Little Sheep Group Limited 小肥羊集團有限公司

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Little Sheep Group Limited, you should at once hand this circular to the purchaser or other transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. Little Sheep Group Limited 小肥羊集團有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 968) DISCLOSEABLE TRANSACTION ACQUISITION OF OFFICE PREMISES 26 September 2008 CONTENTS Pages Definitions .......................................................................... 1 Letter from the Board 1. Introduction ................................................................ 3 2. The Agreement .............................................................. 4 3. Business of the Group and Reasons for the Acquisition ......................... 5 4. Discloseable Transaction ..................................................... 5 5. General ..................................................................... 5 Appendix — General Information ............................................... 6 – i – DEFINITIONS In this circular, the following expressions have the following meanings, unless the context otherwise requires: ‘‘Acquisition’’ the acquisition of the Office Premises by the Purchaser ‘‘Agreement’’ the agreement entered into between Shanghai Huaning as vendor and Little Sheep PRC as purchaser on 5 September 2008 for sale and purchase of the Office Premises ‘‘associates’’ has the meaning ascribed to it under the Listing Rules ‘‘Board’’ the board of Directors ‘‘Company’’ Little Sheep Group Limited (小肥羊集團有限公司), a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange ‘‘Completion’’ completion of the Acquisition in accordance with the Agreement ‘‘Directors’’ directors of the Company ‘‘Group’’ the Company and its subsidiaries ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the People’s Republic of China ‘‘Independent Third Parties’’ parties who are independent of and not connected with the directors, chief executive and substantial shareholders of the Company, its subsidiaries or any of their respective associates ‘‘Latest Practicable Date’’ 19 September 2008, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion herein ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange ‘‘Little Sheep PRC’’ or Inner Mongolia Little Sheep Catering Chain Co., Ltd. (內蒙古小 ‘‘Purchaser’’ 肥羊餐飲連鎖有限公司), incorporated in the PRC and an indirect wholly-owned subsidiary of the Company ‘‘Office Premises’’ Units 901–911 representing the entire 9th floor of the office building currently under construction proposed to be named as 華寧國際廣場 located at No. 300 Xuanhua Road, Changning District, Shanghai, the PRC ‘‘PRC’’ the People’s Republic of China – 1 – DEFINITIONS ‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time ‘‘Shanghai Huaning’’ or ‘‘Vendor’’ 上海華寧置業有限公司 (Shanghai Huaning Real Estate Company Limited), the vendor of the Office Premises ‘‘Share(s)’’ ordinary share(s) of par value HK$0.10 each in the share capital of the Company ‘‘Shareholders’’ holders of the shares of the Company ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘RMB’’ Renminbi, the lawful currency of the PRC ‘‘sq.m.’’ square metres ‘‘%’’ per cent. In this circular, for purpose of illustration only, amount quoted in RMB have been translated into Hong Kong dollars at the rate of RMB1.0000 to HK$1.1414 unless otherwise stated. Such exchange rates has been used, where applicable, for purposes of illustration only and does not constitute a representation that any amounts were or may have been exchanged at this exchange rate or any other rates or at all. – 2 – LETTER FROM THE BOARD Little Sheep Group Limited 小肥羊集團有限公司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 968) Executive Directors: Registered Office: Mr. Zhang Gang (Chairman) Cricket Square, Mr. Lu Wenbing Hutchins Drive, Mr. Yeung Yiu Keung PO Box 2681, Mr. Wang Daizong Grand Cayman, Mr. Zhang Zhanhai KY1-1111, Ms. Kou Zhifang Cayman Islands Ms. Li Baofang Principal Place of Business Non-executive Directors: in Hong Kong: Mr. Chen Hongkai Unit 1104, Mr. Nishpank Rameshbabu Kankiwala 11/F, Jubilee Centre, 42–46 Gloucester Road, Independent Non-executive Directors: Wan Chai, Dr. Xiang Bing Hong Kong Mr. Yeung Ka Keung Mr. Shin Yick, Fabian 26 September 2008 To the Shareholders Dear Sir or Madam, DISCLOSEABLE TRANSACTION 1. INTRODUCTION The Board announced in an announcement of the Company dated 5 September 2008 that on 5 September 2008, Little Sheep PRC, an indirect wholly-owned subsidiary of the Company, entered into the Agreement with Shanghai Huaning whereby Shanghai Huaning agreed to sell and Little Sheep PRC agreed to purchase the Office Premises for a total consideration of RMB60,955,686 (equivalent to approximately HK$69,574,820). – 3 – LETTER FROM THE BOARD The Acquisition contemplated under the Agreement constitutes a discloseable transaction under Chapter 14 of the Listing Rules for the Company. The purpose of this circular is to provide you with further details of the Acquisition and other information as required by the Listing Rules. 2. THE AGREEMENT (1) Date 5 September 2008 (2) Parties Vendor Shanghai Huaning. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendor and its ultimate beneficial owners are Independent Third Parties. Shanghai Huaning is a non wholly-owned subsidiary of 中華企業股份有限公司 (China Enterprise Company Limited), a company listed on the Shanghai Stock Exchange. Purchaser Little Sheep PRC, an indirect wholly-owned subsidiary of the Company. (3) Office Premises The Office Premises to be acquired under the Agreement comprises the entire 9th floor of the office building currently under construction and development by the Vendor to be known as 華寧國際廣場 located at No. 300 Xuanhua Road, Changning District, Shanghai, the PRC. The Office Premises will have a gross floor area of approximately 2,518.83 sq.m. (4) Consideration The total consideration for the Office Premises is RMB60,955,686 (equivalent to approximately HK$69,574,820) payable in cash. The first installment in the amount of RMB30,477,843 (equivalent to approximately HK$34,787,410) which represents 50% of the total consideration had been paid to the Vendor. Currently, the land and construction in progress thereon of which the Office Premises forms part are subject to various mortgages taken out by the Vendor with a commercial bank in the PRC. Pursuant to the Agreement, the Vendor will arrange for the release of the mortgages concerning the Office Premises by the mortgagee bank within 20 working days after signing of the Agreement and thereafter registration of the Agreement with the relevant PRC land authority within the stipulated period under the applicable laws and regulations in the PRC and Shanghai. The remaining balance of the consideration in the sum of RMB30,477,843 (equivalent to approximately HK$34,787,410) shall be paid to the Vendor by Little Sheep PRC within three working days after registration of the Agreement. The consideration was determined after arm’s length negotiations between Little Sheep PRC and the Vendor with references to the prevailing market value and recent transaction record of comparable properties in the vicinity. The Directors are of the view that the consideration of the Acquisition is in line with the market value and recent transaction records of the comparable properties nearby. – 4 – LETTER FROM THE BOARD The consideration is intended to be financed by internal resources of the Group and not from the proceeds of the initial public offering of the Shares. Such proceeds will be used in the manner as set out in the Company’s prospectus dated 2 June 2008. (5) Delivery of the Office Premises upon Completion It is expected that the delivery of the Office Premises will take place on or before 30 November 2008. If there is any delay in delivery, a penalty will be charged and payable to Little Sheep PRC by the Vendor at a daily rate of 0.01% of the amount of the total consideration paid in respect of the Office Premises from 1 December 2008 up to the day of actual delivery. 3. BUSINESS OF THE GROUP AND REASONS FOR THE ACQUISITION The Group is principally engaged in the operation of full-service restaurant chain, the provision of catering services and the sale of related food products. As far as the Board is aware, the Vendor is principally engaged in property development. It is intended that the Office Premises will be used as offices for the Group’s operational headquarters

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