Pharmaron Beijing Co., Ltd — Earnings Release 2020

Jan 25, 2021

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.

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Pharmaron Beijing Co., Ltd.* 康龍化成（北京）新藥技術股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 3759)

INSIDE INFORMATION ANNOUNCEMENT REGARDING THE ESTIMATE FOR ANNUAL RESULTS OF 2020

This announcement is made by Pharmaron Beijing Co., Ltd. (the “ Company ” and together with its subsidiaries, the “ Group ”) pursuant to Rule 13.09 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The following is the estimate of the Company for the annual results of 2020. The financial data contained in this results estimate has not been audited and is, except for non-IFRSs (International Financial Reporting Standards) adjusted net profit attributable to owners of the parent or as otherwise indicated, prepared in accordance with the PRC Accounting Standards for Business Enterprises.

I. ESTIMATE FOR ANNUAL RESULTS OF 2020

1. Period for the results estimate: January 1, 2020 to December 31, 2020

2. Trend of results estimate:

3. □Loss □Turn loss into profit □✓Up year-on-year □Down year-on-year □Other

4. Results estimate is as follows:

Item	Current reporting period	Same period last year
Revenue	Revenue: 5,034.5945 million- 5,222.4525 million Growth compared with the same period of last year: 34% – 39%	Revenue: 3,757.1601 million
Net profit attributable to owners of the parent	Profit: 1,132.6864 million – 1,187.4056 million Growth compared with the same period of last year: 107% – 117%	Profit: 547.1915 million

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Item	Current reporting period	Same period last year
Net profit attributable to owners of the parent excluding non-recurring gains or losses (Note 2)	Profit: 777.9121 million – 828.4258 million Growth compared with the same period of last year: 54% – 64%	Profit: 505.1377 million
Basic earnings per share	1.4325/share – 1.5017/share	Profit: 0.8284/share
Non-IFRSs adjusted net profit attributable to owners of the parent (Note 3)	Profit: 1,032.3704 million – 1,087.2837 million Growth compared with the same period of last year: 88% – 98%	Profit: 549.1332 million

Note 1:

The “million” in this results estimate is in RMB million, unless otherwise defined.

Note 2:

According to the preliminary estimate by the Company, the non-recurring gains or losses attributable to owners of the parent for the year of 2020 would be in the range of approximately RMB350 million and RMB390 million, which mainly includes:

• 1) The gains on fair value change and disposal of our equity investment, Zentalis Pharmaceuticals, Inc. (“ Zentalis ”) of the period is approximately RMB150 million. Zentalis was listed in Nasdaq Global Market on April 3, 2020 (U.S. local time) (stock code: ZNTL). At the time of listing, the Company held 570,124 shares of Zentalis. In accordance with the requirements of the new financial instrument standards adopted by the Company in 2019, the investment in Zentalis shall be measured at fair value and presented as other non-current financial assets. During this reporting period, the Company sold 285,062 shares of Zentalis at an average selling price of approximately USD51.87 per share. As of December 31, 2020, the Company still holds 285,062 shares of Zentalis.

• 2) In 2020, under the authorization of the general meeting, the Company regularly carried out financial derivatives transactions for hedging foreign exchange risks. The impact from gains such as the related foreign exchange options and foreign currency forward contracts on non-recurring gains or losses attributable to owners of the parent (after considering income tax) is approximately RMB115 million to RMB125 million.

Correspondingly, due to the impact of exchange rate fluctuations, the amount of foreign exchange losses (after considering income tax) included in the finance expenses of the Company in 2020 is approximately RMB105 million to RMB115 million. Pursuant to the PRC Accounting Standards for Business Enterprises and other reporting requirements, this portion of the loss is calculated into the recurring gains or losses of the Company in 2020.

• 3) Other non-recurring gains and losses mainly include income related to medium-risk and low-risk wealth management products invested with the Company’s own funds, government grants and subsidies included in current gains and losses, etc.

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Note 3:

To supplement the financial statements prepared by us, we use non-IFRSs adjusted net profit attributable to owners of the parent as an additional financial measure. We define non-IFRSs adjusted net profit attributable to owners of the parent as net profit before certain expenses/(gains): 1) share-based compensation expenses; 2) foreign exchange related losses (as listed in the recurring gains or losses mentioned above); 3) gains on derivative financial instruments related to foreign exchange (as listed in the non-recurring gains or losses mentioned above); 4) realized and unrealized related gains or losses from equity investments (including the gains on fair value change and disposal of investment in Zentalis as mentioned above).

The Company believes that the consideration of the non-IFRSs adjusted net profit attributable to owners of the parent by eliminating the impact of certain incidental, non-cash or non-operating items is useful for better understanding and assessing underlying business performance and operating trends for the Company’s management, shareholders and potential investors.

The non-IFRSs adjusted net profit attributable to owners of the parent is not an alternative to (i) profit before tax or net profit (as determined in accordance with IFRSs) as a measure of our operating performance, (ii) cash flows from operating, investing and financing activities as a measure of our ability to satisfy our cash needs, or (iii) any other measures of performance or liquidity. In addition, the presentation of the non-IFRSs adjusted net profit attributable to owners of the parent is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the IFRSs. Shareholders and potential investors should not view the non-IFRSs adjusted net profit attributable to owners of the parent on a stand-alone basis or as a substitute for results under the IFRSs, or as being comparable to results reported or forecasted by other companies.

II. COMMUNICATION STATUS WITH THE AUDITORS

The Company has communicated in advance with the auditors on matters related to the results estimate, and there is no major disagreement between the Company and the auditors on the financial data related to the results estimate.

The results estimate has not been audited or pre-audited by the auditors.

III. REASONS FOR CHANGES IN RESULTS

During the reporting period, the net profit attributable to owners of the parent increased as compared with the corresponding period of 2019, which is mainly due to:

1. the orderly implementation of the business plan of the Company. In 2020, the Company reported stable growth in revenue in its principal business and a gradual growth of operational efficiency, which improved profitability and resulted in corresponding growth in results.

2. the non-recurring gains or losses attributable to owners of the parent for 2020 increased as compared to last year.

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IV. RISK WARNING

1. The results estimate disclosed in this announcement is only a preliminary estimate made by the finance department of the Company and has not been audited by the auditors.

2. Details of the Company’s results for 2020 prepared under the PRC Accounting Standards for Business Enterprises or IFRSs will be disclosed in the annual report 2020 to be published by the Company on the Shenzhen Stock Exchange or The Stock Exchange of Hong Kong Limited, respectively. Investors are advised to exercise caution and pay attention to investment risks involved.

By order of the Board Pharmaron Beijing Co., Ltd.* 康龍化成（北京）新藥技術股份有限公司 Dr. Lou Boliang Chairman

Beijing, the PRC January 25, 2021

As at the date of this announcement, the Board of Directors comprises Dr. Lou Boliang, Mr. Lou Xiaoqiang and Ms. Zheng Bei as executive Directors; Mr. Chen Pingjin, Mr. Hu Baifeng, Mr. Li Jiaqing and Mr. Zhou Hongbin as non-executive Directors; Mr. Dai Lixin, Ms. Chen Guoqin, Mr. Tsang Kwan Hung Benson and Mr. Yu Jian as independent non-executive Directors.

• For identification purposes only

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