors and senior management, and on the remuneration packages of individual Executive Director and senior management

Nomination

Committee

to review the structure, size and composition of the Board; to assess the independence of Independent Non-executive Directors; and to make recommendations to the Board on appointment and re-appointment of Directors

Sustainability

Committee

to oversee sustainability and environmental, social and governance ("ESG") issues and risks; and to monitor the integrity and compliance of the disclosure on sustainability and ESG information in the Company's annual sustainability reporting

Risk Management Committee

to assist the Audit Committee in deciding the Group's risk level and risk appetite; and to ensure soundness and effectiveness of the Group's risk management and internal control systems

Group Sustainability Steering Committee

to support the Sustainability Committee on identication, evaluation and management of material ESG related issues and to guide group companies to attain ESG related goals

Executive Vice-chairman &

Chief Executive Of-cer

Corporate Functions

Finance & Accounts, Legal &

Company Secretarial, Human

Resources, Information Technology,

Investor Relations, Corporate

Communication, Training and

Administration

Core Businesses

Property development, property investment, roads, aviation, construction and insurance

Strategic Development

Creation of a more sustainable and diversied ecosystem of the New World Group by tapping on synergy among various cross-sector interaction such as education, culture, innovative technologies, medical care and health care, adding value to core businesses as well as enhancement of the unique experience of the consumers

Annual Report 2020

99

Corporate Governance Report

BOARD OF DIRECTORS

Composition

Mr. So Chung-Keung, Alfred and Mr. Au Tak-Cheong resigned as Executive Directors with effect from 1 January 2020 and 1 April 2020 respectively. With effect from 1 May 2020, Dr. Cheng Chi-Kong, Adrian was re-designated from the Executive Vice-chairman & General Manager to Executive Vice-chairman & Chief Executive Officer. Further, Ms. Huang Shaomei, Echo and Ms. Chiu Wai-Han, Jenny were appointed as Executive Directors (the "Board Changes"), both with effect from 1 May 2020.

As at 30 September 2020, the Board comprises a total of 16 Directors, being seven Executive Directors, three Non-executive Directors and six Independent Non-executive Directors. The number of Independent Non-executive Directors represents more than one-third of the Board as required by Rule 3.10A of the Listing Rules. The biographies of the Directors are set out from pages 48 to 56 of this annual report.

As disclosed in the announcement of the Company issued on 25 September 2020, Ms. Ki Man-Fung, Leonie ("Ms. Ki") had tendered her resignation as Non-executive Director with effect from 1 October 2020. Subsequent to Ms. Ki's resignation, the Board will comprise a total of 15 Directors, being seven Executive Directors, two Non- executive Directors and six Independent Non-executive Directors.

All Directors have entered into formal letters of appointment with the Company, each for a term of three years, subject to retirement by rotation in accordance with the articles of association of the Company (the "Articles of Association").

Article 103(A) of the Articles of Association provides that at each annual general meeting, one-third of the Directors for the time being (or if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation, provided that every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every three years. Also, pursuant to Article 94 of the Articles of Association, any Director appointed to fill a casual vacancy or as an addition to the Board is subject to re-election at the next following general meeting or next following annual general meeting of the Company respectively.

To ensure that Directors have spent sufficient time on the affairs of the Company, all Directors have annually disclosed to the Company the level of time involved in performing the duties of his/her position held in the Company and other public companies or organisations or other major appointments.

Chairman, Executive Vice-chairman & Chief Executive Officer and Other Executive Directors

Dr. Cheng Kar-Shun, Henry, the Chairman, has led the Board and ensured that the Board works effectively and that all important issues are discussed in a timely manner. Dr. Cheng Chi-Kong, Adrian, the Executive Vice-chairman

  • General Manager (re-designated as the Executive Vice-chairman & Chief Executive Officer from 1 May 2020), oversees the Company's day-to-day businesses and the implementation of major strategies and policies of the Company. Each of the other Executive Directors takes up different responsibilities according to their own expertise. The responsibilities of the Chairman, the Executive Vice-chairman & General Manager / the Executive Vice- chairman & Chief Executive Officer, and the other Executive Directors are clearly set out in their respective letters of appointment. The positions of the Chairman and the Executive Vice-chairman & General Manager / the Executive Vice-chairman & Chief Executive Officer, are held by separate individuals so as to maintain an effective segregation of duties.

100 New World Development Company Limited

Corporate Governance Report

Non-executive Directors

Non-executive Directors (including the Independent Non-executive Directors) serve the relevant function of bringing independent judgement on the development, performance and risk management of the Company. They have the same duties of care and skill and fiduciary duties as the Executive Directors.

Independence of Independent Non-executive Directors

The Company has received annual confirmation of independence from all Independent Non-executive Directors in accordance with Rule 3.13 of the Listing Rules. The Board is of the view that all Independent Non-executive Directors are independent in accordance with the Listing Rules.

During the year, Independent Non-executive Directors met quarterly with members of senior management and representatives from major business units, which provided a good opportunity for Independent Non-executive Directors to better understand the businesses of the Group and to discuss a wide range of issues concerning the business of the Group.

Role of the Board

The Board oversees the management, businesses, strategic directions and financial performance of the Group. It is collectively responsible for the management and operation of the Company. The Board is the ultimate decision making body of the Company except for matters requiring the approval of the shareholders in accordance with the Articles of Association, the Listing Rules or other applicable laws and regulations.

Day-to-day businesses of the Company are delegated to the management team which works under the leadership and supervision of the Executive Vice-chairman & General Manager / the Executive Vice-chairman & Chief Executive Officer and the Executive Committee of the Board as discussed in sections below.

Corporate Governance Functions

The Board is responsible for performing the corporate governance duties of the Company including:

  1. to develop and review the Company's policies and practices on corporate governance;
  2. to review and monitor the training and continuous professional development of the Directors and senior management;
  3. to review and monitor the Company's policies and practices in compliance with legal and regulatory requirements;
  4. to develop, review and monitor the code of conduct and compliance manual (if any) applicable to employees and the Directors; and
  5. to review the Company's compliance with Appendix 14 of the Listing Rules (Corporate Governance Code and Corporate Governance Report).

The Group complied with all major aspects of laws and regulations that are significant to its business operations. There were no threatened or concluded cases of material nature in connection with legal compliance during the year.

Annual Report 2020

101

Corporate Governance Report

Board Meetings

Regular Board meetings are held at least four times a year with at least 14 days' notices and additional meetings with reasonable notices are held as and when the Board considers appropriate. The Company Secretary assists the Chairman in preparing agenda for each meeting. Draft agenda for each Board meeting is circulated to all Directors to enable them to include other matters into the agenda. Agenda accompanying board papers are sent to all Directors at least three days before each regular Board meeting. Board decisions are voted upon at the Board meetings. The Company Secretary records all matters considered by the Board, decisions reached and any concerns raised or dissenting views expressed by the Directors. Minutes of meetings are kept by the Company Secretary with copies circulated to all Directors for information and records.

Directors' Training

Each newly appointed Director is provided with the necessary induction and information to ensure that he/she has a proper understanding of the Company's operations and businesses as well as his/her responsibilities under the relevant statues, laws, rules and regulations. From time to time, the Company Secretary also provides the Directors with updates on the latest development and changes in the Listing Rules and other relevant legal and regulatory requirements.

The Executive Vice-chairman and General Manager / the Executive Vice-chairman & Chief Executive Officer reports Group business activities including operations review, segment performance, strategies and new initiatives at regular Board meetings. In addition, all Directors are provided with monthly updates on major business segments performance and year-to-date financials. All these give the Board a balanced and understandable assessment of the Group's performance, position and prospects and enable the Board as a whole and each Director to discharge their duties.

102 New World Development Company Limited

Corporate Governance Report

All Directors are encouraged to participate in continuous professional development activities to develop and refresh their knowledge and skills. From time to time, the Company has arranged in-house trainings for the Directors in the form of seminars and reading materials. A summary of training received by the Directors for the year ended 30 June

2020 according to the records provided by the Directors is as follows:

Type of Continuous Professional Development

Training on

corporate governance,

regulatory development and

Attending

Name of Directors

other relevant topics

corporate events or visits

Executive Directors

Dr. Cheng Kar-Shun, Henry

-

Dr. Cheng Chi-Kong, Adrian

Mr. Cheng Chi-Heng

-

Ms. Cheng Chi-Man, Sonia

-

Mr. Au Tak-Cheong*

Mr. Sitt Nam-Hoi

Mr. So Chung-Keung, Alfred*

-

Ms. Huang Shaomei, Echo#

-

Ms. Chiu Wai-Han, Jenny#

Non-executive Directors

Mr. Doo Wai-Hoi, William

-

Mr. Cheng Kar-Shing, Peter

-

Ms. Ki Man-Fung, Leonie

-

Independent Non-executive Directors

Mr. Yeung Ping-Leung, Howard

Mr. Cha Mou-Sing, Payson

-

Mr. Cha Mou-Zing, Victor

(Alternate Director to Mr. Cha Mou-Sing, Payson)

-

Mr. Ho Hau-Hay, Hamilton

Mr. Lee Luen-Wai, John

Mr. Liang Cheung-Biu, Thomas

Mr. Ip Yuk-Keung, Albert

*  Mr. Au Tak-Cheong and Mr. So Chung-Keung, Alfred resigned as Directors with effect from 1 April 2020 and 1 January 2020 respectively

#appointed as Director with effect from 1 May 2020

Annual Report 2020

103

Corporate Governance Report

BOARD COMMITTEES

The Board discharges some of its responsibilities through delegation to respective Board-level committees, namely the Executive Committee, the Audit Committee, the Remuneration Committee, the Nomination Committee and the Sustainability Committee. All the Board committees are empowered by the Board under their own terms of reference which have been posted on HKEx's website and/or the Company's website.

Executive Committee

Members:

Executive Directors

Dr. Cheng Kar-Shun, Henry (Chairman)

Dr. Cheng Chi-Kong, Adrian

Mr. Cheng Chi-Heng

Ms. Cheng Chi-Man, Sonia

Mr. Au Tak-Cheong*

Mr. Sitt Nam-Hoi

Mr. So Chung-Keung, Alfred*

Ms. Huang Shaomei, Echo#

Ms. Chiu Wai-Han, Jenny#

*  Mr. Au Tak-Cheong and Mr. So Chung-Keung, Alfred resigned as Directors with effect from 1 April 2020 and 1 January 2020 respectively

#appointed as Director with effect from 1 May 2020

The Board has delegated to the Executive Committee comprising all Executive Directors with authority and responsibility for handling the management functions and day-to-day operations of the Company, while reserving certain key matters such as the declaration of interim dividend, making recommendation of final dividend or other distributions for the approval by the Board. The Executive Committee monitors the execution of the Company's strategic plans and the operations of all business units of the Company, and manages and develops generally the businesses of the Company. The Executive Committee meets regularly as and when necessary.

Audit Committee

Members:

Independent Non-executive Directors

Mr. Lee Luen-Wai, John (Chairman)

Mr. Yeung Ping-Leung, Howard

Mr. Cha Mou-Sing, Payson

Mr. Ho Hau-Hay, Hamilton

Mr. Liang Cheung-Biu, Thomas

Mr. Ip Yuk-Keung, Albert

The Audit Committee, which comprises of all Independent Non-executive Directors, is responsible for reviewing the Group's financial controls and its risk management and internal control systems. The Audit Committee is empowered to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. It also reviews the internal audit programme and ensures the internal audit function is adequately resourced and effective.

104 New World Development Company Limited

Corporate Governance Report

During the year, the Audit Committee met twice and reviewed the audited financial statements of the Company for the year ended 30 June 2019 and the unaudited interim financial statements of the Company for the six months ended 31 December 2019 with recommendations to the Board for approval, reviewed reports on risk management and internal control systems of the Group, and discussed with the management and the external auditors on the accounting policies and practices which may affect the Group and the financial reporting matters. Furthermore, the Audit Committee reviewed the framework and policy of risk management, the system of internal control and the financial statements for the year ended 30 June 2020 of the Company with recommendation to the Board for approval.

Remuneration Committee

Members:

Independent Non-executive Directors

Mr. Ho Hau-Hay, Hamilton (Chairman)

Mr. Yeung Ping-Leung, Howard

Mr. Cha Mou-Sing, Payson

Mr. Lee Luen-Wai, John

Executive Director

Dr. Cheng Kar-Shun, Henry

The Remuneration Committee is responsible for making recommendations to the Board on the Company's policy and structure on the remuneration of all Directors and senior management of the Company and on the establishment of a formal and transparent procedure for developing remuneration policy for the Company for approval by the Board. It shall also make recommendations to the Board on the remuneration packages of individual Executive Director and senior management.

The remuneration of individual Executive Director and senior management is determined with reference to his/her duties and responsibilities with the Company, the Company's performance as well as remuneration benchmarks in the industry and the prevailing market condition. The Company's Human Resources Department provides materials on relevant remuneration data, remuneration benchmarks, market analysis and proposals to the Remuneration Committee for consideration. The remuneration package is performance-based and linked to the Company's profitability, aimed to be competitive to attract and retain talented employees.

During the year, the Remuneration Committee met once and reviewed the remuneration policy of the Company, including that for the Directors and senior management of the Company. The remuneration for the Executive Directors comprises basic salary, pensions and discretionary bonus. Share options have been granted to all Directors and senior management to subscribe for shares in the Company under the Company's share option scheme. In addition, a Director was granted options under share option scheme of a listed subsidiary of the Group to subscribe for shares in that listed subsidiary. Details of the remuneration paid to the Directors and members of senior management for the financial year ended 30 June 2020 are disclosed in the notes to the financial statements.

Annual Report 2020

105

Corporate Governance Report

Nomination Committee

Members:

Executive Director

Dr. Cheng Kar-Shun, Henry (Chairman)

Independent Non-executive Directors

Mr. Lee Luen-Wai, John

Mr. Liang Cheung-Biu, Thomas

Mr. Ip Yuk-Keung, Albert

The Nomination Committee is responsible for reviewing the structure, size and composition of the Board, assessing the independence of Independent Non-executive Directors taking into account the independence requirements set out in Rule 3.13 of the Listing Rules, and making recommendations to the Board on appointment and re-appointment of Directors.

The Nomination Committee met once during the year and recommended to the Board on the Board Changes. It also reviewed the structure, size and composition of the Board and considered that the Board consists of a diverse mix of members and has provided a good balance of skills and experience appropriate to the business needs of the Group.

For the retiring Directors standing for re-election at 2020 annual general meeting of the Company, the Nomination Committee also met in August 2020 and reviewed their biographical details against relevant requirements under the Listing Rules and the nomination criteria set out in the Company's Nomination Policy and considered they have the required character, integrity and professional knowledge and experience to continue fulfilling their role and contributing to the Company.

The Board has adopted a Nomination Policy since November 2018 which sets out the criteria and procedures to be adopted when considering candidates to be appointed as Directors and re-appointment of existing Directors. In the case of identifying candidate(s) to be appointed as Director, the Nomination Committee shall hold a meeting to consider the candidate(s) identified or selected pursuant to the nomination criteria and make recommendation to the Board if appropriate. The Board shall deliberate and decide on the appointment based upon the recommendation of the Nomination Committee. In the case of re-appointment of existing Director, the Nomination Committee shall review the overall contribution and service of the retiring Director to the Company and determine whether the retiring Director continues to meet the nomination criteria set out in the Nomination Policy, and if appropriate, recommend the retiring Director to the Board for consideration and recommendation to shareholders for the proposed re-election of Director at a general meeting. The factors considered in assessing the suitability of a proposed candidate for appointment as Director or re-appointment of existing Director are as follows:

  • Contribution to the Board with due regard to the Board's diversity policy;
  • Reputation for integrity;
  • Commitment to devote sufficient time to discharge duties as a Board member;
  • Potential conflicts of interest with the Company; and
  • Satisfaction of independence requirements of the Listing Rules in the case of a candidate for Independent Non- executive Director.

106 New World Development Company Limited

Corporate Governance Report

The Board has adopted a Board Diversity Policy (the "Policy") since August 2013 which sets out the approach by the Company to achieve diversity on the Board. Under the Policy, the Company recognises and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining its competitive advantage and supporting its sustainable development. In determining an optimum composition of the Board, the Company will consider all aspects of diversity and will also take into account factors based on its own business model and specific needs from time to time. Board members' appointment will be based on meritocracy and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board. Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, skills, regional and industry experience and expertise, cultural and educational background, and professional experience. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.

The current Board composition reflects diverse mix of educational background, professional knowledge, industry experience and length of service. The diversity mix of the Board as at 30 September 2020 is summarised in the following charts:

Diversity Mix

Number of Directors

16

14

12

10

8

6

4

2

0

Over 30

INED

21-30

Male

Over 60

11-20

NED

51-60

ED

0-10

41-50

Female

30-40

Designation

Gender

Age Group

Length of Service

(No. of years)

Remarks:

ED - Executive Director

NED - Non-executive Director

INED - Independent NED

Annual Report 2020

107

Disclaimer

New World Development Co. Ltd. published this content on 23 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 October 2020 09:34:09 UTC


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Financials
Sales 2021 72 680 M 9 378 M 9 378 M
Net income 2021 7 658 M 988 M 988 M
Net Debt 2021 118 B 15 166 M 15 166 M
P/E ratio 2021 13,2x
Yield 2021 5,05%
Capitalization 104 B 13 419 M 13 419 M
EV / Sales 2021 3,05x
EV / Sales 2022 2,70x
Nbr of Employees 44 000
Free-Float 55,1%
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Mean consensus BUY
Number of Analysts 14
Average target price 45,51 HKD
Last Close Price 40,80 HKD
Spread / Highest target 27,5%
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Spread / Lowest Target -13,7%
EPS Revisions
Managers
NameTitle
Chi Kong Cheng Executive Vice Chairman & Chief Executive Officer
Kar-Shun Cheng Chairman & Managing Director
Kar Shing Cheng Non-Executive Director
Cheung-Biu Liang Independent Non-Executive Director
Hau Hay Ho Independent Non-Executive Director