Very Substantial Acquisition Subscription of Convertible Bonds; Advance to an Entity; 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 the Cayman Islands with limited liability) (Stock Code: 8272)

VERY SUBSTANTIAL ACQUISITION SUBSCRIPTION OF CONVERTIBLE BONDS; ADVANCE TO AN ENTITY; AND RESUMPTION OF TRADING

BACKGROUND On 4 December 2012, the Company, the Subscriber, CPK and Coqueen entered into the Framework Agreement in respect of the incorporation of the SPV to facilitate and carry into effect the investment in FLM HK Operation and FLM Kowloon Operation by the Subscriber. At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:00 a.m. on 5 December 2012 pending the publication of the announcement regarding to the Framework Agreement. In the course of preparing the announcement, on 18 December 2012, the Company, the Subscriber and the relevant parties entered into the CB Subscription Agreement to which the Subscriber has conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$200,000,000. The terms of the CB Subscription Agreement in the event that the Convertible Bonds are converted in full at the Conversion Price, a total of 10,000 SPV Conversion Shares will be issued, representing 50% of the issued share capital of the SPV as enlarged by the Conversion.

The CB Subscription Agreement superseded the Framework Agreement as well as all and any previous agreements, arrangements or understandings between the parties relating to the matters referred to in the CB Subscription Agreement (save and except the Non-Disclosure Agreement), and all previous agreements, understandings or arrangement shall cease and determine with effect from the date of the CB Subscription Agreement.

1 THE CB SUBSCRIPTION AGREEMENT The Subscription Price, in the amount, shall be settled by the Subscriber in the following manner:

(a) HK$20,000,000 which has been paid by the Subscriber to the SPV as deposit upon the execution of the CB Subscription Agreement;

(b) at Completion, the Deposit shall be applied towards part payment of the Subscription Price; and

(c) balance of the Subscription price, in the sum of HK$180,000,000, shall be settled by the Subscriber by cashier order at Completion.

THE SUBSCRIBER SPV LOAN At Completion, the Subscriber shall grant to the SPV the loan in the principal amount of not less than HK$80,000,000 and capped at not more than HK$135,000,000, and both the Subscription Price (inclusive of the Deposit) and the Subscriber SPV Loan shall first be applied solely and exclusively for settlement of the acquisition of the Settlement Assets by the SPV and the levies. For any avoidance of doubt, if Completion shall not take place on the Settlement Agreement Completion Date, or if the CB Subscription Agreement shall be rescinded or terminated prior to Completion, the Subscriber SPV Loan shall not be granted or advanced to the SPV.

THE SECOND FRAMEWORK AGREEMENT On 23 January 2013, the Company, the Subscriber, the SPV, Coqueen, CPK and Mr. Chui Tak Keung, Duncan entered into the Second Framework Agreement and supplemented by the Supplemental Second Framework Agreement dated 30 January 2013 in relation to, inter alia, the adjustment with relevant parties of the CB Subscription Agreement concerning the Further Investment.

As the Further Investment may or may not be materialized, Shareholders and potential investors of the Company shall exercise caution when dealing in the Shares.

IMPLICATIONS UNDER THE GEM LISTING RULES Very Substantial Acquisition As the applicable percentage ratios defined under the GEM Listing Rules of the Subscription and the possible Conversion, respectively, exceed 100%, the Subscription and the possible Conversion constitute very substantial acquisitions under Chapter 19 of the GEM Listing Rules and are therefore subject to the reporting, publication and shareholders’ approval requirements under Chapter 19 of the GEM Listing Rules. As no Shareholder has any material interest in the Subscription, no Shareholder is required to abstain from voting at the EGM.

2 Advance to an entity Under Rule 17.15 of the GEM Listing Rules, a general disclosure obligation arises where the relevant advance to an entity by the Company and its subsidiaries exceeds 8% of the Company’s latest published consolidated total assets. The Deposit constitutes an advance to entity under Rule 17.15 of the GEM Listing Rules and the details of which are disclosed herein in compliance with Rule 17.15 of the GEM Listing Rules.

GENERAL The EGM will be held to consider and, if thought fit, approve the ordinary resolutions in respect of the CB Subscription Agreement, the possible Conversion, the Shareholders’ Agreement, the Agency Agreement and the transactions contemplated thereunder. A circular containing, among other things, further details of the CB Subscription Agreement, the Shareholders’ Agreement, the Agency Agreement and the notice of the EGM will be despatched to the Shareholders on or before 21 March 2013 to allow sufficient time for the preparation of the relevant information for inclusion in the circular.

SUSPENSION AND RESUMPTION OF TRADING IN SHARES At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:00 a.m. on 5 December 2012 pending the publication of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 a.m. on 31 January 2013.

BACKGROUND On 4 December 2012, the Company, the Subscriber, CPK and Coqueen entered into the Framework Agreement in respect of the incorporation of the SPV to facilitate and carry into effect the investment in FLM HK Operation and the FLM Kowloon Operation by the Subscriber. At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:00 a.m. on 5 December 2012 pending the publication of the announcement regarding to the Framework Agreement. In the course of preparing the announcement, on 18 December 2012, the Company, the Subscriber and the relevant parties entered into the CB Subscription Agreement to which the Subscriber has conditionally agreed to subscribe for the Convertible Bonds in the principal amount of HK$200,000,000. The terms of the CB Subscription Agreement in the event that the Convertible Bonds are converted in full at the Conversion Price, a total of 10,000 SPV Conversion Shares will be issued, representing 50% of the issued share capital of the SPV as enlarged by the Conversion.

3 This announcement provides the details of the CB Subscription Agreement and the relevant information in relation to it.

THE CB SUBSCRIPTION AGREEMENT Date 17 December 2012

(The Company entered into the CB Subscription Agreement on 18 December 2012)

Parties (1) Professional Guide Enterprise Limited, a company incorporated in the British Virgin Islands with limited liability and wholly-owned by Coqueen, as the SPV;

(2) Coqueen Company Limited, a company incorporated in Hong Kong with limited liability as the Guarantor;

(3) Mr. Chui Pui Kun as the Guarantor;

(4) Mr. Chui Tak Keung, Duncan as the Guarantor;

(5) Rich Paragon Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company, as the Subscriber; and;

(6) The Company

The SPV is incorporated to facilitate and carry into effect the investment in FLM HK Operation and FLM Kowloon Operation. Pursuant to the CB Subscription Agreement, CPK shall nominate the SPV to acquire the Settlement Assets (from CPK) and the Principal Assets (from CPK and Coqueen) respectively.

Coqueen is interested as to 44.63% in FLM HK, 29% in FLM Kowloon and 0.01% in the FLM Kowloon Properties respectively. Based on the information available to the Company, Coqueen is 69% owned by CPK, 29% owned by Ms. Chui Chan Oi Lin, Eilieen, 1% owned by Mr. Chui Tak Keung, Duncan and 1% owned by Ms. Chui Shuk Wah, Janet.

To the best of the knowledge, information and belief of the Directors having made all reasonably enquiries, CPK and Mr. Chui Tak Keung, Duncan are third parties independent of the Company and not connected persons (as defined in the GEM Listing Rules) of the Company.

4 Subscription Price The Subscriber has agreed to subscribe for the Convertible Bonds in the principal amount of HK$200,000,000.

The Subscription Price, in the amount, shall be settled by the Subscriber in the following manner:

(a) HK$20,000,000 which has been paid by the Subscriber to the SPV as deposit upon the execution of the CB Subscription Agreement;

(b) at Completion, the Deposit shall be applied towards part payment of the Subscription Price; and

(c) balance of the Subscription price, in the sum of HK$180,000,000, shall be settled by the Subscriber by cashier order at Completion.

The Deposit has been settled by the internal resources of the Group. The balance of the Subscription price shall be settled by the Company’s internal resources, debt financing, placing, right issue and/or other fund raising exercises. As at the date of this announcement, the Group is in preliminary discussion with the placing agent and/or underwriter for structures and terms of the fund raising exercises. The Company will make further announcement(s) in respect of the possible fund raising exercise as and when appropriate.

The Subscription Price is arrived at after arm’s length negotiations the parties, taking into account of a price to earnings ratio of approximately 11.85 times based on the principal amount of the Convertible Bonds of HK$200,000,000 and 50% interest in SPV after Conversion and the audited consolidated net profit after taxation of FLM HK and FLM Kowloon of approximately HK$25,335,000 and HK$8,400,000 respectively for the financial year ended 31 March 2012.

ADVANCE TO AN ENTITY The Subscriber has paid to the SPV a sum of HK$20,000,000 as the Deposit. At Completion, the Deposit shall be applied as partial payment of the Subscription Price. If the CB Subscription Agreement is rescinded or terminated in accordance with the terms of the CB Subscription Agreement, or if Completion does not occur simultaneously with and on the same day as the SPV Assets Acquisition, the entire amount of the Deposit shall be refunded to the Subscriber (without interest) within ten Business Days of the Subscriber’s issuance of the demand for refund in writing.

The amount of the Deposit exceeds 8% of the total asset of the Company as defined under Chapter 19 of the GEM Listing Rules and it constitutes an advance to an entity pursuant to GEM Listing Rules 17.15.

5 THE SUBSCRIBER SPV LOAN At Completion, the Subscriber shall grant to the SPV the loan in the principal amount of not less than HK$80,000,000 and capped at not more than HK$135,000,000, and both the Subscription Price (inclusive of the Deposit) and the Subscriber SPV Loan shall first be applied solely and exclusively for settlement of the acquisition of the Settlement Assets by the SPV and the levies. For any avoidance of doubt, if Completion shall not take place on the Settlement Agreement Completion Date, or if the CB Subscription Agreement shall be rescinded or terminated prior to Completion, the Subscriber SPV Loan shall not be granted or advanced to the SPV. No interest rate, security and repayment terms of the Subscriber SPV Loan are specified in the CB Subscription Agreement.

The principal amount of the Subscriber SPV Loan is arrived at after arm’s length negotiations between the parties with reference to the working capital requirement of the SPV. The Subscriber SPV loan shall be settled by the Company’s internal resources, debt financing and/or other fund raising exercises. As at the date of this announcement, the Group is in preliminary discussion with the placing agent and/or underwriter for structures and terms of the fund raising exercises. The Company will make further announcement(s) in respect of the possible fund raising exercise as and when appropriate.

Conditions Precedent to the CB Subscription Agreement Completion of the CB Subscription Agreement is conditional upon:

(a) (if required), all necessary consents, confirmations, permits, approvals, licenses and authorisations having been obtained from the Stock Exchange in connection with the subscription of the Convertible Bonds as well as the implementation of the CB Subscription Agreement (collectively, the “Necessary Approvals”) which Necessary Approvals shall remain valid and effective and not threatened with any revocation up to and including the time immediately prior to Completion;

(b) the passing of an ordinary resolution by the Shareholders approving the subscription of the Convertible Bonds and the CB Subscription Agreement at an extraordinary general meeting of the Company to be convened in accordance with the GEM Listing Rules;

(c) all the pre-completion events and undertakings of the CB Subscription Agreement having been performed, fulfilled or satisfied, or, where appropriate, will be performed, fulfilled or satisfied simultaneously at Completion and, where relevant, on terms of formal documentation which shall have been previously approved by the Subscriber;

6 (d) the parties and/or other relevant parties of the CB Subscription Agreement having executed such formal agreements for or in relation to the conduct and/or completion of the Investment, and/or the pre-completion events and undertakings of the CB Subscription Agreement, and all such formal agreements having been approved by the Subscriber prior to their respective execution;

(e) subject to any SPV Restructuring, the SPV Shareholding Structure having remained intact at all times up to Completion; and

(f) at all times up to Completion, the warranties of the CB Subscription Agreement being accurate, correct and complied with by the SPV and the Guarantors as if the warranties of the CB Subscription Agreement were made at the time of Completion.

None of the conditions precedent (a) and (b) shall be waived by any party of the CB Subscription Agreement. The other conditions may be waived by the Subscriber by notice in writing to the SPV.

Principal terms of the Convertible Bonds Principal Amount: HK$200,000,000

Interest: The Convertible Bonds shall not bear any interest.

Maturity Date: The date falling on the third anniversary of the issue date of the Convertible Bonds or, if that is not a Business Day, then the Business Day which immediately follows next.

Conversion Price: HK$20,000 per SPV Conversion Share.

SPV Conversion Shares: Up to 10,000 SPV Conversion Shares to be issued by the SPV pursuant to the conditions of the Bond Instrument which assuming and upon full conversion of the Convertible Bonds in its entirety at the full principal amount of HK$200,000,000 shall represent 50% of the entire issued share capital of the SPV as enlarged following conversion of the Convertible Bonds in its entirety.

Redemption: Redemption at Maturity

Any principal amount of the Convertible Bonds which has not been redeemed or converted in accordance with the conditions as set out in the Bond Instrument by the Maturity Date, shall be redeemed by the SPV on the Maturity Date in cash at a redemption amount equal to 100% of the principal amount, without premium.

7 Redemption on default

If any of the events (“Events of Default”) specified below occur, the SPV shall forthwith give notice to the holders of the Convertible Bonds and each holder of the Convertible Bonds may (without prejudice to any other rights and remedies available to the holders of the Convertible Bonds), at its option, opt to convert the Convertible Bonds in its entirety or, alternatively, issue a redemption notice to the SPV in respect of part (in multiples of the denomination of HK$20,000) or all of principal amount of the Convertible Bonds held by it, whereupon the Convertible Bonds shall become immediately due and payable at a redemption amount equal to 100% of the principal amount, without premium, and the SPV shall pay the said redemption amount to the holders of the Convertible Bonds in cash. The Events of Default are as follows:

(i) any failure to pay the principal amount of the Convertible Bonds when due and such failure continues for a period of seven Business Days;

(ii) any default made by the SPV in the performance or observance of any undertaking, warranty or representation given by it under these terms (other than the covenant to pay the principal amount of the Convertible Bonds) and such default is incapable of remedy (in which event no such notice as is referred to below shall be required), or if capable of remedy is not remedied within fifteen Business Days of service by any holder of the Convertible Bonds on the SPV of notice requiring such default to be remedied;

(iii) any default made by the SPV in the repayment of any credit or loan facility granted by any bank or money lender whether as a primary obligor or a guarantor where the amount(s) in default is more than HK$5,000,000 (or its equivalent in any other currency) in aggregate;

(iv) any other present or future indebtedness of the SPV or any of its subsidiaries (the “Subsidiaries”) for or in respect of any bond, debenture, note or similar instrument of indebtedness or any other monies borrowed or raised, becomes due and payable prior to

8 its stated maturity otherwise than at the option (as the case may be) of the SPV or the relevant Subsidiary, or any such indebtedness is not paid when due or, as the case may be, within any applicable grace period, or the SPV or any of its Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any such indebtedness provided that the aggregate amount of indebtedness and guarantees and indemnities in respect of which one or more events mentioned above have occurred equals or exceeds HK$5,000,000 or its equivalent in any other currency provided that the provisions of this paragraph shall not apply to any alleged default if the SPV or the relevant Subsidiary, as the case may be, is contesting the matter in good faith;

(v) a resolution is passed or an order of a court of competent jurisdiction is made that the SPV be wound up or dissolved otherwise than for the purposes of or pursuant to and followed by a consolidation, amalgamation, merger or reconstruction the terms of which shall have previously been approved in writing by a resolution of the holders of the Convertible Bonds;

(vi) a resolution is passed or an order of a court of competent jurisdiction is made for the winding up or dissolution of any Subsidiary except (a) for the purposes of or pursuant to and followed by a consolidation or amalgamation with or merger into the SPV or any other Subsidiary, (b) for the purposes of or pursuant to and followed by a consolidation, amalgamation, merger or reconstruction (other than as described in (a) above) the terms of which shall have previously been approved by a resolution of the Convertible Bonds, or (c) by way of a voluntary winding up or dissolution where there are surplus assets in such Subsidiary and such surplus assets attributable to the SPV and/or any other Subsidiary are distributed to the SPV and/or any such other Subsidiary;

(vii) an encumbrancer takes possession or a receiver is appointed over the whole or a material part of the assets or undertaking of the SPV or any Subsidiary;

9 (viii) a distress, execution or seizure order before judgement is levied or enforced upon or sued out against the whole or a material part of the property, assets or revenues of the SPV or any Subsidiary (as the case may be) and is not discharged or stayed within thirty Business Days or such longer period as the holders of the Convertible Bonds, by a resolution of the holders of the Convertible Bonds, may consider appropriate in relation to the event concerned;

(ix) the SPV or any of its Subsidiaries is insolvent or unable to pay its debts as and when they fall due or the SPV or any of its Subsidiaries shall initiate or consent to proceedings relating to itself under any applicable administration, bankruptcy, composition or insolvency law or scheme of arrangement while insolvent (except, for the avoidance of doubt, for the purposes of a dissolution or winding-up permitted under paragraphs (v) or (vi) above) or makes a general assignment for the benefit of, or enters into any composition with, its creditors;

(x) proceedings shall have been initiated against the SPV or any Subsidiary under any applicable bankruptcy, reorganisation or insolvency law, and such proceedings shall not have been discharged or stayed within fifteen Business Days (or such longer period as the holder(s) of the Convertible Bonds by a resolution of the holders of the Convertible Bonds may consider appropriate in relation to the jurisdiction concerned;

(xi) it is or becomes unlawful for the SPV to perform or comply with any of its obligations under the Bond Instrument or any Convertible Bonds, or due to no fault on the part of any holders of the Convertible Bonds any such obligation is not or ceases to be enforceable or is claimed by the SPV not to be enforceable;

(xii) any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or substantially all or (other than on arm’s length terms or with respect to a part of the relevant entity’s business or operations which has not materially contributed to the consolidated operating profit of the SPV and its Subsidiaries for at least

10 three years prior to the day on which this paragraph operates) a material part of the assets of the SPV or any of its Subsidiaries; or

(xiii) any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (a) to enable the SPV lawfully to enter into, exercise its rights and perform and comply with its obligations under the Convertible Bonds or the Bond Instrument, (b) to ensure that those obligations are legally binding and enforceable, and (c) to make the Convertible Bonds or the Bond Instrument admissible in evidence in the courts of Hong Kong, is not taken, fulfilled or done by the requisite time.

Conversion Period: The period commencing from the date of issue of the Convertible Bonds and ending on the date that falls on the fifth Business Day before the Maturity Date (both dates inclusive).

Conversion Rights: Each holder of the Convertible Bonds shall have the right, exercisable during the Conversion Period to convert the whole or any part (in multiples of the denomination of HK$20,000) of the outstanding principal amount of the Convertible Bonds held by such holders of the Convertible Bonds into such number of SPV Conversion Shares as will be determined by dividing the principal amount of the Convertible Bonds to be converted by the Conversion Price.

No fraction of a SPV Conversion Share shall be issued on conversion and in lieu of the SPV shall pay a cash amount in HK$ equal to such principal amount of the Convertible Bonds that is not converted.

Ranking of SPV SPV Conversion Shares issued upon exercise of conversion Conversion Shares: rights shall rank pari passu in all respects with all other existing SPV Shares at the date of conversion and all SPV Conversion Shares shall include rights to participate in all dividends and other distributions.

11 Transferability: The Convertible Bonds may be transferred to (i) any person if prior written approval shall have been given by the SPV; or (ii) a Hong Kong licensed bank or regulated financial institution in Hong Kong (the “Permitted Chargee”) as the result of the enforcement by that Permitted Chargee of a pledge of a Convertible Bond by a holder of the Convertible Bonds to Permitted Chargee under a genuine financing transaction for the raising of funds by the holder of the Convertible Bonds.

Pre-Completion Events and Undertakings of the SPV and Guarantors The SPV undertakes to, and the Guarantors shall procure the SPV to, pending Completion and save as otherwise disclosed, operate, conduct and manage the business of the SPV on a normal and usual basis and in the ordinary course of day-to-day operations and shall not do or omit to do (or allow to be done) or to be omitted to be done any act or thing (in either case whether or not in the ordinary course of day-to- day operations) which will have a material adverse effect on the financial condition of the SPV and in particular (but without limited the generality of the foregoing), the SPV shall not, and the Guarantors shall procure that the SPV not to, prior to Completion and without the prior written consent of the Subscriber:

(a) issue, allot, or agree to issue or allot any share or loan capital or grant or agree to grant or redeem any option or right to acquire or subscribe any of its share or loan capital;

(b) take any action which may result in either a dilution of the share capital of the SPV or the Subscriber possessing on completion of full conversion of the Convertible Bonds less than 50% of the entire issued share capital of the SPV as enlarged upon conversion of the entire principal amount or exercise of the conversion rights in full;

(d) create or permit to arise any encumbrance, other form of security or encumbrance of equity of whatsoever nature on or in respect of any part of the SPV’s undertaking, property or assets, and for any avoidance of doubt, in this connection, the Guarantors and the SPV jointly and severally warrants, represents and undertakes that there is no subsisting or existing encumbrance, third party interest and/or other securities against the SPV or any of the SPV Shares;

(e) give any guarantee, indemnity, surety or security other than guarantees, indemnity, surety or security given in relation to banking facilities made available to the SPV which has been disclosed in writing by the SPV and/or the Guarantors to the Subscriber prior to Completion;

12 (f) enter into any contract or other transaction or capital commitment or undertake any material contingent liability or acquire any asset (save and except those in relation to or concerning the conduct and/or completion of the Investment, the acquisition of the assets by the SPV under the CPK Shareholding Acquisition and CPK Loan Acquisition, the SPV Assets Acquisition, the pre-completion events and undertakings and/or the post-completion events and undertakings) which exceeds, whether individually or cumulatively, a monetary value of HK$500,000;

(g) in any way depart from the business as stated and the SPV shall not terminate any agreement, arrangement or undertaking or waive any right of material value undermining such purpose;

(h) dispose of any of its assets;

(i) declare, pay or make any dividends or other distributions;

(j) appoint any new director other than the person nominated by the Subscriber;

(k) dispose of the ownership, possession, custody or control of any corporate or other books or records of material importance;

(l) release, compromise or write off any or any amount recorded in the books of account of the SPV;

(m) compromise, settle, release, discharge or compound any civil, criminal, arbitration or other proceedings or any liability, claim, action, demand or dispute or waive any right in relation to any of the foregoing;

(n) terminate any, or allow to lapse any, licences, approvals, authorisations, permissions or insurance policies now in effect and which are requisite for the business of the SPV and/or that of any of the subsidiaries or the operation, conduct and/or management of the same; or

(o) make or permit to be made any alteration to the memorandum or articles of association or the equivalent constitutional documents of the SPV.

Provided that nothing shall restrict the SPV from the undertaking of any transaction or doing of anything in relation to or concerning the fulfilment of the conditions precedent of the CB Subscription Agreement, the SPV Restructuring, the conduct and/ or completion of the Investment, the acquisition of the assets by the SPV under the CPK Shareholding Acquisition and CPK Loan Acquisition to the SPV, the SPV Assets Acquisition, the pre-completion events and undertakings and/or the post-completion events and undertakings.

13 The SPV shall, and the Guarantors shall procure the SPV to, incorporate the subsidiaries, and to have (i) the SPV being the sole shareholder of the respective subsidiaries but subject to any SPV Restructuring, and (ii) CPK and Mr. Chui Tak Keung, Duncan appointed as directors of the respective subsidiaries.

Subject to any SPV Restructuring, the SPV Shareholding Structure shall remain intact at all times up to Completion.

The SPV and the Guarantors shall jointly and severally ensure:

(a) the delivery of the consolidated management accounts of the SPV for each and every calendar month to the Subscriber within twenty-five Business Days after the end of the calendar month concerned; and

(b) no dividend shall be declared or paid by FLM HK or FLM Kowloon prior to Completion.

Coqueen and/or CPK shall execute such agreements or instruments with financier(s) for granting of loans to the SPV, and such loans shall be dealt with by the SPV in accordance with Subscriber’s instructions.

Coqueen and CPK shall nominate the SPV as the vehicle to acquire all assets to be acquired by Coqueen and/or CPK under the CPK Shareholding Acquisition and the CPK Loan Acquisition and shall effect the completion of SPV Assets Acquisition via the SPV as the purchaser.

The Guarantors and the SPV shall jointly ensure full compliance with and observance of the Settlement Agreement, inclusive of but not limited to settlement of the settlement price and the levies.

This above pre-completion events and undertakings shall be and remain valid, binding and effective up to Completion.

Completion The Completion shall take place on the Settlement Agreement Completion Date and subject to the satisfaction or fulfillment of the conditions precedent of CB Subscription Agreement.

Completion of the CB Subscription Agreement shall occur simultaneously with and on the same day as the SPV Asset Acquisition. If the foregoing condition is not met, no Completion shall occur and the CB Subscription Agreement shall be rescinded forthwith. For any avoidance of doubt, this condition shall be interpreted and construed as if it were a condition precedent to the CB Subscription Agreement.

14 If any conditions precedent shall not have been fulfilled (save as waived by the Subscriber) by the Long Stop Date, the CB Subscription Agreement shall, unless the parties of the CB Subscription Agreement agree in writing to postpone the Long Stop Date to another date (being a Business Day), automatically terminate and cease to be of any effect except for certain terms relating to, among others, declaration of independence and confidentiality which shall remain in force.

Upon Completion, the SPV shall, and the Guarantors shall procure the SPV to, appoint one person nominated by the Subscriber out of three directors to each of the board of the SPV and the subsidiaries formed under the FLM Restructuring.

The post-completion events and undertakings of the SPV and the Guarantors include, inter alia, (i) financial reporting; (ii) appointment of the board directors of the SPV and SPV subsidiaries; (iii) implementation of the FLM Restructuring; (iv) financing arrangement and; (v) the Shareholders’ Agreement.

As at the date of this announcement, the Company has no intention to change the composition of the Board.

CONVERSION OF CONVERTIBLE BONDS Assuming full conversion of the Convertible Bonds in the principal amount of HK$200,000,000, up to 10,000 SPV Conversion Shares will be issued and allotted to the Subscriber, representing 50% of the entire issued share capital of the SPV as enlarged following conversion of the Convertible Bonds in its entirety. The Conversion shall constitute a very substantial acquisition to the Company.

The Company is in the progress of obtaining legal advice and opinions of the auditor of the Company to clarify the issue of consolidation of the SPV. The Company will disclose the issue of the consolidation of the SPV in the Circular.

THE SHAREHOLDERS’ AGREEMENT Pursuant to the CB Subscription Agreement, the Shareholders’ Agreement shall be executed by Coqueen (or its subsidiary following the SPV Restructuring) and the Subscriber forthwith upon the Conversion in full. Pursuant to the Shareholders’ Agreement, the Shareholders’ Agreement shall be terminated if the parties to the Shareholders’ Agreement cease to be a shareholder of the SPV. Details of the Shareholders’ Agreement are set out below.

Management Structure Upon the execution of the Shareholders’ Agreement, the board of the SPV shall have five members, three of whom being appointed by the Subscriber while the other two being appointed by Coqueen.

15 Coqueen and Subscriber shall procure the board of the SPV to make a delegation of its power and authority to the Management Committee so that the authority and responsibility to exercise control, direction, supervision and management of the SPV and its subsidiaries shall be divided between the board of the SPV and the Management Committee as follows:

(1) Subject to compliance with reserved matters contemplated under the Shareholders’ Agreement, the board of the SPV shall have the authority, power and responsibility to:

(a) evaluate and determine the business policies, operational objectives, corporate strategies, general development plans from time to time for the purpose of attaining the mutual goals of between Coqueen and Subscriber;

(b) financial planning for and related arrangements of the Property Holding Subsidiaries;

(d) review and approve the annual financial statements of the SPV and its subsidiaries;

(e) determine and approve (i) accounting principles and policies for adoption by the SPV and its subsidiaries in connection with the preparation of its financial statements, and (ii) remuneration of auditors; and

(f) make recommendation to Coqueen and Subscriber as regards the resolution and disposal of any reserved matters contemplated under the Shareholders’ Agreement from time to time arising for decision by Coqueen and Subscriber;

(2) Subject to compliance with reserved matters contemplated under the Shareholders’ Agreement, the Management Committee shall have the authority, power and responsibility to:

(a) prepare the draft budget and business plan for approval by the board of the SPV and revise the budget and business plan for re-approval or further approval by the board of SPV as per the board of the SPV’s request;

(b) goodwill promotion and brand management in respect of the trademarks, tradenames and other intellectual property rights owned by the SPV and its subsidiaries;

(c) implement and execute the business policies, operational objectives, corporate strategies, general development plans from time to time resolved by the board of the SPV to be adopted by the SPV and its subsidiaries; and

16 (d) supervise, manage and exercise control over the day-to-day operation and conduct of the business and related activities of the SPV and its subsidiaries (other than financial planning for and related arrangements of the Property Holding Subsidiaries) in all respects and the administration of all general internal and external affairs of the SPV and its subsidiaries and each member of the SPV and its subsidiaries.

(3) The board of directors of each subsidiary of the SPV shall comprise of 4 directors. Each of Coqueen and the Subscriber shall be entitled to appoint 2 directors to the board of each of the subsidiaries of the SPV.

(4) The Management Committee shall have the direct authority, power and responsibility to supervise, manage and exercise control over the day to day operation, conduct of business and activities of each subsidiary of the SPV (other than the Property Holding Subsidiaries).

(5) Directors of the SPV and its subsidiaries appointed by Coqueen may only be removed by Coqueen and Coqueen may at the same time as such removal or at any time whilst such vacancy exists, appoint a new director. Directors of the SPV and its subsidiaries appointed by the Subscriber may only be removed by the Subscriber and the Subscriber may at the same time as such removal or at any time whilst such vacancy exists, appoint a new director. Any such removal or appointment of a director by Coqueen or Subscriber may be effected by notice in writing and signed by or on behalf of Coqueen or Subscriber and served on the SPV at its registered office and Coqueen and the Subscriber at the address specified on the Shareholders’ Agreement. Coqueen or the Subsciber removing a director shall indemnify the SPV and the relevant subsidiaries against any claim arising in connection with that director’s removal from office.

The Subscriber shall procure the directors appointed by it to the SPV and its subsidiaries:

(1) to observe the division of authority between the board of the SPV and the Management Committee on the terms contemplated under the Shareholders’ Agreement;

(2) not to revoke, reduce or diminish the authority delegated by the board of the SPV to the Management Committee;

(3) not to interfere with the operation of the Management Committee or any exercise of power or authority by the Management Committee;

(4) not to reverse or countermand decision of the Management Committee;

17 (5) not to exercise executive authority in relation to the affairs of the subsidiaries of the SPV(other than the Property Holding Subsidiaries); and

(6) not to do anything, take or initiate any action, arrangement or measure the effect or intended purpose of which will constitute an infringement of any of (1) to (5) above.

Break-up Event If at any time any of the directors appointed by the Subscriber to the SPV and its subsidiaries fails to observe in accordance with the Shareholders’ Agreement, Coqueen shall be entitled to the Event A or the Event B. Pursuant to the Shareholders’ Agreement, the Subscriber does not entitle to the Event A or Event B.

The break-up event shall be deemed to have occurred (the “Break-up Event”) and Coqueen shall be entitled to declare the occurrence of a Break-up Event if:

(1) a warning notice has been issued by Coqueen under the Event A but the Subscriber and/or the directors appointed by the Subscriber shall fail to comply; or

(2) a notice has been issued by Coqueen under the Event B to convene the meeting of the shareholders of the SPV but such meeting is dissolved owing to a lack of quorum by reason of non-attendance by the Subscriber or its representative; or

(3) a meeting of the shareholders of the SPV has been convened following a notice issued by Coqueen under the Event B but no mutually satisfactory solution has been agreed upon by the shareholders of the SPV as the outcome of such meeting.

Within the period of 4 years from the date of execution of the Shareholders’ Agreement, Coqueen shall not declare any occurrence of a Break-up Event. During this period:

(1) no action taken by the Subscriber;

(2) no resolution passed by the board of the SPV;

(3) no action authorized by the board of the SPV;

(4) no action taken by any of the directors appointed by the Subscriber, which is contrary to or in breach of the Shareholders’ Agreement shall have effect on or be binding on the Management Committee or any of the directors appointed by Coqueen and the Management Committee shall continue to have and may exercise the authority to manage and supervise the day to day operation of the SPV and its subsidiaries despite any interference from the Subscriber, the board of the SPV or any of the directors appointed by the Subscriber.

18 Following the declaration by Coqueen of the occurrence of a Break-up Event, Coqueen shall be entitled to elect:

(1) to exercise a put option requiring the Subscriber to buy from Coqueen the 50% shares in the SPV at 50% of the fair value of the SPV, by giving notice in writing to the Subscriber with a copy to the SPV; or

(2) exercise a call option requiring the Subscriber to sell to Coqueen the 50% shares in the SPV at 50% of the fair value of the SPV, by giving notice in writing to the Subscriber with a copy to the SPV; or

(3) with consent by the Subscriber, put the SPV into liquidation.

If Coqueen elects to exercise the put option or call option, the following provisions shall take effect to determine the fair value of the SPV:

(1) the SPV shall promptly after its receipt of the exercise notice issued by Coqueen select and instruct a firm of independent public accountants, which shall be one of the big four accounting firms based in Hong Kong to certify in writing the sum which, in their opinion, is the fair value of the SPV (on the basis of a sale between a willing seller and a willing buyer but no account being taken of any control premium nor the fact that the purchaser of the SPV Shares will as a result of the option exercised by Coqueen will have 100% controlling interest in the SPV);

(2) the independent public accountants may engage an independent professional valuer to provide valuation on the SPV and/or its assets;

(3) the fair value of the SPV can (if determined by the independent public accountants to be a fair valuation basis) be a valuation based on net assets or the most recent audited profits times an earning multiple or a mixture of both, depending on nature of the underlying assets/operations at the relevant juncture;

(4) an earning multiple to be applied in the valuation of the fair value of the SPV or any relevant subsidiaries of the SPV shall be based on the average of earning multiples of entities listed on the Stock Exchange whose primary business is similar to the business of the relevant subsidiaries of the SPV;

(5) such firm of independent accountants shall act as experts and not as arbitrators and their certification shall, in the absence of fraud or manifest error, be final, conclusive and binding on Coqueen and Subscriber;

(6) the cost of obtaining such certificate shall be borne by the SPV;

19 (7) the SPV shall forward a copy of such certificate to Coqueen and the Subscriber promptly after receiving the same from the independent accountants;

(8) within 10 Business Days after receiving a copy of such certificate from the SPV, Coqueen may elect to revoke the exercise notice given by Coqueen pursuant to the put option and call option contemplated under the Shareholders’ Agreement to sell or (as the case may be) purchase the Subscriber’s Shares at the certified fair value; and

(9) if no election is made by Coqueen under (8) above, Coqueen shall be deemed to have waived its right of revocation and shall be bound to proceed with the purchase or (as the case may be) of the SPV Shares at the certified fair value.

If Coqueen makes an election to revoke the exercise notice previously given by Coqueen pursuant to the put option and call option contemplated under the Shareholders’ Agreement, no sale and purchase of the SPV Shares will occur following the declaration by Coqueen of the Break-up Event concerned. Such revocation shall not prejudice Coqueen’s right to invoke certain clause under the Shareholders’ Agreement in relation to any future or subsequent non-observance of interfere with the operation of the Management Committee by any of the directors appointed by the Subscriber to the SPV and its subsidiaries.

Pursuant to Shareholders’ Agreement, the call and put option will be exercised with reference to the fair value of the SPV. As such, the Directors consider the terms of the call/put options are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

The exercise of call/put option following the declaration by Coqueen of the occurence of the Break-up Event may constitute a separate transaction and may constitute a connected transaction to the Company. The Company shall comply with the respective GEM Listing Rule requirements accordingly.

Financial Year End and Dividend Policy Unless otherwise agreed by Coqueen and Subscriber, the financial year of the SPV shall end on 31 March every year.

Subject to compliance with the terms of any credit or loan facilities for the time being obtained by the SPV and its subsidiaries, Coqueen and the Subscriber shall procure the SPV to declare, make and pay to Coqueen and the Subscriber in proportion to their respective shareholding in the SPV a cash dividend in respect of each financial year (whether by way of interim or final dividend) in amount not less than 80% of the annual after tax profit of the SPV.

20 THE AGENCY AGREEMENT Date 22 November 2012

Parties (1) Able Wind Limited, a wholly-owned subsidiary of the Company

(2) Profit Direct Limited, as the Referral Agent

To the best knowledge, information and belief of the Directors after making all reasonable enquiries, the Referral Agent and its ultimate beneficial owner are third parties independent of the Company and not connected persons (as defined in the GEM Listing Rules) of the Company.

Referral Services Pursuant to the Agency Agreement, the Referral Agent is appointed as the exclusive agent to provide the following services:

(a) finding, exploring, identifying, referring and/or introducing Investment Opportunities to Able Wind Limited;

(b) negotiating and liaising with relevant parties for matters concerning and in relation to the Investment Opportunities;

(c) facilitating Able Wind Limited entering into appropriate agreements on or in relation to the Investment Opportunities with relevant parties; and

(d) handing such matters in relation to the Investment Opportunities as and when requested by Able Wind Limited.

Referral fee In consideration of the above referral services, the Able Wind Limited agreed to pay a fee at the rate of 5% of the Consideration to the Referral Agent. In view of the business opportunity and growth prospects of the business of FLM HK and FLM Kowloon, the parties to the Agency Agreement, after arm’s length negotiations, have mutually arrived at the referral fee.

The referral fee shall be settled by Able Wind Limited within 10 business days after the date of completion of the Investment Opportunities.

21 THE SECOND FRAMEWORK AGREEMENT On 23 January 2013, the Company, the Subscriber, the SPV, Coqueen, CPK and Mr. Chui Tak Keung, Duncan entered into the Second Framework Agreement and supplemented by the Supplemental Second Framework Agreement dated 30 January 2013 in relation to, inter alia, the adjustment with relevant parties of the CB Subscription Agreement concerning the Further Investment.

Pursuant to the Second Framework Agreement, upon completion of the FLM Restructuring, the Subscriber shall carry out the Further Investment to acquire a portion of Coqueen’s entire shareholding in the SPV. The consideration is to be agreed by the parties and shall be fully settled and discharged partly in cash and partly by the issuance of a convertible bond to Coqueen by the Company. Pursuant to the Supplemental Second Framework Agreement, the parties shall enter into the Formal Agreement in relation to the Further Investment on or before 20 May 2013 (or such later date as the parties to the Second Framework Agreement agree in writing). The Company will comply with the requirements of the GEM Listing Rules if and when appropriate.

As the Further Investment may or may not be materialized, Shareholders and potential investors of the Company shall exercise caution when dealing in the Shares.

INFORMATION OF THE SPV, FLM HK AND FLM KOWLOON Information of the SPV Professional Guide Enterprise Limited is incorporated in the British Virgin Islands with limited liability and is regarded as a special purpose vehicle to facilitate and carry into effect the Investment. As at the date of this announcement, the SPV is authorized to issue 5,000 ordinary shares of US$1.00 each, of which 10,000 SPV Shares have been issued and fully paid and Coqueen is the sole legal and beneficial owner of the SPV.

As a result of the completion of the SPV Assets Acquisition, the SPV shall remain the sole legal and beneficial owner of the Settlement Assets and the Principal Assets free from any ancumbrance, which in turn is beneficially interested in 89.26% of the entire issued share capital of FLM HK and 86% of the entire issued share capital of FLM Kowloon.

Pursuant to the CB Subscription Agreement, the SPV shall implement and complete the FLM Restructuring as soon as practicable but in any event on or before 3 June 2014 (and if that is not a Business Day, then on the Business Day which immediately follows next), which FLM Restructuring shall involve the following schemes and restructurings:

(a) in respect of and concerning FLM HK and the FLM HK Operation: (i) FLM HK shall remain as the sole legal and beneficial owner of the FLM HK Properties, (ii) the Subsidiary A shall become the sole shareholder of FLM HK and therefore the sole ultimate beneficial owner of the FLM HK Properties, and (iii) the FLM HK Operation shall be transferred or assigned by FLM HK to the Subsidiary B at a nominal consideration of HK$1.00, and thereupon, the Subsidiary B shall be solely and wholly responsible for the FLM HK Operation;

22 (b) in respect of and concerning FLM Kowloon and the FLM Kowloon Operation: (i) CTI shall remain as the sole legal owner of the FLM Kowloon Properties, (ii) Coqueen shall transfer or assign its entire holding of 0.01% interest in CTI to FLM Kowloon at a nominal consideration of HK$1.00, and FLM Kowloon shall be the sole shareholder of CTI, and as such, FLM Kowloon shall be the sole legal and beneficial owner of the FLM Kowloon Property, (iii) the Subsidiary C shall become the sole shareholder of FLM Kowloon and therefore the sole ultimate beneficial owner of the FLM Kowloon Property, and (iv) the FLM Kowloon Operation shall be transferred or assigned by FLM Kowloon to the Subsidiary D at a nominal consideration of HK$1.00, and thereupon, the Subsidiary D shall be solely and wholly responsible for the FLM Kowloon Operation;

(c) in respect of FLM Trademarks: the FLM Trademarks shall be assigned or transferred by FLM HK to the Subsidiary E at nominal considerations; and

(d) the FLM Restructuring and the shareholding, directorship, functioning, management, operation and other affairs of and concerning each of the subsidiary of the SPV shall be implemented in accordance with any plan and scheme approved by the Subscriber provided that such approval is not to be unreasonably withheld or delayed by the Subscriber.

Information of FLM HK FLM HK is primarily engaged in the operation of high-end Chinese restaurant business, serving Cantonese cuisine and in the provision of banquet catering services.

FLM HK is incorporated in Hong Kong with limited liability. FLM HK is located at 1/F to 4/F and Shop No.2B, Ground Floor, Newman House, 35-45 Johnston Road, Wanchai, Hong Kong. As at the date of this announcement, FLM HK is authorized to issue 60,000 ordinary shares of HK$10 each, of which 60,000 shares of FLM HK have been issued and fully paid and is beneficially owned as to 44.63% by CWK, 44.63% by Coqueen and 10.74% by FLM HK Other Shareholders. FLM HK is sole legal and beneficial owner of the FLM HK Properties and is also the registered owner of FLM Trademarks.

Information of FLM Kowloon FLM Kowloon is primarily engaged in the operation of high-end Chinese restaurant business, serving Cantonese cuisine.

FLM Kowloon is incorporated in Hong Kong with limited liability. FLM Kowloon is located at Shop 8, G/F. and 1/F., Luna Court, 53-59 Kimberley Road, Tsimshatsui, Kowloon. As at the date of this announcement, FLM Kowloon is authorized to issue 1,700 ordinary shares of HK$1,000 each, of which 1,000 shares of FLM Kowloon have been issued and fully paid and is beneficially owned as to 43% by CWK and Chui Wai Kwan Investments Company Limited, 43% by CPK and Coqueen and 14% by FLM Kowloon Other Shareholders. FLM Kowloon Properties is wholly-owned by CTI which is in turn owned as to 1% by Coqueen and 99% by FLM Kowloon.

23 The diagram below shows the shareholding structure of the FLM HK and FLM Kowloon as at the date of this announcement

CWK Coqueen FLM HK Other Shareholders

44.63% 44.63% 10.74%

FLM HK

CWK and Chui Wai FLM Kowloon Kwan Investment Coqueen and CPK Company Limited Other Shareholders

43% 43% 14%

FLM Kowloon

The diagram below shows the shareholding structure of the FLM HK and FLM Kowloon upon full conversion of the Convertible Bonds

FLM Kowloon Subscriber Coqueen FLM HK Other Shareholders Other Shareholders

50% 50%

SPV

14% 86% 89.26% 10.74%

FLM Kowloon FLM HK

24 Financial Information of FLM HK The financial information extracted from the audited accounts of FLM HK for the two financial years ended 31 March 2011 and 2012 are as follows:

Year ended Year ended 31 March 2011 31 March 2012 audited audited (HK$’000) (HK$’000)

Revenue 111,249 119,900 Profit before taxation 23,899 31,098 Profit after taxation 18,967 25,335 Net Asset 50,414 65,749

Financial Information of FLM Kowloon The financial information extracted from the audited accounts of FLM Kowloon for the two financial years ended 31 March 2011 and 2012 are as follows:

Year ended Year ended 31 March 2011 31 March 2012 audited audited (HK$’000) (HK$’000)

Revenue 50,231 54,337 Profit before taxation 7,275 10,619 Profit after taxation 5,626 8,400 Net Asset 11,277 16,676

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION The Company is an investment holding company and its subsidiaries are principally engaged in the local catering business, brand management and is acting as a sourcing agent for reputable buyers in a variety of products.

The Group has been proactively identifying potential investment opportunities for building a stronger business foundation, broadening its source of income and improving its overall financial results. In order to further explore into the local catering industry, the Company entered into the CB Subscription Agreement on 18 December 2012 to subscribe for the Convertible Bonds in the principal amount of HK$200,000,000. If the Convertible Bonds is converted in full at the Conversion Price, a total of 10,000 SPV Conversion Shares will be issued, representing 50% of the issued share capital of the SPV as enlarged by the Conversion. The principal amount of the Convertible Bonds of HK$200,000,000 represents a price to earnings ratio of approximately 11.85 times based on 50% interest in the SPV after Conversion and the audited consolidated net profit after taxation of FLM HK and FLM Kowloon of approximately HK$25,335,000

25 and HK$8,400,000 respectively for the financial year ended 31 March 2012. The price to earnings ratio of approximately 11.85 times represents a substantial discount to the average price to earnings ratio of approximately 18.32 times as quoted from Bloomberg under the sector (GICS) of classification “restaurants” listed on the Stock Exchange as at 20 December 2012.

The Directors consider that the Subscription provides an excellent opportunity for the Company to participate in the local high-end catering market with strong earnings potential and create synergy effect with its existing catering business.

Taking into consideration (i) the Company’s corporate strategy at exploring the feasibility of further expansion in catering business, (ii) the basis for the Subscription Price, (iii) the development potential of the local high-end catering industry, as far as the Directors believe, will continue to perform well in the coming years, the Directors are of the view that the Subscription and the terms of the Convertible Bonds are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Upon completion of the Subscription, the Group will focus on business development of FLM HK and FLM Kowloon and intends to maintain the operations of all the existing business segments.

Advance to an entity Under Rule 17.15 of the GEM Listing Rules, a general disclosure obligation arises where the relevant advance to an entity by the Company and its subsidiaries exceeds 8% of the Company’s latest published consolidated total assets. The Deposit constitutes an advance to entity under Rule 17.15 of the GEM Listing Rules and the details of which are disclosed herein in compliance with Rule 17.15 of the GEM Listing Rules.

26 SUSPENSION AND RESUMPTION OF TRADING IN SHARES At the request of the Company, trading in the Shares on the Stock Exchange has been suspended from 9:00 a.m. on 5 December 2012 pending the publication of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in the Shares with effect from 9:00 a.m. on 31 January 2013.

DEFINITIONS “Agency Agreement” an agency agreement dated 22 November 2012 entered into by Referral Agent and Able Wind Limited, a wholly-owned subsidiary of the Company in relation to the referral of the Investment Opportunities

“Board” the board of Directors

“Bond Instrument” a bond instrument set out in a schedule of the CB Subscription Agreement

“Business Day(s)” a day (excluding Saturday and Sunday) on which licensed banks are generally open for business in Hong Kong throughout their business hours

“CB Subscription Agreement” the convertible bonds subscription agreement dated 17 December 2012 and entered into by the Company, the Subscriber, Coqueen, the SPV, CPK and Mr. Chui Tak Keung, Duncan on 18 December 2012 in relation to the Subscription

“Circular” a circular to be despatched by the Company to the Shareholders on or before 21 March 2013

“Company” Chinese Food and Beverage Group Limited, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on GEM

“Completion” completion of the Subscription

“Consideration” the aggregate of the amount paid or invested by the Able Wind Limited for the acquisition of equity interest in FLM HK, FLM Kowloon and/or any other corporate entities within the Fook Lam Moon Companies, which the consideration may be settled by Able Wind Limited in cash, the Shares and/or other instruments

27 “Conversion” conversion of the Convertible Bonds in the principal amount of HK$200,000,000 up to 10,000 SPV Conversion Shares

“Conversion Period” the period commencing from the date of issue of the Convertible Bonds and ending on the date that falls on the fifth Business Day before the Maturity Date (both dates inclusive)

“Conversion Price” HK$20,000 per SPV Conversion Share

“Convertible Bonds” the convertible bonds in the principal amount of HK$200,000,000 to be issued by the SPV to the Subscriber pursuant to the CB Subscription Agreement

“Coqueen” Coqueen Company Limited, a company incorporated in Hong Kong with limited liability and owned by CPK (69%), Chui Chan Oi Lin, Eileen (29%), Chui Tak Keung, Duncan (1%) and Chui Shuk Wah, Janet (1%);

“CPK” Mr. Chui Pui Kun

“CPK FLM HK HK$34,348,261.50 of which is due and owing to CPK Shareholder’s Loan” by FLM HK

“CPK FLM Kowloon HK$16,264,446.46 of which is due and owing to CPK Director’s Loan” by FLM Kowloon

“CPK Loan Acquisition” acquisition of CWK FLM HK Shareholder’s Loan and the CWK FLM Kowloon Director’s Loan by CPK

“CPK Shareholding acquisition of (i) CWK’s 44.63% equity interest in Acquisition” FLM HK; (ii) CWK’s 42% equity interest in FLM Kowloon and; (iii) 1% equity interest in FLM Kowloon owned by Chui Wai Kwan Investments Company Limited by CPK

“CTI” Champion Tree Investment Limited, the sole legal and beneficial owner of the FLM Kowloon Properties

“CWK” Mr. Chui Wai Kwan, a third party independent of the Company and not a connected person (as defined in the GEM Listing Rules) of the Company

28 “CWK FLM HK HK$34,348,261.50 of which is due and owing to CWK Shareholder’s Loan” by FLM HK

“CWK FLM Kowloon HK$16,264,446.46 of which is due and owing to CWK Director’s Loan” by FLM Kowloon

“Deposit” the deposit of HK$20,000,000 by the Subscriber to the SPV upon the execution of the CB Subscription Agreement

“Director(s)” the director(s) of the Company

“EGM” the extraordinary general meeting(s) of the Company to be convened to consider and approve, among other things, the CB Subscription Agreement, the possible Conversion, the Shareholders’ Agreement, the Agency Agreement and the transactions contemplated thereunder

“Event A” issuance of a warning notice by Coqueen requiring the Subscriber and the directors concerned to desist, retract and/or remedy

“Event B” giving a notice by Coqueen to the Subscriber for convening a meeting of the shareholders of the SPV to discuss the matters that have given rise to the breach and to identify and arrive at a mutually satisfactory solution

“FLM Further Restructuring” forming Subsidiary E

“FLM HK” Fook Lam Moon Restaurant Limited, a company incorporated in Hong Kong with limited liability

“FLM HK Operation” the operations of FLM HK

“FLM HK Other Shareholders” shareholders of FLM HK as at the date of this announcement, except CWK and Coqueen, including Chui Yau Foon (2.77%), Chui Yau Hing (2.77%), Chui Yau Hoi (2.60%), Chui Yau Mui (2.60%)

“FLM HK Properties” 1/F to 4/F and Shop No. 2B, Ground Floor, Newman House, 35-45 Johnston Road, Wanchai, Hong Kong and Flat C, 3/F, Lai Yuen Apartments, 61 Russell Street, Causeway Bay, Hong Kong

29 “FLM HK Restructuring” forming Subsidiary A and Subsidiary B

“FLM Kowloon” Fook Lam Moon (Kowloon) Restaurant Limited, a company incorporated in Hong Kong with limited liability

“FLM Kowloon Operation” the operations of FLM Kowloon

“FLM Kowloon Other shareholders of FLM Kowloon as at the date of Shareholders” this announcement, except CWK, Chui Wai Kwan Investments Company Limited, Coqueen and CPK, including Fullbond Properties Limited (14%)

“FLM Kowloon Properties” 1/F, and Shop 8, G/F, Luna Court, 53-59 Kimberley Road, Tsimshatsui, Kowloon

“FLM Kowloon Restructuring” forming Subsidiary C and Subsidiary D

“FLM Restructuring” the FLM HK Restructuring, the FLM Kowloon Restructuring and FLM Further Restructuring

“FLM Trademarks” the “Fook Lam Moon” and “福臨門” trademarks which are registered in Hong Kong, Macau and PRC

“Fook Lam Moon Companies” FLM HK, FLM Kowloon as well as other corporate entities operating and managing restaurants under the “Fook Lam Moon” brand-name in Hong Kong, the PRC and Japan

“Formal Agreement” the formal agreement to be entered into by the Company, the Subscriber, Coqueen, the SPV, CPK and Mr. Chui Tak Keung, Duncan in relation to the Further Investment on or before 20 May 2013 (or such later date as the parties to the Second Framework Agreement agree in writing)

“Framework Agreement” the framework agreement dated 4 December 2012 entered into among the Company, the Subscriber and CPK and Coqueen, in respect of the Investment

“Further Investment” the acquisition of a portion of Coqueen’s entire shareholding in the SPV from Coqueen by the Subscriber pursuant to the Second Framework Agreement

30 “GEM Listing Rules” the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange

“Group” the Company and its subsidiaries

“Guarantors” Coqueen and CPK and Mr. Chui Tak Keung, Duncan

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong” Hong Kong Special Administrative Region of the PRC

“Investment” the incorporation of the SPV to facilitate and carry into effect the investment in the FLM HK Operation and the FLM Kowloon Operation by the Subscriber

“Investment Opportunities” investment opportunities of acquisition of certain equity interest in FLM HK and/or FLM Kowloon and/ or other corporate entities within Fook Lam Moon Companies by Able Wind Limited and refereed by the Referral Agent

“Long Stop Date” 5:00 pm on 24 May 2013

“Management Committee” the committee of the board of the SPV comprising the two directors appointed by Coqueen who shall, in accordance with the Shareholders’ Agreement, have the authority to manage and supervise the day-to-day operation of FLM HK and FLM Kowloon

“Maturity Date” the date falling on the third anniversary of the issue date of the Convertible Bonds or, if that is not a Business Day, then the Business Day which immediately follows next

“Non-Disclosure Agreement” the non-disclosure agreement executed in August 2012 between Coqueen and Able Wind Limited, a nominee of the Subscriber

“PRC” the People’s Republic of China, excluding Hong Kong and the Macau Special Administrative Region

31 “Principal Assets” (i) Coqueen’s 44.63% equity interest in FLM HK;

(ii) CPK’s 14% equity interest in FLM Kowloon;

(iii) Coqueen’s 29% equity interest in FLM Kowloon;

(iv) Coqueen’s 0.01% equity interest in FLM Kowloon Property;

(v) CPK FLM HK Shareholder’s Loan; and

(vi) CPK FLM Kowloon Director’s Loan

CPK shall procure the SPV to acquire the abovementioned pursuant to the CB Subscription Agreement

“Property Holding the holding companies of Subsidiary A and Subsidiary Subsidiaries” C

“Referral Agent” Profit Direct Limited, a company incorporated in the British Virgin Islands with limited liability, referring the Investment Opportunities to Able Wind Limited

“Second Framework the second framework agreement dated 23 January Agreement” 2013 entered into among the Company, the Subscriber, the SPV, Coqueen, CPK and Mr. Chui Tak Keung, Duncan, in respect of the adjustment with relevant parties of the CB Subscription Agreement concerning the Further Investment

“Settlement” the arrangement and transactions regulated by the Settlement Agreement

“Settlement Agreement” a settlement agreement dated 29 November 2012 entered into by CPK, CWK and other relevant parties in relation to the disputes between CPK and CWK concerning FLM HK and FLM Kowloon and their respective interest as well as the manner in which CPK and CWK treats each other

“Settlement Agreement date of completion of the Settlement Agreement Completion Date”

32 “Settlement Assets” (i) CWK’s 44.63% equity interest in FLM HK;

(ii) CWK’s 42% equity interest in FLM Kowloon;

(iii) another 1% equity interest in FLM Kowloon owned by Chui Wai Kwan Investments Company Limited but beneficially owned by CWK;

(iv) the CWK FLM HK Shareholder’s Loan; and

(v) the CWK FLM Kowloon Director’s Loan to be acquired by CPK under the CPK Loan Acquisition

CPK shall procure the SPV to acquire the abovementioned pursuant to the CB Subscription Agreement

“Share(s)” ordinary share(s) of HK$0.001 each in the share capital of the Company

“Shareholder(s)” holder(s) of the issued Shares

“Shareholders’ Agreement” a shareholders’ agreement to be entered into between Coqueen and the Subscriber in relation to the SPV

“SPV” Professional Guide Enterprise Limited, a company incorporated in the British Virgin Islands and a wholly- owned subsidiary of Coqueen

“SPV Asset Acquisition” acquisition of the Settlement Assets (from CWK) and the Principal Assets (from CPK and Coqueen) by SPV pursuant to the CB Subscription Agreement

“SPV Conversion Share(s)” new SPV Share(s) to be issued by the SPV upon conversion of the Convertible Bonds in accordance with the terms and conditions as set out in the Bond Instrument

“SPV Restructuring” the arrangement for Coqueen to form, at any time before or after Completion, a new subsidiary to own the 10,000 shares in the SPV provided that Coqueen shall hold not less than 85% of the entire issued share capital of the said new subsidiary

33 “SPV Shares” ordinary share(s) in the share capital of the SPV

“SPV Shareholding Structure” the arrangement that (i) at any time before Completion, Coqueen being the sole shareholder of the SPV (subject to any SPV Restructuring) at all times from the execution of the CB Subscription Agreement up to and including the Settlement Agreement Completion Date and (ii) at any time after Completion, Coqueen being the sole shareholder of the SPV (subject to any SPV Restructuring) at all times from the Settlement Agreement Completion Date up to and including the last conversion date of the Convertible Bonds, save for any bondholder(s) who has become shareholder(s) of the SPV as a result of any exercise of the conversion rights of the Convertible Bonds

“Stock Exchange” the Stock Exchange of Hong Kong Limited

“Subscriber” Rich Paragon Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of the Company

“Subscription” the subscription of the Convertible Bonds pursuant to the CB Subscription Agreement

“Subscription Price” the subscription price of HK$200,000,000 for the Subscription

“Subscriber SPV Loan” the loan in the principal amount of not less than HK$80,000,000 and not more than HK$135,000,000 to be granted by the Subscriber to the SPV at Completion

“Subsidiary A” a subsidiary of the SPV shall become the sole shareholder of FLM HK and therefore the sole ultimate beneficial owner of the FLM HK Properties

“Subsidiary B” a subsidiary of the SPV shall be solely and wholly responsible for the FLM HK Operation

“Subsidiary C” a subsidiary of the SPV shall become the sole shareholder of FLM Kowloon and therefore the sole ultimate beneficial owner of the FLM Kowloon Property

34 “Subsidiary D” a subsidiary of the SPV shall be solely and wholly responsible for the FLM Kowloon Operation

“Subsidiary E” a subsidiary of the SPV shall be the sole ultimate beneficial owner of the FLM Trademarks

“Supplemental Second the supplemental framework agreement dated 30 Framework Agreement” January 2013 entered into among the Company, the Subscriber, the SPV, Coqueen, CPK and Mr. Chui Tak Keung, Duncan

“%” per cent

By order of the Board CHINESE FOOD AND BEVERAGE GROUP LIMITED Yu Sau Lai Executive Director

Hong Kong, 30 January 2013

As at the date of this announcement, Ms. Yu Sau Lai and Mr. Too Shu Wing are executive Directors; and Mr. Orr Joseph Wai Shing, Mr. Lam Raymond Shiu Cheung and Mr. Matthew Pau are independent non-executive Directors.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and that there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days and on the Company website at www.cfbgroup.com.hk from the date of its publication.