Li & Fung : Discloseable Transaction-Investment of 21.7% Stake in LF Logistics by Temasek and Resumption of Trading

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Incorporated in Bermuda with limited liability

Stock Code: 494

DISCLOSEABLE TRANSACTION

INVESTMENT OF 21.7% STAKE IN

LF LOGISTICS BY TEMASEK

RESUMPTION OF TRADING

Reference is made to the 2018 Annual Report of the Company, where the Company had indicated that it had decided to seek a separate listing ("spin-offIPO") for the Company's Logistics business on the Stock Exchange to further accelerate the pace of its business growth.

Considering the current market conditions and geopolitical uncertainties, the Company had continued to evaluate the capital fund raising initiative for LF Logistics while continuing the preparatory work in connection with the spin-off IPO. The Board is pleased to announce that the Company and LF Logistics (a wholly-owned subsidiary of the Company) have entered into the Subscription Agreement with Dahlia Investments Pte. Ltd. (the "Investor"), an indirect wholly-owned subsidiary of Temasek, on 28 June 2019, pursuant to which the Investor has agreed to subscribe for the Subscription Shares on the terms and conditions set out in the Subscription Agreement for a cash consideration of US$300 million, subject to adjustments for the Net Debt Adjustment Amount, for approximately 21.7% stake of LF Logistics.

The Investment values the Company's Logistics business at approximately US$1.4 billion on a post-money equity valuation basis. The Investment is subject to customary regulatory approvals, and upon Completion, LF Logistics will remain a subsidiary of the Company. As a result of the Investment, the proposed spin-off IPO will be postponed until further notice. Proceeds from the Investment, with the final proceeds subject to the adjustment of the Net Debt Adjustment Amount as of June 30, 2019, will be used to fund future capital expenditures, repay existing bank facilities, and accelerate business growth initiatives at LF Logistics. The Board believes that the Investment would allow the Company to unlock the value of LF Logistics and accelerate its business growth, as well as further enhance the capital structure and the financial flexibility of the Group.

1

LISTING RULES IMPLICATION

The Investment will constitute a deemed disposal of the interest in a subsidiary of the Company under Rule 14.29 of the Listing Rules. As one or more of the applicable percentage ratios (as defined in the Listing Rules) for the Investment are expected to be 5% or more but less than 25%, the Investment is expected to constitute a disclosable transaction of the Company under Chapter 14 of the Listing Rules. Accordingly, the Investment will be subject to the reporting and announcement requirements, but is exempted from the shareholders' approval requirement, under Chapter 14 of the Listing Rules. The Company will comply with the applicable requirements under Chapter 14 of the Listing Rules as and when necessary.

Shareholders and potential investors of the Company should note that the Investment is subject to certain conditions that may or may not be fulfilled. Shareholders and potential investors of the Company are reminded to exercise caution when dealing in the securities of the Company.

TRADING HALT AND RESUMPTION OF TRADING

At the request of the Company, trading in its shares on the Stock Exchange was halted at 10:18 a.m. on 28 June 2019 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for the resumption of trading in its shares with effect from 1:00 p.m. today, 28 June 2019.

INTRODUCTION

The announcement is made pursuant to Rule 13.09(2) of the Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Reference is made to the 2018 Annual Report of the Company, where the Company had indicated that it had decided to seek a spin-off IPO for LF Logistics on the Stock Exchange to further accelerate the pace of its business growth. Considering the current market conditions and geopolitical uncertainties, the Company had since continued to evaluate its capital fund raising initiative while continuing the preparatory work in connection with the spin-off IPO. The Board is pleased to announce that the Company and LF Logistics have entered into the Subscription Agreement with the Investor on 28 June 2019, pursuant to which the Investor has agreed to subscribe for the Subscription Shares on the terms and conditions set out in the Subscription Agreement for a cash consideration of US$300 million, subject to adjustments for the Net Debt Adjustment Amount, for approximately 21.7% stake of LF Logistics.

The Investment values LF Logistics at approximately US$1.4 billion on a post-money equity valuation basis. The Investment is subject to customary regulatory approvals, and upon Completion, LF Logistics will remain a subsidiary of the Company. As a result of the Investment, the proposed spin-off IPO will be postponed until further notice. Proceeds from

2

the Investment, with the final proceeds subject to the adjustment of the Net Debt Adjustment Amount as of June 30, 2019, will be used to fund future capital expenditures, repay existing bank facilities and accelerate business growth initiatives at LF Logistics. The Board believes the Investment would allow the Company to unlock the value of LF Logistics and accelerate its business growth, as well as further enhance the capital structure and the financial flexibility of the Group.

PRINCIPAL TERMS OF THE SUBSCRIPTION AGREEMENT

Date

28 June 2019

Parties

1. the Company;
2. LF Logistics; and
3. the Investor.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the Investor and its respective ultimate beneficial owners are third parties independent of, and not connected with, the Company and its connected persons.

The Subscription

LF Logistics has agreed to issue, and the Investor has agreed to subscribe for, the Subscription Shares, representing 21.7% of the enlarged issued share capital of LF Logistics immediately after Completion.

Consideration

The Consideration under the Subscription Agreement shall be US$300 million, subject to adjustment for the Net Debt Adjustment Amount. The Consideration was determined after arm's length negotiation among the Company, LF Logistics and the Investor with reference to the historical performance and future prospects of LF Logistics. The approximate US$1.4 billion post-money equity valuation of LF Logistics represents a price-to-earnings ratio of approximately 22x based on the 2018 net profit after taxation of LF Logistics.

The Consideration shall be payable in cash according to the following schedule:

1. Initial Consideration: The Initial Consideration shall be payable in cash at Completion.
2. Adjustment Payment: On the Post-Completion Payment Date, the Investor shall pay an amount equal to the lower of (i) 21.7% of the Net Debt Reference Amount and (ii)

3

US$3 million (if the Net Debt Reference Amount is a positive number), or LF Logistics shall pay an amount equal to 21.7% of the Net Debt Reference Amount, expressed in an absolute value (if the Net Debt Reference Amount is a negative number) (such amount of adjustment payment being the "Net Debt Adjustment Amount").

Conditions

Completion is subject to the following Conditions being satisfied (or waived) on or before the Longstop Date:

1. the Investor having received the antitrust approval pursuant to the Monopoly Regulation and Fair Trade Act of South Korea;
2. no material adverse event specifically related to LF Logistics has occurred on or prior to Completion; and
3. no governmental authority has enacted any law, and no governmental authority has instituted or threatened in writing any action, to prohibit or challenge the consummation of the Investment.

Completion

Completion shall take place on the Completion Date.

Covenants, Representations and Warranties

The Subscription Agreement also contains interim covenants of the Company and LF Logistics, and representations and warranties of the parties, which are usual and customary for a transaction of this nature and scale.

SHAREHOLDERS' AGREEMENT

At Completion, the Company, LF Logistics and the Investor will enter into a shareholders' agreement in respect of LF Logistics, pursuant to which the Investor will be granted certain governance and exit rights.

INFORMATION ON THE GROUP AND LF LOGISTICS

The Group is recognised as the world's leader in consumer goods design, development, sourcing and logistics. It specializes in responsibly managing supply chains of high-volume,time-sensitive goods for leading retailers and brands worldwide. The Group is focused on building the supply chain of the future and accelerating the speed in the supply chain through the development of its digital platform.

LF Logistics, which is the holding company of certain subsidiaries of the Company, is a high growth pan-Asian logistics service provider focused on serving the growing consumption-led

4

markets in the region. LF Logistics operates two distinct but integrated segments, namely the pan-Asiain-country logistics business segment and the global freight management business segment.

The summary of the financial information of LF Logistics for the financial years ended 31 December 2017 and 2018 is as follows:

	For the year ended	For the year
	31 December 2018	ended 31
	(Unaudited)	December 2017
		(Unaudited)
	(US$'000)	(US$'000)
Turnover	1,133,374	1,028,097
Core Operating Profit	86,093	75,103
Profit before taxation	82,152	68,597
Net profit after taxation	62,704	49,350

The net asset value of LF Logistics was US$445,587,000 as at 31 December 2018.

INFORMATION ON TEMASEK

Incorporated in 1974, Temasek is a global investment company headquartered in Singapore. Supported by its network of international offices, Temasek owns a S$308 billion (US$235 billion) portfolio as at 31 March 2018, with significant exposure to Singapore and the rest of Asia. Temasek's investment activities are guided by four investment themes and the long term trends they represent: Transforming Economies; Growing Middle Income Populations; Deepening Comparative Advantages; and Emerging Champions.

REASONS FOR AND BENEFITS OF THE INVESTMENT

In 2019, the Group's Logistics business has continued to benefit from the tailwind of the rising middleclass consumption in Asia, growth in e-commerce logistics, and geographic and vertical expansion. The Investment will allow the Company to fund future capital expenditures, repay existing bank facilities, and further accelerate the pace of the growth and development of the Group's Logistics business. The Board believes that the Investment would allow the Company to unlock the value of LF Logistics and accelerate its business growth, as well as further enhance the capital structure and the financial flexibility of the Group. As the Investment does not result in change in control of LF Logistics, no gain or loss will therefore arise on the Investment.

As a result of the Investment, the proposed spin-off IPO will be postponed until further notice.

5