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Contents 2 Corporate Information 4 Highlights and Financial Calendar 6 Chairman s Statement 13 Financial Review 16 Profile of Directors 19 Report of the Directors 33 Corporate Governance Report 42 Independent Auditor s Report 44 Consolidated Income Statement 45 Consolidated Statement of Comprehensive Income 46 Consolidated Balance Sheet 48 Balance Sheet 49 Consolidated Statement of Changes in Equity 50 Consolidated Cash Flow Statement 52 Notes to the Financial Statements 128 Principal Subsidiaries 132 Five-Year Group Financial Summary 134 Investment Properties held by the Group 135 Store Address

Corporate Information Canon s Court, 22 Victoria Street, Hamilton HM12, Bermuda UFJ UBS AG BOARD OF DIRECTORS Executive Directors Dennis Lo Hoi Yeung (Executive Chairman) Chan Chee Shing (Chief Executive Officer) Mak Yee Mei Non-executive Director Ng Chi Keung Independent Non-executive Directors Joseph Chan Kai Nin Peter Lau Kwok Kuen Tony Tsoi Tong Hoo Peter Wan Kam To AUDIT COMMITTEE Peter Wan Kam To (Chairman) Ng Chi Keung Joseph Chan Kai Nin Tony Tsoi Tong Hoo REMUNERATION COMMITTEE Joseph Chan Kai Nin (Chairman) Ng Chi Keung Peter Lau Kwok Kuen REGISTERED OFFICE Canon s Court, 22 Victoria Street, Hamilton HM12, Bermuda COMPANY SECRETARY Mak Yee Mei PRINCIPAL BANKERS Standard Chartered Bank (Hong Kong) Limited The Bank of East Asia, Limited DBS Bank (Hong Kong) Limited The Hongkong and Shanghai Banking Corporation Limited The Bank of Tokyo-Mitsubishi UFJ, Limited Hang Seng Bank Limited Nanyang Commercial Bank, Limited Chong Hing Bank Limited Industrial and Commercial Bank of China (Asia) Limited Fubon Bank (Hong Kong) Limited Bank of China (Hong Kong) Limited Bank of Communications Company, Limited UBS AG 2 FAIRWOOD HOLDINGS LIMITED

HSBC Bank Bermuda Limited 6 Front Street, Hamilton HM11, Bermuda A www.fairwood.com.hk 52 AUDITORS KPMG SOLICITORS Mayer Brown JSM Richards Butler HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS 2/F, TRP Commercial Centre, 18 Tanner Road, North Point, Hong Kong PRINCIPAL REGISTRAR AND TRANSFER OFFICE HSBC Bank Bermuda Limited 6 Front Street, Hamilton HM11, Bermuda HONG KONG BRANCH REGISTRAR AND TRANSFER OFFICE Computershare Hong Kong Investor Services Limited Rooms 1712-6, 17/F, Hopewell Centre, 183 Queen s Road East, Hong Kong PUBLIC RELATIONS CONSULTANT Strategic Financial Relations Limited Unit A, 29/F, Admiralty Centre, Tower 1, 18 Harcourt Road, Hong Kong WEBSITE www.fairwood.com.hk STOCK CODE 52 3

Highlights and Financial Calendar HIGHLIGHTS 6.6% 15.623 Turnover increased by 6.6% to HK$1,562.3 million 13.9% 12.8% Gross profit margin was 13.9% (2009: 12.8%) 16.6% 9,330 8,000 23.7% 21.5% 28.0 8.0 46.0 74.21 63.56 Profit for the year increased by 16.6% to HK$93.3 million (2009: HK$80.0 million) The return on average equity was 23.7% (2009: 21.5%) Final dividend of HK28.0 cents per share was proposed. Total dividend for the year amounts to HK46.0 cents, increased by HK8.0 cents per share Basic earnings per share were HK74.21 cents (2009: HK63.56 cents) The new food processing plant in Tai Po successfully commenced to operate in September 2009 Financial Calendar Interim results announcement 30 November 2009 Paid date of the interim dividend 24 December 2009 Annual results announcement 8 July 2010 Closure of register of members for 2 September 2010 to the proposed final dividend 6 September 2010 (both days inclusive) Annual general meeting 6 September 2010 Payable date of the final dividend 15 September 2010 4 FAIRWOOD HOLDINGS LIMITED

TURNOVER (HK$ m) PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS (HK$ m) 1,800 1,500 1,200 CAGR 12% 986.7 1,204.9 1,433.5 1,465.5 1,562.3 120 100 80 CAGR 6% 75.1 84.7 101.0 80.0 93.3 900 60 600 40 300 20 0 2006 2007 2008 2009 2010 0 2006 2007 2008 2009 2010 CAGR : Compound Annual Growth Rate BASIC EARNINGS PER SHARE (HK cents) 100 NET ASSETS (HK$ m) 450 412.6 80 60 60.02 66.85 79.02 63.56 74.21 400 370.0 374.9 350 333.8 40 20 300 289.1 0 2006 2007 2008 2009 2010 250 2006 2007 2008 2009 2010 5

Chairman s Statement 6.6% 15.623 14.65513.9% 9,330 8,000 74.21 63.56 28.0 28.018.0 10.0 46.0 38.0 62% TO OUR SHAREHOLDERS On behalf of the Board of Directors (the Board ), I am pleased to present the annual results of Fairwood Holdings Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) for the year ended 31 March 2010. FINANCIAL RESULTS During the latest reporting year, the Group recorded a modest increase in turnover of 6.6% to HK$1,562.3 million (2009: HK$1,465.5 million). Gross profit margin rose to 13.9% while profit attributable to equity shareholders was HK$93.3 million (2009: HK$80.0 million). Basic earnings per share were HK74.21 cents as compared to HK63.56 cents for the last financial year. DIVIDEND The Board recommends to pay a final dividend of HK28.0 cents (2009: HK28.0 cents) per share for the year ended 31 March 2010. Together with the interim dividend of HK18.0 cents (2009: HK10.0 cents) per share paid during the year, the total dividend for the year ended 31 March 2010 amounts to HK46.0 cents (2009: HK38.0 cents) per share, representing a total distribution of approximately 62% of the Group s profit for the year. The proposed final dividend will be paid on or before Wednesday, 15 September 2010 to shareholders whose names appear on the Register of Members of the Company at the close of business on Monday, 6 September 2010. 6 FAIRWOOD HOLDINGS LIMITED

110% BUSINESS REVIEW Hong Kong Since the re-branding campaign of the Group in 2003 we have been able to maintain steady sales growth, and we achieved an increase of approximately 110% in turnover as compared to the year ended 31 March 2004. Along with the introduction of innovative dishes, comprehensive service training was provided to staff to ensure a high level of customer satisfaction. Store ambiance was also significantly enhanced with the launch of the second generation of our Orange Concept, a wellreceived design created by the renowned interior designer, Mr Steve Leung. Though food costs had remained relatively stable during the first half of the current financial year, we saw a rebound in prices in the latter six months. Rental expenses also rose consistently throughout the past 12 months. These two items of expenses were the major challenges to the Group s performance for the review year. As a means to offset various rising costs, the Group had sought to enhance backend production. The new central food processing plant at the Tai Po Industrial Estate, with operation commenced from September 2009, had helped enrich product offerings and raise efficiency. Equipped with modern equipment and technologies, the plant is currently supplying food to approximately 100 stores, and will eventually be able to supply a maximum of 180 stores. The added production capacity of the new plant had also enabled provision of hygienic and healthy lunch boxes to primary and secondary schools. The new business initiatives along with the greater economies of scale enjoyed by the Group demonstrated the efficiency of the new plant facility. 7

Chairman s Statement 8 FAIRWOOD HOLDINGS LIMITED

ISO 22000 ISO SAP ERP 13.9% Our new food processing plant also plays a vital role in reinforcing our commitment to delivering quality food to customers. The ISO 22000 accreditation awarded to the Group in March 2010 highlighted our ability to unify the requirements of various food safety management systems applied internationally. The ISO requirements, which involve stringent standards, are specifically designed for companies in the food industry that are committed to surpassing regulatory standards on food safety. In terms of bolstering the Group s overall efficiency, progress was made as we completed implementing phase two of the SAP Enterprise Resources Planning (ERP) System. This allows the management to capture important data and analytical tools to respond promptly to the market trends as well as to decide on effective business strategy and cost management. Mainland China As at 31 March 2010, the Group s operations in Mainland China achieved sales growth of 13.9% as compared with the previous year. The positive result is mainly attributable to the enhanced product portfolio that appeals to local tastes and the stores set up alongside metro stations where the public traffic is high. With consumer sentiment in Mainland China recovering rapidly, the Group has been allocating greater effort and resources toward developing this lucrative market. During the year under review, the Group opened 13 new fast food stores including 8 in Hong Kong and 5 in Mainland China. As at 31 March 2010, the Group has a total of 101 stores in operation in Hong Kong, including 96 fast food stores, 3 Buddies Cafes and 2 specialty restaurants. As for the Mainland China operation, we have 16 fast food stores. 9

Chairman s Statement 10 FAIRWOOD HOLDINGS LIMITED Corporate Social Responsibility During the year under review, the Group continued to devote time and energy for the betterment of the society. In support of the Log Charitable Foundation Limited and Heifer International Hong Kong fund raising campaigns, donation boxes were placed at most of the Group s Hong Kong stores to encourage contributions from the general public. In January 2010, the management and staff took part in the Run-up Two ifc Charity Race 2010 organised by The Community Chest and funds were raised to support Services for the Mentally & Multiple Handicapped. Furthermore, the Group was also recognised as a Caring Company by The Hong Kong Council of Social Service during the year, thus underscoring our commitment to enhancing the wellbeing of our staff and the community as a whole. PROSPECTS Moving forward, we will continue to prudently expand our business presence in Hong Kong. We maintain our target of operating 100 fast food stores by the end of 2010 and will explore setting up restaurants at locations with a potential of high customer flow and yet demand reasonable rental rates. To attract sophisticated customers and to enhance dining experience for customers, the interior design of both new and renovated stores will be revamped based on the second generation of the Orange Concept. The management is confident that with an increased number of restaurants and improved store ambiance, brand awareness and image of the Group will be strengthened to maintain customer loyalty and lure new customers.

The key to attracting customers, however, lies fundamentally in the products that we deliver. This is why the Group has been dedicating much effort to introduce innovative yet approachable dishes that appeal to the larger segment of the population. In developing new menus, our food processing plant in Tai Po can be relied on for more production to alleviate the pressure of food production at store level. Eventually, step up production at the plant will bolster store efficiency and greater cost savings will be realised. Turning to the Mainland China market, the management will proactively expand operations to seize the opportunities emerging from the tremendous economic growth in China. The local economy, boosted by the RMB4 trillion stimulus plan implemented by the central government, is recovering at a rapid pace and translated into optimism among the public bringing greater consumption as well as increased spending power. The Mainland China market is expected to be another growth driver for the Group in the years to come. Faced with surging food costs, threat of RMB appreciation and continuously high rental rates together with the imminent legislation for minimum wages, the management is reviewing its strategic choices and operating systems aiming at dealing with these issues. 11

Chairman s Statement APPRECIATION I would like to take this opportunity to offer my gratitude to all staff for their dedication and hard work during the year and express my sincere appreciation to all fellow directors. I would also like to thank all customers, business partners and shareholders for their continuing support. Lastly, I would like to give my heartfelt thanks to Mr Herald Lau Ling Fai who had joined the Board since the listing of the Company on the Stock Exchange in 1991 and retired on 27 August 2009 as an Independent Non-executive Director. His contribution and guidance throughout his tenure of service were invaluable to the success of the Group. My special thanks also to Mr Ng Chi Keung who remains on the Board as a Non-executive Director following his retirement from the Group in January 2010. At the same time, I warmly welcome Mr Peter Wan Kam To who joined the Board on 1 September 2009 as an Independent Non-executive Director and Ms Mak Yee Mei as an Executive Director on 1 January 2010. I have no doubt that the Group will benefit immensely from their extensive financial expertise and experience. By Order of the Board Dennis Lo Hoi Yeung Executive Chairman Hong Kong, 8 July 2010 12 FAIRWOOD HOLDINGS LIMITED

Financial Review 7.217 6.023 4,400 5,220 2.786 2.489 2.346 1.967 1.2 1.3 23.7% 21.5% 4.126 3.749 2.100 1.811 16.0% 4,530 600 7.9% 67.6% 24.5% 2.910 2.204 11.0% 1.6% 1.599 6,080 Liquidity and financial resources At 31 March 2010, the Group had total assets of HK$721.7 million (2009: HK$602.3 million). The Group s working capital was HK$44.0 million (2009: HK$52.2 million), represented by total current assets of HK$278.6 million (2009: HK$248.9 million) against total current liabilities of HK$234.6 million (2009: HK$196.7 million). The current ratio, being the proportion of total current assets against total current liabilities, was 1.2 (2009: 1.3). The return on average equity was 23.7% (2009: 21.5%), being profits attributable to equity shareholders of the Company against the average total equity. Total equity attributable to equity shareholders of the Company was HK$412.6 million (2009: HK$374.9 million). The Group finances its business with internally generated cash flows and available banking facilities. At 31 March 2010, the Group had bank deposits and cash amounting to HK$210.0 million (2009: HK$181.1 million), representing an increase of 16.0% from 2009. Most bank deposits and cash were denominated in Hong Kong dollars, United States dollars and Renminbi. At 31 March 2010, the Group had total bank loans of HK$45.3 million (2009: HK$6.0 million) which were denominated in Hong Kong dollars and Renminbi. All of the Group s bank borrowings were subject to the floating rate basis. The maturity of borrowings are up to 2019 with approximately 7.9% repayable within 1 year, 67.6% repayable over 1 year but less than 5 years and 24.5% repayable after 5 years. The unutilised banking facilities were HK$291.0 million (2009: HK$220.4 million). The gearing ratio of the Group was 11.0% (2009: 1.6%), which was calculated based on the total bank loans over total equity attributable to equity shareholders of the Company. Capital expenditure During the year, the capital expenditure was approximately HK$159.9 million (2009: HK$60.8 million). The increase was mainly due to the set up fee of our new central food processing plant situated at Tai Po Industrial Estate. 13

Financial Review 6.52.63% 2.74% 6,880 4,330 260 140 3,280 1.288 2,990 1.166 1,040 1,250 Financial risk management The Group s receipts and expenditures were mainly denominated in HK dollars and Renminbi. The impact of the fluctuation in exchange rate is immaterial to the Group s financial position. For the purpose of offsetting the exposure of the interest rate fluctuation, the Group had entered certain forward interest rate swaps with financial institutions. The swaps were arranged to match the maturity of the repayment schedule of certain bank loans with the maturity over the next 6.5 years and had the fixed swap rates ranging from 2.63% to 2.74%. Non-current assets held for sale Certain leasehold land and buildings and investment properties are presented as non-current assets held for sale following the decision of the Group s management to dispose of these properties. Efforts to dispose of these assets commenced in March 2010 and a sales and purchases agreement was entered into with a third party on 22 April 2010. The sale and purchase was completed on 30 June 2010. Charges on Group s assets At 31 March 2010, the net book value of properties pledged as security for banking facilities granted to certain subsidiaries of the Group amounted to HK$68.8 million (2009: HK$43.3 million). Further, the Group had pledged bank deposits of HK$2.6 million (2009: nil) to secure a bank loan of HK$1.4 million borrowed by an independent third party food processing contractor. Commitments The Group s capital commitments outstanding at 31 March 2010 were HK$32.8 million (2009: HK$128.8 million). Included in capital commitment outstanding at 31 March 2010 was an amount of HK$29.9 million (2009: HK$116.6 million) for the future development of the new central food processing plant to cope with the Group s long term business growth. In addition, the Group had outstanding other commitments of HK$10.4 million at 31 March 2010 (2009: HK$12.5 million) in respect of the contracting fee for operation of a fast food restaurant. 14 FAIRWOOD HOLDINGS LIMITED

7,960 3,610 4,4004,300 Contingent liabilities At 31 March 2010, guarantees are given to banks by the Company in respect of mortgage loans and other banking facilities extended to certain wholly-owned subsidiaries. As at the balance sheet date, the directors do not consider it probable that a claim will be made against the Company under the guarantee arrangement. The maximum liability of the Company at the balance sheet date under the guarantee is the amount of the facilities drawn down by all the subsidiaries that are covered by the guarantee, being HK$79.6 million (2009: HK$36.1 million). The Company has not recognised any deferred income in respect of the guarantee as its fair value cannot be reliably measured and there is no transaction price. Employee information At 31 March 2010, the total number of employees of the Group was approximately 4,400 (2009: 4,300). Employees remuneration is commensurate with their job nature, qualifications and experience. Salaries and wages are normally reviewed annually basing on performance appraisals and other relevant factors. The Group continues to offer competitive remuneration packages, share options and bonus to eligible staff, basing on the performance of the Group and the individual employee. Also, the Group has committed to provide related training programme to improve the quality, competence and skills of all staff. 15

Profile of Directors Neblett Investments Limited XV Executive Directors Mr Dennis Lo Hoi Yeung, aged 58, is the Executive Chairman of the Company. He graduated from the Parsons School of Design with a Bachelor Degree in Fine Arts and also attended a course on food and beverage management at New York University. After the completion of his studies in the U.S.A. in 1977, Mr Lo returned to Hong Kong and obtained a Master Degree in Business Administration. In 1981, Mr Lo joined Fairwood Fast Food Limited. In 1991, he played a major role in the listing of the Company. Mr Lo was the Managing Director of the Company from 1991 to 1999. He was appointed the Chairman and Chief Executive of the Company in January 2000. On 1 January 2009, Mr Lo relinquished his role as Chief Executive but remained the Executive Chairman of the Company. He is also a director of various subsidiaries of the Company. He is a director of Neblett Investments Limited which has discloseable interests in the shares of the Company under the provisions of Part XV of the Securities and Futures Ordinance. Mr Chan Chee Shing, aged 56, is the Chief Executive Officer of the Company. He joined the Group in 1995. Mr Chan received a Bachelor of Arts Degree in Economics from the University of Manitoba, Canada in 1977 and a Master of Business Administration Degree from the University of East Asia, Macau in 1987. He has nearly 30 years experience in marketing. Before joining the Group, Mr Chan worked as a senior executive for a restaurant group which is listed on The Stock Exchange of Hong Kong Limited. He was appointed a Director of the Company in January 1998 and was appointed Chief Executive Officer of the Company on 1 January 2009. Mr Chan is also a director of various subsidiaries of the Company. Ms Mak Yee Mei, aged 43, was appointed as an Executive Director of the Company in January 2010. She joined the Company in 2004. Ms Mak holds a Bachelor of Science Degree in Economics, a Master of Science Degree in Finance and a Master Degree in Business Administration. She is an Associate Member of the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Management Accountants as well as a Fellow Member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants. Ms Mak has extensive experience in auditing, accounting and financial management. Prior to joining the Company, she had held senior management positions in several companies the securities of which are listed on The Stock Exchange of Hong Kong Limited. Ms Mak was appointed Executive Director, Company Secretary and Authorised Representative of the Company on 1 January 2010. She is also a director of various subsidiaries of the Company. 16 FAIRWOOD HOLDINGS LIMITED

* # * # # Non-executive Director Mr Ng Chi Keung* #, aged 61, is a Non-executive Director of the Company. He joined the Group in 1994. Mr Ng holds a Master Degree in Business Administration and is an Associate Member of the Institute of Chartered Accountants in England and Wales and an Associate Member of the Hong Kong Institute of Certified Public Accountants. He has over 30 years experience in finance and management. Prior to joining the Company, he held senior management positions with a number of well-known local and overseas multinational companies. Mr Ng was appointed a Director of the Company in November 1995. He was re-designated as a Non-executive Director of the Company from 1 January 2010 following his retirement from the Group. At the same time, Mr Ng was also appointed as a member of the Audit Committee and remains as a member of the Remuneration Committee of the Company. Independent Non-executive Directors Mr Joseph Chan Kai Nin* #, aged 62, was appointed an Independent Non-executive Director in 1991. He has over 30 years experience in human resources development in public, commercial and educational sectors. Mr Chan graduated from The University of Hong Kong, the University of Strathclyde and The Chinese University of Hong Kong. He holds a Bachelor of Arts Degree, a Diploma in Social Work, a Master of Business Administration Degree and a Master of Education Degree. Mr Chan is a Fellow Member of the Institute of Human Resources Management. He is currently Director of the Student Development Services, City University of Hong Kong. Dr Peter Lau Kwok Kuen #, aged 57, was appointed an Independent Non-executive Director in September 2000. Dr Lau had spent over 12 years in finance related work in the private and public sectors in Canada prior to returning to Hong Kong in 1987. Dr Lau holds a Doctorate degree in Business Administration from The Hong Kong Polytechnic University and a MBA degree from the University of Calgary in Canada. He is a member of The Canadian Institute of Chartered Accountants and the Society of Certified Management Accountants of Canada. Dr Lau is the Chairman and Chief Executive of Giordano International Limited, a leading international apparel retailer listed on the main board of The Stock Exchange of Hong Kong Limited. 17

Profile of Directors * * * # Mr Tony Tsoi Tong Hoo*, aged 45, was appointed an Independent Non-executive Director in November 2008. Mr Tsoi graduated from the University of Western Ontario, Canada with an Honours degree in Business Administration in 1986. He is an executive director and the chief executive officer of Varitronix International Limited and is also a non-executive director of China Windpower Group Limited, both of which are listed on The Stock Exchange of Hong Kong Limited. Mr Peter Wan Kam To*, aged 57, was appointed an Independent Non-executive Director of the Company in September 2009. He was also appointed as the Chairman of the Company s Audit Committee. Mr Wan has been a practising accountant in Hong Kong for over 30 years and has extensive experience in auditing, finance, advisory and management. He was a former partner of PricewaterhouseCoopers Hong Kong and China firm. Mr Wan is currently an Independent Director of Mindray Medical International Limited (a company listed on the New York Stock Exchange, USA) and an Independent Nonexecutive Director of China Resources Land Limited (a company listed on The Stock Exchange of Hong Kong Limited) and East West Bank (China) Limited in Shanghai, PRC as well as the Chairman of their respective Audit Committees. Mr Wan is also a Non-executive Director of Taikang Life Insurance Company Ltd., in Beijing, PRC. He is a Fellow Member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. * Member of the Audit Committee # Member of the Remuneration Committee 18 FAIRWOOD HOLDINGS LIMITED

Report of the Directors Canon s Court, 22 Victoria Street, Hamilton HM12, Bermuda 128 131 12 30% 44131 93,269,00080,022,000 18.0 10.0 28.0 28.0 The Board of Fairwood Holdings Limited (the Company ) has pleasure in submitting their annual report together with the audited financial statements of the Company and its subsidiaries (collectively referred to as the Group ) for the year ended 31 March 2010. Principal Place of Business The Company is incorporated in Bermuda. Its registered office is situated at Canon s Court, 22 Victoria Street, Hamilton HM12, Bermuda and principal place of business is situated at 2/F, TRP Commercial Centre, 18 Tanner Road, North Point, Hong Kong. Principal Activities The principal activity of the Company is investment holding. The Group is principally engaged in the operation of fast food restaurants and property investments. The principal activities and other particulars of the principal subsidiaries are set out in pages 128 to 131 to the financial statements. The analysis of the principal activities and geographical locations of the operations of the Group during the financial year are set out in note 12 to the financial statements. Major Customers and Suppliers For the year ended 31 March 2010, the aggregate amount of turnover and purchases attributable to the Group s five largest customers and suppliers represent less than 30 per cent of the Group s total turnover and purchases respectively. Financial Statements The profit of the Group for the year ended 31 March 2010 and the state of the Company s and the Group s affairs as at that date are set out in the financial statements on pages 44 to 131. Transfer to Reserves Profit attributable to equity shareholders, before dividends, of HK$93,269,000 (2009: HK$80,022,000) has been transferred to reserves. Other movements in reserves are set out in the consolidated statement of changes in equity. An interim dividend of HK18.0 cents (2009: HK10.0 cents) per share was paid on 24 December 2009. The Board now recommends the payment of a final dividend of HK28.0 cents (2009: HK28.0 cents) per share in respect of the year ended 31 March 2010. 19

Report of the Directors 58,000 13 27 Charitable Donations Charitable donations made by the Group during the year amounted to HK$58,000 (2009: HK$Nil). Fixed Assets Movements in fixed assets during the year are set out in note 13 to the financial statements. Share Capital Details of movements in share capital of the Company during the year are set out in note 27 to the financial statements. Shares were issued during the year on exercise of share options. There were no purchases, sales or redemptions of the Company s listed securities by the Company or any of its subsidiaries during the year. Directors The Directors during the financial year and up to the date of this report were: Executive Directors Dennis Lo Hoi Yeung (Executive Chairman) Chan Chee Shing (Chief Executive Officer) Mak Yee Mei (appointed on 1 January 2010) Non-executive Director Ng Chi Keung (re-designated from Executive Director to Non executive Director on 1 January 2010) Independent Non-executive Directors Joseph Chan Kai Nin Peter Lau Kwok Kuen Tony Tsoi Tong Hoo Peter Wan Kam To (appointed on 1 September 2009) Herald Lau Ling Fai (retired on 27 August 2009) 20 FAIRWOOD HOLDINGS LIMITED

100 109189(viii) Directors (continued) In accordance with Bye-Law 100 of the Company, Mr Peter Wan Kam To and Ms Mak Yee Mei, appointed on 1 September 2009 and 1 January 2010 respectively, will hold office until the next annual general meeting of the Company. Mr Wan and Ms Mak shall then retire at the Company s forthcoming annual general meeting and, being eligible, will offer themselves for re-election. In accordance with Bye-Laws 109 and 189(viii) of the Company, Mr Ng Chi Keung shall retire by rotation at the forthcoming annual general meeting and Mr Ng, being eligible, will offer himself for reelection at the forthcoming annual general meeting. Independent Non-executive Directors are appointed for a fixed term of three years and are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Bye-Laws of the Company. No Director proposed for re-election at the forthcoming annual general meeting has an unexpired service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than normal statutory compensation. 21

Report of the Directors 352 XV Directors and Chief Executives Interests and Short Positions in Shares, Underlying Shares and Debentures As at 31 March 2010, the interests or short positions of the Directors and chief executives of the Company and their associates in the issued share capital of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )) as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the Stock Exchange ) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) were as follows: (a) (a) Interests in the Company 1 Ordinary shares of HK$1 each Percentage of total Personal Family Corporate Other issued interests interests interests interests Total shares Dennis Lo Hoi Yeung 3,471,105 51,984,279 55,455,384 44.12% 1 (Note 1) Chan Chee Shing 15,000 15,000 0.01% Mak Yee Mei 600,000 600,000 0.48% Ng Chi Keung 262,500 262,500 0.21% 1 Neblett Investments LimitedNeblett Neblett Neblett Note 1: These shares were held by Neblett Investments Limited ( Neblett ), a company beneficially owned by a trust of which Mr Dennis Lo Hoi Yeung is a discretionary object. Mr Dennis Lo Hoi Yeung, by virtue of his interest in the trust as a discretionary object and as the Executive Chairman of the Company, was deemed to be interested in the shares held by Neblett. 22 FAIRWOOD HOLDINGS LIMITED

(b) Directors and Chief Executives Interests and Short Positions in Shares, Underlying Shares and Debentures (continued) (b) Interests in Fairwood Fast Food Limited 10 Non-voting deferred shares of HK$10 each Personal Family Corporate Other interests interests interests interests Total Dennis Lo Hoi Yeung 11,500 279,357 290,857 2 (Note 2) 2 Pengto International LimitedPengto Pengto Pengto Note 2: These shares were held by Pengto International Limited ( Pengto ), a company beneficially owned by a trust of which Mr Dennis Lo Hoi Yeung is a discretionary object. Mr Dennis Lo Hoi Yeung, by virtue of his interest in the trust as a discretionary object and as the Executive Chairman of the Company, was deemed to be interested in the shares held by Pengto. 352 XV All the interests stated above represent long positions. Apart from the foregoing and those disclosed under the section Share Option Scheme below, as at 31 March 2010, none of the Directors or chief executives of the Company or any of their spouses or children under eighteen years of age had any other interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which had been entered in the register kept by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. Details of Directors and chief executives interests under the Company s Share Option Scheme are set out in the section Share Option Scheme below. 23

Report of the Directors (i) (ii) (iii) 12,660,828 10% 1% 1 8.25 6.10 11 Share Option Scheme The Company has adopted a share option scheme on 18 September 2002 under which the Directors of the Company are authorised, at their discretion, to invite any Director (including Non-executive Director and Independent Non-executive Director) or any employee of the Company or its subsidiaries or any consultant, agent, representative, adviser, supplier of goods or services, customer, contractor, business ally and joint venture partner to take up options to subscribe for shares in the Company at a price which shall not be less than the highest of (i) the nominal value of the share; (ii) the closing price of the shares as stated in the daily quotation sheet of the Stock Exchange on the date of offer; and (iii) the average closing price of the shares as stated in the daily quotation sheets of the Stock Exchange for the 5 business days immediately preceding the date of offer. As at 31 March 2010, the maximum number of shares in respect of which options may be granted under the share option scheme is 12,660,828 shares being 10 per cent of the issued share capital of the Company as at 23 August 2006, the date on which the refreshment of the mandate limit under the share option scheme was approved by the shareholders of the Company. The maximum entitlement for any one participant under the share option scheme shall not in any 12 months period up to the date of grant exceed one per cent of the shares in issue. During the year ended 31 March 2010, the Directors and employees of the Company had the following interests in options to subscribe for shares of the Company (market value per share at 31 March 2010 was HK$8.25 (2009: HK$6.10)) granted for HK$1 consideration under the share option scheme of the Company. The options are unlisted. Each option gives the holder the right to subscribe for one ordinary share of HK$1 each of the Company. 24 FAIRWOOD HOLDINGS LIMITED

Share Option Scheme (continued) Weighted average Closing price price of closing Number of Number of Number of Number of Number of Number of per share price per share options options options options options options immediately immediately outstanding granted lapsed cancelled exercised outstanding Exercise before date before date at 1 April during Date Exercisable during during during at 31 March price per of grant of exercise 2009 the year granted period the year the year the year 2010 share of options of options 1,000,000 1,000,000 6.26 6.28 Chan Chee Shing (Director) HK$6.26 HK$6.28 8 April 2009 20% Exercisable in five tranches of 20% during the period from 1 April 2010 to 31 March 2016 400,000 400,000 8.08 8.07 Mak Yee Mei (Director) HK$8.08 HK$8.07 1 March 2010 20% Exercisable in five tranches of 20% during the period from 1 January 2011 to 31 December 2016 400,000 (400,000) 6.26 6.28 Ng Chi Keung (Director) HK$6.26 HK$6.28 8 April 2009 20% Exercisable in five tranches of 20% during the period from 1 April 2010 to 31 March 2016 100,000 (100,000) 2.325 2.35 6.00 Employee HK$2.325 HK$2.35 HK$6.00 1 September 2004 Exercisable in four batches during the period from 23 September 2005 to 22 September 2009 25

Report of the Directors Share Option Scheme (continued) Weighted average Closing price price of closing Number of Number of Number of Number of Number of Number of per share price per share options options options options options options immediately immediately outstanding granted lapsed cancelled exercised outstanding Exercise before date before date at 1 April during Date Exercisable during during during at 31 March price per of grant of exercise 2009 the year granted period the year the year the year 2010 share of options of options 800,000 800,000 6.30 6.23 Employee HK$6.30 HK$6.23 6 April 2009 20% Exercisable in five tranches of 20% during the period from 5 April 2010 to 4 April 2017 3,600,000 (140,000) (240,000) 3,220,000 6.26 6.28 Employees HK$6.26 HK$6.28 8 April 2009 20% Exercisable in five tranches of 20% during the period from 1 April 2010 to 31 March 2016 100,000 100,000 6.29 6.18 Employee HK$6.29 HK$6.18 4 May 2009 20% Exercisable in five tranches of 20% during the period from 1 April 2010 to 31 March 2016 200,000 200,000 7.69 7.30 Employees HK$7.69 HK$7.30 10 July 2009 20% Exercisable in five tranches of 20% during the period from 1 July 2010 to 30 June 2016 26 FAIRWOOD HOLDINGS LIMITED

1(p)(ii) 24 336 Share Option Scheme (continued) Information on the accounting policy for share options granted and the weighted average value per option is provided in note 1(p)(ii) and note 24 to the financial statements respectively. Apart from the foregoing, at no time during the year was the Company or any of its subsidiaries a party to any arrangement to enable the Directors or chief executives of the Company or any of their spouses or children under eighteen years of age to acquire benefits by means of acquisition of shares in or debentures of the Company or any of its associated corporations within the meaning of the SFO. Substantial Interests in the Share Capital of the Company As at 31 March 2010, the interests or short positions of every person, other than the Directors and chief executives of the Company, in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under Section 336 of the SFO, or as otherwise notified to the Company, were as follows: Shares directly and/or indirectly held Percentage of total issued shares (i) Neblett(Note) 51,984,279 41.36% (ii) Jumbo Easy Limited (Note) 51,984,279 41.36% (iii) Winning Spirit International Corp.(Note) 51,984,279 41.36% (iv) HSBC International Trustee Limited(Note) 51,984,279 41.36% (v) Allard Partners Limited 11,317,000 9.00% Neblett NeblettWinning Spirit International Corp. Winning Spirit International Corp. HSBC International Trustee Limited Neblett NeblettHSBC International Trustee Limited Neblett Neblett Note: These interests represented the same block of shares and were held by Neblett. Neblett was a company wholly-owned by Winning Spirit International Corp., which in turn was a company wholly-owned by HSBC International Trustee Limited in the capacity of trustee. Jumbo Easy Limited was deemed to be interested in these shares by virtue of its capacity of a discretionary object of the trust which beneficially owned Neblett and being a wholly-owned company of Mr Dennis Lo Hoi Yeung. HSBC International Trustee Limited was deemed to be interested in the shares held by Neblett in the capacity of trustee of the trust which beneficially owned Neblett. 336 All the interests stated above represent long positions. Save as disclosed above, no other interest or short position in the shares or underlying shares of the Company were recorded in the register required to be kept under Section 336 of the SFO as at 31 March 2010. 27

Report of the Directors 14A Sufficiency of Public Float Based on the information that is publicly available to the Company and within the knowledge of the Directors of the Company as at the date of this annual report, the Company has maintained the prescribed public float under the Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ). Continuing Connected Transactions The particulars of the following continuing connected transactions of the Group are set out below in compliance with the reporting requirements of Chapter 14A of the Listing Rules: (a) 31(d) (a) Tenancy agreement with Front Land Properties Limited ( Front Land ) As detailed in note 31(d) to the financial statements, Fairwood Fast Food Limited, a subsidiary of the Company, leased a property from Front Land with the lease term expired on 31 July 2009 (the 1st Transaction ) and renew the lease of the property for a further period of three years from 1 August 2009 (the 2nd Transaction ) for the operation of a fast food restaurant thereat. The ultimate beneficial owners of Front Land are Mr Lo Hoi Chun, who is a cousin of Mr Dennis Lo Hoi Yeung, and his associate. Details of the rent and deposits paid by Fairwood Fast Food Limited relating to the property for the above transactions are as follows: 1 April 2009 1 August 2009 1 April 2008 to 31 July 2009 to 31 March 2010 to 31 March 2009 (1st Transaction) (2nd Transaction) HK$ 000 HK$ 000 HK$ 000 Rent for the period 655 481 1,966 31 July 2009 31 March 2010 31 March 2009 HK$ 000 HK$ 000 HK$ 000 Rental deposit 491 197 491 28 FAIRWOOD HOLDINGS LIMITED

(b) 31(b) Pengto Pengto Continuing Connected Transactions (continued) (b) Tenancy agreement with New Champion International Limited ( New Champion ) As detailed in note 31(b) to the financial statements, Fairwood Fast Food Limited leased a property from New Champion with the lease term expired on 9 April 2009 (the 3rd Transaction ) and renew the lease of the property for a further three years from 10 April 2009 (the 4th Transaction ) for the operation of a fast food restaurant thereat. New Champion is wholly beneficially owned by Pengto, a company in turn beneficially owned by a trust of which Mr Dennis Lo Hoi Yeung is a discretionary object. In addition, Mr Dennis Lo Hoi Yeung is a director of New Champion. Details of rent and deposits paid by Fairwood Fast Food Limited relating to the property are as follows: 1 April 2009 10 April 2009 1 April 2008 to 9 April 2009 to 31 March 2010 to 31 March 2009 (3rd Transaction) (4th Transaction) HK$ 000 HK$ 000 HK$ 000 Rent for the period 33 1,404 1,247 9 April 2009 31 March 2010 31 March 2009 HK$ 000 HK$ 000 HK$ 000 Rental deposit 330 360 330 14A In compliance with Chapter 14A of the Listing Rules in connection with the above continuing connected transactions, the Independent Non-executive Directors have reviewed and confirmed that all transactions with Front Land and New Champion have been entered into: (i) (i) in the ordinary and usual course of business; (ii) (ii) either on normal commercial terms or on terms no less favourable than those available to or from independent third parties; 29

Report of the Directors (iii) Continuing Connected Transactions (continued) (iii) in accordance with the terms of agreements governing the Transactions on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole; (iv) 655,000 (iv) the aggregate value of the 1st Transaction has not exceeded the maximum aggregate annual value of HK$655,000; (v) 100 2.5% 14A.33 (v) the annual consideration of the 2nd Transaction is less than HK$1 million and each of the applicable ratios is less than 2.5 per cent, hence the 2nd Transaction is exempt from the reporting, announcement and independent shareholders approval under Rule 14A.33 of the Listing Rules; (vi) 1,000 3% (vi) the aggregate value of the 3rd Transaction has not exceeded the maximum aggregate value which is the lower of HK$10 million or 3 per cent of the book value of the net tangible assets of the Group as at 31 March 2009; and (vii) 1,404,000 14A.38 (vii) the aggregate value of the 4th Transaction has not exceeded the maximum aggregate annual value of HK$1,404,000 for the year ended 31 March 2010. The Directors have requested the auditors of the Company to perform certain agreed-upon procedures on the continuing connected transactions and have received a letter from the auditors as required under Rule 14A.38 of the Listing Rules. 30 FAIRWOOD HOLDINGS LIMITED

Directors Interests in Contracts Apart from the transactions disclosed in the section headed Continuing connected transactions, New Champion has also agreed to grant a licence to Fairwood Fast Food Limited during the year to use a storeroom in Hong Kong up to 9 April 2009. Details of the licence fee and deposits paid by Fairwood Fast Food Limited relating to the storeroom are as follows: 2010 2009 HK$ 000 HK$ 000 Licence fee for the year 5 180 Deposits at 31 March 30 22 Apart from the foregoing, no contract of significance to which the Company or any of its subsidiaries was a party and in which a Director of the Company had a material interest subsisted at the end of the year or at any time during the year. Directors Service Contracts During the year, Mr Dennis Lo Hoi Yeung had a service contract with the Company which may be terminated by either party to the contract on three months notice. Purchase, Sale or Redemption of the Company s Listed Securities There was no purchase, sale or redemption of the Company s listed securities by the Company or any of its subsidiaries during the year. Pre-emptive Rights There is no provision for pre-emptive rights under the Company s Bye-Laws and the law in Bermuda. Bank Loans Particulars of bank loans of the Group at 31 March 2010 are set out in note 22 to the financial statements. 31

Report of the Directors 132 133 134 23 3.13 Five-year Group Financial Summary A summary of the results and of the assets and liabilities of the Group for the last five financial years is set out on pages 132 and 133 of the annual report. Investment Properties Particulars of the investment properties of the Group are shown on page 134 of the annual report. Retirement Scheme The Group operates a Mandatory Provident Fund Scheme (the MPF Scheme ) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees in Hong Kong under the jurisdiction of the Hong Kong Employment Ordinance. Particulars of the MPF Scheme are set out in note 23 to the financial statements. Confirmation of Independence The Company has received from each of the Independent Nonexecutive Directors an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules and considers all the Independent Non-executive Directors to be independent. Auditors KPMG retire and, being eligible, offer themselves for re-appointment. A resolution for the re-appointment of KPMG as auditors of the Company is to be proposed at the forthcoming Annual General Meeting. By Order of the Board Dennis Lo Hoi Yeung Executive Chairman Hong Kong, 8 July 2010 32 FAIRWOOD HOLDINGS LIMITED

Corporate Governance Report 14 10 The Board is committed to achieving high standards of corporate governance practices to safeguard the interests of shareholders and to enhance corporate value and accountability. The Company has complied with the code provisions as set out in the Code on Corporate Governance Practices (the CG Code ) contained in Appendix 14 of the Listing Rules throughout the year ended 31 March 2010 save and except that the Chairman and/or Managing Director of the Company are not subject to retirement by rotation, details of which and the reason for the deviations are stated below. Model Code for Securities Transactions The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules for securities transactions by Directors of the Company. Following specific enquiry by the Company, all Directors of the Company have confirmed their compliance with the required standards set out in the Model Code throughout the year ended 31 March 2010. Board of Directors The overall management of the Company s business is vested in the Board, which assumes the responsibility for leadership and control of the Company and is collectively responsible for promoting the success of the Company by directing and supervising its affairs. All Directors have taken decisions objectively in the interests of the Company and its shareholders at all times. The Board undertakes responsibility for decision making in major matters of the Company, including the approval and monitoring of all policy matters, overall strategies and budgets, internal control, financial information, appointment of directors and other significant financial and operational matters. All Directors have been consulted on all major and material matters of the Company. With the advice and services of the Company Secretary, the Executive Chairman seeks to ensure that all Directors are properly briefed on issues arising at Board meetings and receive adequate and reliable information in a timely manner. Directors may choose to take independent professional advice in appropriate circumstances at the Company s expenses, upon making request to the Board. 33

Corporate Governance Report 1618 3.13 Board of Directors (continued) The day-to-day management, administration and operation of the Company are delegated to the Executive Committee which comprises the three Executive Directors and the senior management of the Company. The delegated functions and work tasks are periodically reviewed. Approval has to be obtained from the Board prior to any significant transactions entered into by the abovementioned officers. As at the date of this report, the Board comprises the following Directors: Executive Directors Dennis Lo Hoi Yeung (Executive Chairman) Chan Chee Shing (Chief Executive Officer) Mak Yee Mei (appointed on 1 January 2010) Non-executive Director Ng Chi Keung (re-designated from Executive Director to Non-executive Director on 1 January 2010) Independent Non-executive Directors Joseph Chan Kai Nin Peter Lau Kwok Kuen Tony Tsoi Tong Hoo Peter Wan Kam To (appointed on 1 September 2009) During the year ended 31 March 2010, the Board at all times met the requirements of the Listing Rules relating to the appointment of at least three independent non-executive directors with at least one independent non-executive director possessing appropriate professional qualifications or accounting or related financial management expertise. Biographical details of the Directors of the Company and the relevant relationships among them, if any, are set out on pages 16 to 18 of this annual report. The Company has received from each of the Independent Nonexecutive Directors an annual confirmation in writing of his independence pursuant to Rule 3.13 of the Listing Rules. The Company considers that all the Independent Non-executive Directors are independent. 34 FAIRWOOD HOLDINGS LIMITED

Board of Directors (continued) Four full Board meetings were held during the year ended 31 March 2010 and attendance record of individual Directors is set out below: No. of meetings attended/held Executive Directors Dennis Lo Hoi Yeung (Executive Chairman) 4/4 Chan Chee Shing (Chief Executive Officer) 4/4 Mak Yee Mei (appointed on 1 January 2010) 2/2 Non-executive Director Ng Chi Keung (re-designated from Executive Director to Non-executive Director on 1 January 2010) 4/4 Independent Non-executive Directors Joseph Chan Kai Nin 3/4 Peter Lau Kwok Kuen 4/4 Tony Tsoi Tong Hoo 4/4 Peter Wan Kam To (appointed on 1 September 2009) 3/3 Herald Lau Ling Fai (retired on 27 August 2009) 1/1 4243 All Directors well understand their responsibilities to present a balanced, clear and understandable assessment of annual and interim reports, price-sensitive announcements and other disclosures required under the Listing Rules and other regulatory requirements. The Directors acknowledge their responsibility for preparing financial statements which give a true and fair view of the state of affairs of the Group. The statement of the auditors of the Company about their reporting responsibilities on the financial statements of the Company is set out on pages 42 and 43 in the independent auditor s report. The Directors, having made appropriate enquiries, confirm that there are no material uncertainties relating to events or conditions that may cast doubt upon the Company s ability to continue as a going concern. 35

Corporate Governance Report (i) (ii) A.4.2 Appointment and Re-election of Directors The Board is empowered under the Bye-Laws of the Company (the Bye-Laws ) to appoint any person as a Director of the Company either to fill a casual vacancy or as an addition to the Board. Though the Company has not set up a nomination committee, the Board as a whole will carry out the selection process by making reference to the qualifications, experience, integrity and time commitment of the proposed candidates. According to the Bye-Laws, (i) new Directors appointed by the Board during the year shall hold office until the first annual general meeting after their appointment and shall then be eligible for reelection; and (ii) at each annual general meeting, one-third of the Directors (other than any Director holding office as Chairman or Managing Director) for the time being or, if their number is not three or a multiple of three, then the number nearest to but not less than one-third, shall retire from office provided that each Director (other than any Director holding office as Chairman or Managing Director) including those appointed for a specific term shall be subject to retirement by rotation at least once every three years. Currently, all Independent Non-executive Directors of the Company are appointed for a specific term of three years, subject to retirement by rotation and re-election by the shareholders in accordance with the Bye-Laws. Chairman and Chief Executive Officer Code provision A.4.2 of the CG Code stipulates that every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years. Under the Bye-Laws, the Chairman and the Managing Director of the Company are not subject to retirement by rotation. The Board considers that the exemption of both the Chairman and the Managing Director (Chief Executive Officer) of the Company from such retirement by rotation provisions would provide the Group with strong and consistent leadership, efficiency usage of resources and enables effective planning, formulation and implementation of long-term strategies and business plans. The Board believes that it would be in the best interest of the Company for such Directors to continue to be exempted from the retirement by rotation provisions. 36 FAIRWOOD HOLDINGS LIMITED

Remuneration Committee The Company has established a Remuneration Committee with written terms of reference which are in line with the CG Code and are posted on the Company s website and available to shareholders upon request. The Remuneration Committee comprises two Independent Non-executive Directors, Mr Joseph Chan Kai Nin and Dr Peter Lau Kwok Kuen and one Non-executive Director, Mr Ng Chi Keung. Mr Joseph Chan Kai Nin is the chairman of the Remuneration Committee. The Remuneration Committee is responsible for reviewing and determining the remuneration packages of the Directors and other related matters. During the year, the Remuneration Committee met once to review the remuneration policy of the Group. The attendance record of individual members is as follows: No. of meetings attended/held Independent Non-executive Directors * Joseph Chan Kai Nin* 1/1 Peter Lau Kwok Kuen 1/1 Non-executive Director Ng Chi Keung 1/1 * Chairman of the Remuneration Committee 37

Corporate Governance Report Audit Committee The Audit Committee comprises one Non-executive Director, Mr Ng Chi Keung (appointed on 1 January 2010) and three Independent Non-executive Directors, Mr Joseph Chan Kai Nin, Mr Tony Tsoi Tong Hoo and Mr Peter Wan Kam To (appointed on 1 September 2009). The Audit Committee is chaired by Mr Peter Wan Kam To and meets at least twice a year. The principal duties of the Audit Committee include reviewing the financial statements and reports and considering any significant or unusual items raised by the qualified accountant, internal auditor or external auditors before submission to the Board for approval. It is also responsible for reviewing the scope and nature of the external audit and the adequacy and effectiveness of the Company s financial reporting system, internal control system and risk management system and associated procedures. The Audit Committee has adopted written terms of reference which are in line with the CG Code and are posted on the Company s website and available to shareholders upon request. During the year ended 31 March 2010, two Audit Committee meetings were held to review the interim and annual financial statements of the Company; to review the remuneration of external auditors; to discuss with the external auditors their independence and the nature and scope of the audit; to review the internal audit programme, findings and management s responses; and to evaluate the system of internal controls and risk management of the Group. 38 FAIRWOOD HOLDINGS LIMITED

Audit Committee (continued) The attendance record of individual members is as follows: No. of meetings attended/held Independent Non-executive Directors * Peter Wan Kam To * (appointed on 1 September 2009) 1/1 Joseph Chan Kai Nin 1/2 Tony Tsoi Tong Hoo 2/2 Herald Lau Ling Fai (retired on 27 August 2009) 1/1 Non-executive Director Ng Chi Keung (appointed on 1 January 2010) N/A * Chairman of the Audit Committee 39

Corporate Governance Report Auditor s Remuneration During the year ended 31 March 2010, the fees paid/payable to the auditors in respect of audit and non-audit services provided by the auditors of the Company were as follows: Nature of services Amount HK$ 000 Review fee for 2009/10 interim results 405 Audit fee for 2009/10 final results 2,420 Non-audit services which covered provision of tax compliance services 330 Total 3,155 40 FAIRWOOD HOLDINGS LIMITED

Internal Controls The Board has overall responsibility for maintaining a sound and effective internal control system of the Group. The Group s internal control system includes a well defined management structure with limits of authority which is designed for the achievement of business objectives, safeguard assets against unauthorised use or disposition, ensure maintenance of proper books and records for the provision of reliable financial information for internal use or publication, and to ensure compliance with relevant legislations and regulations. The Board conducts regular reviews of the effectiveness of the Group s internal control system. Investor Relations and Communication The Company continues to pursue a proactive policy of promoting investor relations communications. Designated executive directors and senior management maintain regular dialogue with institutional investors and analysts to keep them abreast of the Company s developments. Enquiries from investors are dealt with in an informative and timely manner. The Board also welcomes the views of shareholders on matters affecting the Group and encourages them to attend shareholders meetings to communicate any concerns they might have with the Board or management directly. As a channel to further promote effective communication, the Company s website is maintained to disseminate corporate information and other relevant financial and non-financial information electronically. 41

Independent Auditor s Report 44 131 90 Independent auditor s report to the shareholders of Fairwood Holdings Limited (Incorporated in Bermuda with limited liability) We have audited the financial statements of Fairwood Holdings Limited (the Company ) set out on pages 44 to 131, which comprise the consolidated and Company balance sheets as at 31 March 2010, and the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors responsibility for the financial statements The directors of the Company are responsible for the preparation and the true and fair presentation of these financial statements in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and the true and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. This report is made solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. 42 FAIRWOOD HOLDINGS LIMITED

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and true and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2010 and of the Group s profit and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. 10 8 KPMG Certified Public Accountants 8th Floor, Prince s Building 10 Chater Road Central, Hong Kong 8 July 2010 43

Consolidated Income Statement For the year ended 31 March 2010 (Expressed in Hong Kong dollars) 2010 2009 Note $ 000 $ 000 Turnover 3 & 12 1,562,348 1,465,503 Cost of sales (1,344,519) (1,277,361) Gross profit 217,829 188,142 Other revenue 4 708 3,202 Other net income 4 4,974 7,478 Selling expenses (27,112) (26,351) Administrative expenses (81,035) (72,147) Net impairment losses on fixed assets 13(d) (7,389) (4,142) Valuation gains/(losses) on investment properties 13(b) 3,743 (1,370) Profit from operations 111,718 94,812 Finance costs 5(a) (1,332) (199) Profit before taxation 5 110,386 94,613 Income tax 6(a) (17,117) (14,591) Profit for the year attributable to equity shareholders of the Company 93,269 80,022 Earnings per share 11 Basic 74.21 cents 63.56 cents Diluted 74.07 cents 63.47 cents 52131 10 The notes on pages 52 to 131 form part of these financial statements. Details of dividends payable to equity shareholders of the Company are set out in note 10. 44 FAIRWOOD HOLDINGS LIMITED

Consolidated Statement of Comprehensive Income For the year ended 31 March 2010 (Expressed in Hong Kong dollars) 2010 2009 $ 000 $ 000 Profit for the year attributable to equity shareholders of the Company 93,269 80,022 Other comprehensive income for the year (after tax): Exchange differences on translation of financial statements of the People s Republic of China (the PRC ) subsidiaries 151 836 Revaluation gain recognised upon transfer from property held for own use to investment property 241 151 1,077 Total comprehensive income for the year attributable to equity shareholders of the Company 93,420 81,099 52131 The notes on pages 52 to 131 form part of these financial statements. 45

Consolidated Balance Sheet At 31 March 2010 (Expressed in Hong Kong dollars) Non-current assets 2010 2009 Note $ 000 $ 000 Fixed assets 13(a) Investment properties 42,078 41,135 Other property, plant and equipment 348,928 266,463 Interests in leasehold land held for own use under operating leases 7,886 398,892 307,598 Prepayment for fixed assets 3,683 Goodwill 14 1,001 1,001 Rental deposits paid 40,861 38,742 Other financial asset 16 2,341 2,341 Deferred tax assets 25(b) 37 35 Current assets 443,132 353,400 Non-current assets held for sale 17 7,247 Inventories 18(a) 22,168 29,232 Trade and other receivables 19 39,148 36,359 Current tax recoverable 25(a) 8 2,239 Bank deposits and cash 20 210,042 181,098 Current liabilities 278,613 248,928 Trade and other payables 21 223,486 190,375 Current portion of bank loans 22 3,589 350 Current tax payable 25(a) 3,219 552 Provisions 26 4,335 5,489 234,629 196,766 Net current assets 43,984 52,162 Total assets less current liabilities 487,116 405,562 46 FAIRWOOD HOLDINGS LIMITED

Non-current liabilities 2010 2009 Note $ 000 $ 000 Bank loans 22 41,676 5,670 Deferred tax liabilities 25(b) 8,139 2,962 Rental deposits received 1,126 675 Provisions 26 23,585 21,365 74,526 30,672 Net assets 412,590 374,890 Capital and reserves 27 Share capital 125,687 125,587 Reserves 286,903 249,303 Total equity attributable to equity shareholders of the Company 412,590 374,890 Approved and authorised for issue by the Board of Directors on 8 July 2010. Dennis Lo Hoi Yeung Executive Chairman Chan Chee Shing Chief Executive Officer 52131 The notes on pages 52 to 131 form part of these financial statements. 47

Balance Sheet At 31 March 2010 (Expressed in Hong Kong dollars) Non-current assets 2010 2009 Note $ 000 $ 000 Investments in subsidiaries 15 310,212 354,317 Current assets Trade and other receivables 19 62,119 35,707 Bank deposits and cash 20 205 158 Current liabilities 62,324 35,865 Trade and other payables 21 29,214 29,209 Net current assets 33,110 6,656 Net assets 343,322 360,973 Capital and reserves 27 Share capital 125,687 125,587 Reserves 217,635 235,386 Total equity 343,322 360,973 Approved and authorised for issue by the Board of Directors on 8 July 2010. Dennis Lo Hoi Yeung Executive Chairman Chan Chee Shing Chief Executive Officer 52131 The notes on pages 52 to 131 form part of these financial statements. 48 FAIRWOOD HOLDINGS LIMITED

Consolidated Statement of Changes in Equity For the year ended 31 March 2010 (Expressed in Hong Kong dollars) Attributable to equity shareholders of the Company Land and buildings Share Share Capital Exchange revaluation Retained capital premium reserve reserve reserve profits Total Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 April 2008 127,106 1,463 (4,484) 245,868 369,953 Shares issued under share option scheme 27(c)(i) 200 265 465 Issue expenses (8) (8) Dividends approved in respect of the previous year 10(b) (51,670) (51,670) Dividend declared in respect of the current year 10(a) (12,549) (12,549) Equity-settled share-based transactions 187 1,205 496 1,888 Repurchase of own shares par value paid 27(c)(ii) (1,719) (1,719) premium and transaction costs paid 27(c)(ii) (219) (12,350) (12,569) Total comprehensive income for the year 836 241 80,022 81,099 At 31 March 2009 125,587 225 2,668 (3,648 ) 241 249,817 374,890 At 1 April 2009 125,587 225 2,668 (3,648) 241 249,817 374,890 Shares issued under share option scheme 27(c)(i) 100 133 233 Issue expenses (4) (4) Dividends approved in respect of the previous year 10(b) (35,192) (35,192) Dividend declared in respect of the current year 10(a) (22,624) (22,624) Equity-settled share-based transactions 96 1,771 1,867 Total comprehensive income for the year 151 93,269 93,420 At 31 March 2010 125,687 450 4,439 (3,497) 241 285,270 412,590 52131 The notes on pages 52 to 131 form part of these financial statements. 49

Consolidated Cash Flow Statement For the year ended 31 March 2010 (Expressed in Hong Kong dollars) Operating activities 2010 2009 Note $ 000 $ 000 $ 000 $ 000 Profit before taxation 110,386 94,613 Adjustments for: Depreciation of fixed assets 54,232 49,324 Amortisation of interests in leasehold land held for own use under operating leases 212 Net impairment losses on fixed assets 7,389 4,142 Impairment losses on other receivables 205 Change in fair value of other financial assets/liabilities at fair value through profit or loss 116 78 Interest expense 1,216 121 Interest income (708) (3,202) Net loss on disposal of fixed assets 2,690 6,076 Valuation (gains)/losses on investment properties (3,743) 1,370 Equity-settled share-based payment expenses 1,867 1,888 Operating profit before changes in working capital 173,862 154,410 Decrease/(increase) in inventories 7,064 (818) Increase in rental deposits paid (1,251) (5,107) (Increase)/decrease in trade and other receivables (3,943) 1,193 Increase/(decrease) in trade and other payables 19,808 (17,034) Decrease in rental deposits received (293) (1,481) Increase in provision for long service payments 600 790 Decrease in provision for reinstatement costs for rented premises (1,105) (1,000) Cash generated from operations 194,742 130,953 Interest received 770 3,209 Interest paid (1,214) (136) Tax paid Hong Kong Profits Tax paid (9,722) (18,996) Hong Kong Profits Tax refunded 2,678 286 Net cash generated from operating activities carried forward 187,254 115,316 50 FAIRWOOD HOLDINGS LIMITED

2010 2009 Note $ 000 $ 000 $ 000 $ 000 Net cash generated from operating activities brought forward 187,254 115,316 Investing activities Investment in structured notes (17,957) Maturity of structured notes 54,883 Payment for purchase of fixed assets (140,664) (74,072) Net proceeds from disposal of fixed assets 701 61 Net cash used in investing activities (139,963) (37,085) Financing activities Proceeds from shares issued under share option scheme 233 465 Expenses incurred in connection with the issue of shares (4) (8) Payment for repurchase of shares (14,288) Dividends paid (57,816) (64,219) Repayment of bank loans (1,771) (3,000) Drawdown of bank loans 41,000 5,670 Increase in pledged bank deposits (2,550) Net cash used in financing activities (20,908) (75,380) Net increase in cash and cash equivalents 26,383 2,851 Cash and cash equivalents at 1 April 181,098 178,052 Effect of foreign exchange rate changes 11 195 Cash and cash equivalents at 31 March 20 207,492 181,098 52131 The notes on pages 52 to 131 form part of these financial statements. 51

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (a) 2 (b) 1 Significant Accounting Policies (a) Statement of compliance These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (HKFRSs), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (HKASs) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (HKICPA), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). A summary of the significant accounting policies adopted by the Group is set out below. The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Group and the Company. Note 2 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these financial statements. (b) Basis of preparation of the financial statements The consolidated financial statements for the year ended 31 March 2010 comprise the Company and its subsidiaries (together referred to as the Group ). The measurement basis used in the preparation of the financial statements is the historical cost basis except that the following assets and liabilities are stated at their fair value as explained in the accounting policies set out below: 1(g) ; 1(f) investment properties (see note 1(g)); and derivative financial instruments (see note 1(f)). 52 FAIRWOOD HOLDINGS LIMITED The preparation of financial statements in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

1 (b) 34 1 Significant Accounting Policies (continued) (b) Basis of preparation of the financial statements (continued) The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of HKFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 34. (c) 1(k) (c) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment. In the Company s balance sheet, an investment in a subsidiary is stated at cost less impairment losses (see note 1(k)). (d) 1(k) (d) Goodwill Goodwill represents the excess of the cost of a business combination over the Group s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities. Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment (see note 1(k)). Any excess of the Group s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the cost of a business combination is recognised immediately in profit or loss. 53

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (e) 1(k) 1 Significant Accounting Policies (continued) (e) Structured note The Group s other financial asset represents a structured note which is classified as loans and receivables. Purchases and sales of financial assets are recognised on the trade date. Structured note includes a bank note which is a non-derivative financial asset with fixed or determinable payments that is not quoted in an active market. Loans and receivables are initially recognised at fair value and thereafter stated at amortised cost less impairment losses for bad and doubtful debts (see note 1(k)). Financial asset is derecognised when the contractual rights to receive the cash flows from the financial asset have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial asset. (f) (f) Derivative financial instruments Derivative financial instruments are recognised initially at fair value. At each balance sheet date the fair value is remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. (g) 1(s)(ii) 1(i) 1(i) (g) Investment properties Investment properties are land and/or buildings which are owned or held under a leasehold interest to earn rental income and/or for capital appreciation. Investment properties are stated in the balance sheet at fair value. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in profit or loss. Rental income from investment properties is accounted for as described in note 1(s)(ii). When the Group holds a property interest under an operating lease to earn rental income and/or for capital appreciation, the interest is classified and accounted for as an investment property on a property-by-property basis. Any such property interest which has been classified as an investment property is accounted for as if it were held under a finance lease (see note 1(i)), and the same accounting policies are applied to that interest as are applied for other investment properties leased under finance leases. Lease payments are accounted for as described in note 1(i). 54 FAIRWOOD HOLDINGS LIMITED

1 (h) 1(k) 30 50 10% 20% 15% 25% 10% 1 Significant Accounting Policies (continued) (h) Other property, plant and equipment The following items of property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see note 1(k)): land held under operating leases and buildings thereon, where the fair values of the leasehold interest in the land and buildings cannot be measured separately at the inception of the lease and the building is not clearly held under an operating lease; and other items of plant and equipment, except cutlery and utensils (see below). Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal. Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives as follows: Leasehold land and 30 50 years buildings situated thereon Leasehold improvements the remaining term of the tenancy leases Air-conditioning plant the remaining term of the tenancy leases Furniture and equipment 10% 20% per annum Motor vehicles 15% per annum Computer system 25% per annum Others 10% per annum No depreciation is provided on initial purchases of cutlery and utensils which are capitalised. Costs of subsequent replacements are charged to profit or loss in the year when the expenditure is incurred. Both the useful life of an asset and its residual value, if any, are reviewed annually. 55

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (i) 1 Significant Accounting Policies (continued) (i) Leased assets An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease. (i) (i) Classification of assets leased to the Group Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases, with the following exceptions: 1(g) property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a property-byproperty basis and, if classified as investment property, is accounted for as if held under a finance lease (see note 1(g)); and land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease. For these purposes, the inception of the lease is the time that the lease was first entered into by the Group, or taken over from the previous lessee. (ii) (ii) Operating lease charges Where the Group has the use of other assets under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. 56 FAIRWOOD HOLDINGS LIMITED

1 (i) (ii) 1 Significant Accounting Policies (continued) (i) Leased assets (continued) (ii) Operating lease charges (continued) The cost of acquiring land held under an operating lease is amortised on a straight-line basis over the period of the lease term. (j) 1(k) (j) Trade and other receivables Trade and other receivables are initially recognised at fair value and thereafter stated at amortised cost less allowance for impairment of doubtful debts (see note 1(k)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts. (k) (i) (k) Impairment of assets (i) Impairment of trade and other receivables and other financial asset carried at amortised cost Trade and other receivables and other financial asset carried at cost or amortised cost are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events: significant financial difficulty of the debtor; a breach of contract, such as a default or delinquency in interest or principal payments; it becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor. 57

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (k) (i) 1 Significant Accounting Policies (continued) (k) Impairment of assets (continued) (i) Impairment of trade and other receivables and other financial asset carried at amortised cost (continued) If any such evidence exists, impairment of trade and other receivables and other financial asset carried at amortised cost is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where financial assets carried at amortised cost share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years. Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of trade debtors included within trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss. 58 FAIRWOOD HOLDINGS LIMITED

1 (k) (ii) 1 Significant Accounting Policies (continued) (k) Impairment of assets (continued) (ii) Impairment of other assets Internal and external sources of information are reviewed at each balance sheet date to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased: property, plant and equipment; interests in leasehold land held for own use under operating leases; investments in subsidiaries; and goodwill. If any such indication exists, the asset s recoverable amount is estimated. In addition, for goodwill, the recoverable amount is estimated annually whether or not there is any indication of impairment. Calculation of recoverable amount The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit). 59

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (k) (ii) 1 Significant Accounting Policies (continued) (k) Impairment of assets (continued) (ii) Impairment of other assets (continued) Recognition of impairment losses An impairment loss is recognised in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable. Reversals of impairment losses In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed. A reversal of impairment losses is limited to the asset s carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised. (l) (l) Inventories Inventories are carried at the lower of cost and net realisable value. Cost is calculated using the weighed average cost formula and comprises all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 60 FAIRWOOD HOLDINGS LIMITED

1 (l) (m) 1 Significant Accounting Policies (continued) (l) Inventories (continued) When inventories are sold, the carrying amount of those inventories is recognised as an expense in the year in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the year the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. (m) Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between the amount initially recognised and redemption value being recognised in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method. (n) 1(r)(i) (n) Trade and other payables Trade and other payables are initially recognised at fair value. Except for financial guarantee liabilities measured in accordance with note 1(r)(i), trade and other payables are subsequently stated at amortised cost except where the payables are interestfree loans from related parties without any fixed repayment terms or the effect of discounting would be immaterial, in which case they are stated at cost. (o) (p) (i) (o) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. (p) Employee benefits (i) Short term employee benefits and contributions to defined contribution retirement plans Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. 61

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (p) (ii) 1 Significant Accounting Policies (continued) (p) Employee benefits (continued) (ii) Share-based payments The fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at the grant date using the trinomial lattice model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest. During the vesting period, the number of share options that is expected to vest is reviewed. Any adjustment to the cumulative fair value recognised in prior years is charged/ credited to profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On the vesting date, the amount recognised as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company s shares. The equity amount is recognised in the capital reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained profits). (iii) (iii) Termination benefits Termination benefits are recognised when, and only when, the Group demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal. (q) (q) Income tax Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively. 62 FAIRWOOD HOLDINGS LIMITED

1 (q) 1 Significant Accounting Policies (continued) (q) Income tax (continued) Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised. The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future. 63

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (q) 1 Significant Accounting Policies (continued) (q) Income tax (continued) The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted. The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available. Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met: in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either: the same taxable entity; or different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously. 64 FAIRWOOD HOLDINGS LIMITED

1 (r) (i) (i) (ii) 1(r)(ii) 1 Significant Accounting Policies (continued) (r) Financial guarantees issued, provisions and contingent liabilities (i) Financial guarantees issued Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specific payments to reimburse the beneficiary to the guarantee (the holder ) for a loss the holder incurs because a specific debtor fails to make payment when due in accordance with the terms of a debt instrument. Where the Group or the Company issues a financial guarantee, the fair value of the guarantee (being the transaction price, unless the fair value can otherwise be reliably estimated) is initially recognised as deferred income within trade and other payables. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Group s policies applicable to that category of asset. Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss on initial recognition of any deferred income. The amount of the guarantee initially recognised as deferred income is amortised in profit or loss over the term of the guarantee as income from financial guarantees issued. In addition, provisions are recognised in accordance with note 1(r)(ii) if and when (i) it becomes probable that the holder of the guarantee will call upon the Group under the guarantee, and (ii) the amount of that claim on the Group is expected to exceed the amount currently carried in trade and other payables in respect of that guarantee i.e. the amount initially recognised, less accumulated amortisation. (ii) (ii) Other provisions and contingent liabilities Provisions are recognised for other liabilities of uncertain timing or amount when the Group or the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation. 65

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (r) (ii) 1 Significant Accounting Policies (continued) (r) Financial guarantees issued, provisions and contingent liabilities (continued) (ii) Other provisions and contingent liabilities (continued) Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. (s) (s) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows: (i) (i) Revenue arising from the sale of food and beverages is recognised in profit or loss at the point of sale to customers. Revenue is after deduction of any sale discounts. (ii) (ii) Rental income receivable under operating leases is recognised in profit or loss in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the use of the leased asset. Lease incentives granted are recognised in profit or loss as an integral part of the aggregate net lease payments receivable. Contingent rentals are recognised as income in the accounting period in which they are earned. (iii) (iii) Interest income is recognised as it accrues using the effective interest method. (iv) (iv) Other income is recognised in the income statement on an accrual basis. (t) (t) Translation of foreign currencies The functional currency of the Company and subsidiaries which operate in Hong Kong is Hong Kong dollars while that for subsidiaries which operate in the PRC is Renminbi. The presentation currency of the Group is Hong Kong dollars. 66 FAIRWOOD HOLDINGS LIMITED

1 (t) 1 Significant Accounting Policies (continued) (t) Translation of foreign currencies (continued) Foreign currency transactions during the year are translated into Hong Kong dollars at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognised in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined. The results of operations outside Hong Kong are translated into Hong Kong dollars at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Balance sheet items, including goodwill arising on consolidation of operations outside Hong Kong acquired on or after 1 January 2005, are translated into Hong Kong dollars at the closing foreign exchange rates ruling at the balance sheet date. The resulting exchange differences are recognised directly in other comprehensive income and accumulated separately in equity in the exchange reserve. On disposal of operations outside Hong Kong, the cumulative amount of the exchange differences relating to that operations is reclassified from equity to profit or loss when the profit or loss on disposal is recognised. (u) (u) Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete. 67

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 1 (v) 1 (w) 1 Significant Accounting Policies (continued) (v) Non-current assets held for sale A non-current asset is classified as held for sale if it is highly probable that its carrying amount will be recovered through a sale transaction rather than through continuing use and the asset is available for sale in its present condition. Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with the accounting policies before the classification. Then, on initial classification as held for sale and until disposal, the noncurrent assets (except for certain assets as explained below), are recognised at the lower of their carrying amount and fair value less costs to sell. The principal exceptions to this measurement policy so far as the financial statements of the Group and the Company are concerned are investment properties. Investment properties, even if held for sale, would continue to be measured in accordance with the policies set out elsewhere in note 1. Impairment losses on initial classification as held for sale, and on subsequent remeasurement while held for sale, are recognised in profit or loss. As long as a non-current asset is classified as held for sale, the non-current asset is not depreciated or amortised. (w) Related parties For the purposes of these financial statements, a party is considered to be related to the Group if: (i) (i) the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group; (ii) (ii) the Group and the party are subject to common control; (iii) (iii) the party is an associate of the Group or a joint venture in which the Group is a venturer; (iv) (iv) the party is a member of key management personnel of the Group or the Group s parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals; 68 FAIRWOOD HOLDINGS LIMITED

1 (w) (v) (i) 1 Significant Accounting Policies (continued) (w) Related parties (continued) (v) the party is a close family member of a party referred to in (i) or is an entity under the control, joint control or significant influence of such individuals; or (vi) (vi) the party is a post-employment benefit plan which is for the benefit of employees of the Group or of any entity that is a related party of the Group. (x) Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. (x) Segment reporting Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group s various lines of business and geographical locations. Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. 69

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 2 8 1 27 7 23 2 13 2 Changes in Accounting Policies The HKICPA has issued one new HKFRS, a number of amendments to HKFRSs and new Interpretations that are first effective for the current accounting period of the Group and the Company. Of these, the following developments are relevant to the Group s financial statements: HKFRS 8, Operating segments HKAS 1 (revised 2007), Presentation of financial statements Improvements to HKFRSs (2008) Amendments to HKAS 27, Consolidated and separate financial statements cost of an investment in a subsidiary, jointly controlled entity or associate Amendments to HKFRS 7, Financial instruments: Disclosures improving disclosures about financial instruments HKAS 23 (revised 2007), Borrowing costs Amendments to HKFRS 2, Share-based payment vesting conditions and cancellations HK(IFRIC) 13, Customer loyalty programmes 70 FAIRWOOD HOLDINGS LIMITED

2 13 23 2 8 8 12 1 2 Changes in Accounting Policies (continued) The adoption of Improvements to HKFRSs (2008), Interpretation HK(IFRIC) 13, HKAS 23 (revised 2007) and Amendments to HKFRS 2 do not have a significant impact on the Group s results of operations and financial position. The impact of the remainder of these developments is as follows: HKFRS 8 requires segment disclosure to be based on the way that the Group s chief operating decision maker regards and manages the Group, with the amounts reported for each reportable segment being the measures reported to the Group s chief operating decision maker for the purposes of assessing segment performance and making decisions about operating matters. This contrasts with the presentation of segment information in prior years which was based on a disaggregation of the Group s financial statements into segments based on related products and services and on geographical areas. The adoption of HKFRS 8 has resulted in the presentation of segment information in a manner that is more consistent with internal reporting provided to the Group s most senior executive management (see note 12). Corresponding amounts have been provided on a basis consistent with the revised segment information. As a result of the adoption of HKAS 1 (revised 2007), details of changes in equity during the period arising from transactions with equity shareholders in their capacity as such have been presented separately from all other income and expenses in a revised consolidated statement of changes in equity. All other items of income and expense are presented in the consolidated income statement, if they are recognised as part of profit or loss for the period, or otherwise in a new primary statement, the consolidated statement of comprehensive income. Corresponding amounts have been restated to conform to the new presentation. This change in presentation has no effect on reported profit or loss, total income and expense or net assets for any period presented. 71

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 2 7 28 7 27 3 2 Changes in Accounting Policies (continued) As a result of the adoption of the amendments to HKFRS 7, the financial statements included expanded disclosures in note 28 about the fair value measurement of the Group s financial instruments, categorising these fair value measurements into a three-level fair value hierarchy according to the extent to which they are based on observable market data. The Group has taken advantage of the transitional provisions set out in the amendments to HKFRS 7, under which comparative information for the newly required disclosures about the fair value measurements of financial instruments has not been provided. The amendments to HKAS 27 have removed the requirement that dividends out of pre-acquisition profits should be recognised as a reduction in the carrying amount of the investment in the investee, rather than as income. As a result, as from 1 April 2009 all dividends receivable from subsidiaries, whether out of pre- or post-acquisition profits, will be recognised in the Company s profit or loss and the carrying amount of the investment in the investee will not be reduced unless that carrying amount is assessed to be impaired as a result of the investee declaring the dividend. In such cases, in addition to recognising dividend income in profit or loss, the Company would recognise an impairment loss. In accordance with the transitional provisions in the amendment, this new policy will be applied prospectively to any dividends receivable in the current or future periods and previous periods have not been restated. 3 Turnover The principal activities of the Group are operation of fast food restaurants and property investments. Turnover represents the sales value of food and beverages sold to customers and rental income. An analysis of turnover is as follows: 2010 2009 $ 000 $ 000 Sale of food and beverages 1,555,111 1,456,683 Property rental 7,237 8,820 1,562,348 1,465,503 72 FAIRWOOD HOLDINGS LIMITED

4 4 Other Revenue and Net Income Other revenue 2010 2009 $ 000 $ 000 Interest income 708 3,202 Other net income Compensation received on early termination of lease 7,000 Net loss on disposal of fixed assets from early termination of lease (2,661) in the normal course of business (2,690) (3,415) Compensation received on granting right of access to a third party for construction work performed in part of a restaurant 3,481 2,135 Electric and gas range incentives 2,186 1,948 Profit on sale of redemption gifts 519 867 Others 1,478 1,604 4,974 7,478 5 5 Profit Before Taxation Profit before taxation is arrived at after charging/(crediting): (a) (a) Finance costs: 2010 2009 $ 000 $ 000 Change in fair value of other financial asset/liabilities at fair value through profit or loss 116 78 Interest on bank loans 1,216 121 (b) (b) Staff costs: 1,332 199 Contributions to defined contribution retirement plan 17,901 16,750 Equity-settled share-based payment expenses 1,867 1,888 Salaries, wages and other benefits 404,387 376,802 424,155 395,440 73

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 5 5 Profit Before Taxation (continued) (c) (c) Other items: 2010 2009 $ 000 $ 000 Cost of inventories (Note) 437,364 425,275 Depreciation of fixed assets 54,232 49,324 Amortisation of interests in leasehold land held for own use under operating leases 212 Auditor s remuneration 2,825 2,602 Impairment losses on other receivables 205 Operating lease charges on properties Minimum lease payments 212,329 200,294 Contingent rentals 17,457 17,845 Rental receivable Investment properties, less direct 270,000 outgoings of $270,000 (2009: $287,000) 287,000 (3,457) (3,719) Other operating sub-leases (3,510) (4,814) Cost of subsequent replacement of cutlery and utensils 10,029 7,074 Note: This represents food costs. 74 FAIRWOOD HOLDINGS LIMITED

6 (a) 6 Income Tax in the Consolidated Income Statement (a) Taxation in the consolidated income statement represents: Current tax Hong Kong Profits Tax 2010 2009 $ 000 $ 000 Provision for the year 12,037 13,423 Over-provision in respect of prior years (95) (513) Current tax PRC 11,942 12,910 Provision for the year Over-provision in respect of prior years (192) Deferred tax (192) Origination and reversal of temporary differences 5,175 1,873 17,117 14,591 16.5% 16.5%) The provision for Hong Kong Profits Tax for 2010 is calculated at 16.5% (2009: 16.5%) of the estimated assessable profits for the year. Taxation for overseas subsidiaries is charged similarly at the appropriate current rates of taxation ruling in the relevant countries. 75

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 6 (b) 6 Income Tax in the Consolidated Income Statement (continued) (b) Reconciliation between tax expense and accounting profit at applicable tax rates: 2010 2009 $ 000 $ 000 Profit before taxation 110,386 94,613 Notional tax on profit before taxation, calculated at the rate applicable to profits in the tax jurisdictions concerned 18,214 15,611 Tax effect of non-deductible expenses 1,100 1,220 Tax effect of non-taxable income (2,195) (1,786) Tax effect of current year s tax losses not recognised 16 191 Tax effect of previously unrecognised tax losses utilised this year (2) Tax effect of other temporary differences not recognised 63 89 Over-provision in prior years (95) (705) Others 16 (29) Actual tax expense 17,117 14,591 76 FAIRWOOD HOLDINGS LIMITED

7 161 7 Directors Remuneration Directors remuneration disclosed pursuant to section 161 of the Hong Kong Companies Ordinance is as follows: Executive Directors Salaries, allowances Retirement Directors and benefits Discretionary Share-based scheme 2010 fee in kind bonus payments contributions Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 (iv) (note (iv)) Mr Dennis Lo Hoi Yeung 120 4,525 2,840 12 7,497 Mr Chan Chee Shing 120 1,389 1,135 395 12 3,051 Ms Mak Yee Mei 30 943 260 12 12 1,257 (i) Mr Ng Chi Keung (Note (i)) 98 1,009 430 9 1,546 Non-executive Director (i) Mr Ng Chi Keung (Note (i)) 32 32 Independent Non executive Directors Mr Joseph Chan Kai Nin 160 160 Dr Peter Lau Kwok Kuen 130 130 Mr Tony Tsoi Tong Hoo 140 140 Mr Peter Wan Kam To 110 110 (ii) Mr Herald Lau Ling Fai (Note (ii)) 70 70 1,010 7,866 4,665 407 45 13,993 77

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 7 7 Directors Remuneration (continued) Executive Directors Salaries, allowances Retirement Directors and benefits Discretionary Share-based scheme 2009 fee in kind bonus payments contributions Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 (iv) (note (iv)) Mr Dennis Lo Hoi Yeung 120 4,466 1,500 12 6,098 Mr Chan Chee Shing 120 1,142 250 201 12 1,725 Mr Ng Chi Keung 130 1,093 250 201 12 1,686 Independent Non executive Directors Mr Herald Lau Ling Fai 160 160 Mr Joseph Chan Kai Nin 160 160 Mr Peter Lee Sheung Yam (iii) (Note (iii)) 60 60 Dr Peter Lau Kwok Kuen 130 130 Mr Tony Tsoi Tong Hoo 60 60 940 6,701 2,000 402 36 10,079 (i) Note (i): Re-designated from Executive Director to Non-executive Director on 1 January 2010 (ii) (iii) Note (ii): Retired on 27 August 2009 Note (iii): Retired on 28 August 2008 78 FAIRWOOD HOLDINGS LIMITED

7 (iv) 1(p)(ii) 24 8 7 7 Directors Remuneration (continued) Note (iv): Share-based payments represent the estimated value of share options granted to the Directors under the Company s share option scheme. The value of these share options is measured according to the Group s accounting policies for sharebased payment transactions as set out in note 1(p)(ii) and, in accordance with that policy, includes adjustments to reverse amounts accrued in previous years where grants of equity instruments are forfeited prior to vesting. The details of these benefits in kind, including the principal terms and number of options granted, are disclosed under the paragraph Share option schemes in the Directors report and note 24. 8 Individuals with Highest Emoluments Of the five individuals with the highest emoluments, four (2009: three) are Directors whose emoluments are disclosed in note 7. The aggregate of the emoluments in respect of the other individual (2009: two individuals) is as follows: 2010 2009 $ 000 $ 000 Salaries and other emoluments 1,685 1,748 Share-based payments 204 23 Retirement scheme contributions 12 24 1,901 1,795 The emoluments of the individual (2009: two individuals) with the highest emoluments are within the following bands: 2010 2009 Number of Number of individuals individuals 1,000,000 $0 $1,000,000 2 1,000,0011,500,000 $1,000,001 $1,500,000 1,500,0012,000,000 $1,500,001 $2,000,000 1 1 2 79

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 8 9 45,000 1,084,000 8 Individuals with Highest Emoluments (continued) During the year, no emoluments (2009: $Nil) were paid by the Group to any of the Directors or the five highest paid individuals as an inducement to join or upon joining the Group or as a compensation for loss of office. 9 Profit Attributable to Equity Shareholders of the Company The consolidated profit attributable to equity shareholders of the Company includes a loss of $45,000 (2009: $1,084,000) which has been dealt with in the financial statements of the Company. Reconciliation of the above amount of the Company s profit for the year: 2010 2009 $ 000 $ 000 Amount of consolidated profit attributable to equity shareholders dealt with in the Company s financial statements (45) (1,084) Write back of impairment losses on interest in subsidiaries 38,114 29,278 Company s profit for the year 27(b) (note 27(b)) 38,069 28,194 80 FAIRWOOD HOLDINGS LIMITED

10 (a) 10 Dividends (a) Dividends payable to equity shareholders of the Company attributable to the year 2010 2009 $ 000 $ 000 Interim dividend declared and paid of 18.010.0 18.0 cents (2009: 10.0 cents) per share 22,624 12,549 Final dividend proposed after the 28.0 balance sheet date of 28.0 cents 28.0 (2009: 28.0 cents) per share 35,192 35,164 57,816 47,713 (b) The final dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date. (b) Dividends payable to equity shareholders of the Company attributable to the previous financial year, approved and paid during the year 2010 2009 $ 000 $ 000 Final dividend in respect of the previous financial year, approved and paid during the year, of 28.0 cents 28.029.0 (2009: 29.0 cents) per share 35,192 36,547 Special dividend in respect of the previous financial year, approved and paid during the year, of nil cent 12.0 (2009: 12.0 cents) per share 15,123 35,192 51,670 28,000 In respect of the final dividends for the year ended 31 March 2009, there is a difference of $28,000 between the final dividends disclosed in the last annual financial statements and amount approved and paid during the year which represents dividends attributable to new shares issued upon the exercise of share options before the closing date of the register of members. 81

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 11 (a) 93,269,000 80,022,000 125,679,000 125,908,000 11 Earnings Per Share (a) Basic earnings per share The calculation of basic earnings per share is based on the profit attributable to ordinary equity shareholders of the Company of $93,269,000 (2009: $80,022,000) and the weighted average of 125,679,000 ordinary shares (2009: 125,908,000 shares) in issue during the year, calculated as follows: Weighted average number of ordinary shares: 2010 2009 Number of Number of shares shares 000 000 Issued ordinary shares at 1 April 125,587 127,106 Effect of share options exercised 92 94 Effect of shares repurchased (1,292) Weighted average number of ordinary shares at 31 March 125,679 125,908 (b) 93,269,000 80,022,000 125,913,000 126,088,000 (b) Diluted earnings per share The calculation of diluted earnings per share is based on the profit attributable to ordinary equity shareholders of the Company of $93,269,000 (2009: $80,022,000) and the weighted average number of ordinary shares of 125,913,000 shares (2009: 126,088,000 shares), calculated as follows: 82 FAIRWOOD HOLDINGS LIMITED

11 (b) 11 Earnings Per Share (continued) (b) Diluted earnings per share (continued) Weighted average number of ordinary shares (diluted): 2010 2009 Number of Number of shares shares 000 000 Weighted average number of ordinary shares at 31 March 125,679 125,908 Effect of deemed issue of ordinary shares under the Company s share option scheme for nil consideration 234 180 Weighted average number of ordinary shares at 31 March (diluted) 125,913 126,088 12 8 12 Segment Reporting The Group manages its businesses by two geographical divisions, namely Hong Kong restaurant and the PRC restaurant, which are organised by both products and geography. On firsttime adoption of HKFRS 8, Operating segments and in a manner consistent with the way in which information is reported internally to the Group s most senior executive management for the purposes of resource allocation and performance assessment, the Group has identified the following two reportable segments. No operating segments have been aggregated to form the following reportable segments. Hong Kong restaurant: this segment operates fast food restaurants in Hong Kong. The PRC restaurant: this segment operates fast food restaurants in PRC. Other segments generate profits mainly from leasing of investment properties and comprised of corporate expenses. 83

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 12 (a) 12 Segment Reporting (continued) (a) Segment results For the purposes of assessing segment performance and allocating resources between segments, the Group s senior executive management monitors the results to each reportable segment on the following bases: Revenue and expenses are allocated to the reportable segments with reference to revenue generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortisation of assets attributable to those segments. Performance is measured based on segment profit before taxation. Items not specifically attributable to individual segments, such as corporate expenses (mainly costs of supporting functions that are provided by head office), are not allocated to the reporting segments. In addition to receiving segment information concerning segment profit, management is provided with segment information concerning revenue (including inter-segment revenue) and cost of sales (including food cost, labour cost, rent and rates and depreciation). The inter-segment transactions were conducted on normal commercial terms and were priced with reference to prevailing market prices and in the ordinary course of business. Segment assets information is not reported or used by the Group s most senior executive management. Information regarding the Group s reportable segments as provided to the Group s most senior executive management for the purposes of resource allocation and assessment of segment performance for the years ended 31 March 2010 and 2009 is set out below. 84 FAIRWOOD HOLDINGS LIMITED

12 (a) 12 Segment Reporting (continued) (a) Segment results (continued) Hong Kong restaurant The PRC restaurant Other segments Total 2010 2009 2010 2009 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue from external customers 1,407,414 1,327,059 147,697 129,624 12,942 15,056 1,568,053 1,471,739 Inter-segment revenue (5,705) (6,236) (5,705) (6,236) Reportable segment revenue 1,407,414 1,327,059 147,697 129,624 7,237 8,820 1,562,348 1,465,503 Reportable segment profit 92,508 77,595 11,181 7,121 9,644 9,123 113,333 93,839 Interest income 633 3,148 75 54 708 3,202 (b) Interest expense on bank loans 852 66 364 55 1,216 121 Depreciation and amortisation 48,122 43,898 5,324 4,423 998 1,003 54,444 49,324 (b) Reconciliations of reportable segment profit Profit 2010 2009 $ 000 $ 000 Reportable segment profit before taxation 113,333 93,839 Compensation received on early termination of lease 7,000 Compensation received on granting right of access to a third party for construction work performed in part of a restaurant 3,481 2,135 Change in fair value of other financial asset/liabilities at fair value through profit or loss (116) (78) Valuation gains/(losses) on investment properties 3,743 (1,370) Net impairment losses on fixed assets (7,389) (4,142) Unallocated corporate expenses (2,666) (2,771) Consolidated profit before taxation 110,386 94,613 85

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 12 (c) (i) (ii) 12 Segment Reporting (continued) (c) Geographic information The following table sets out information about the geographical location of (i) the Group s revenue from external customers and (ii) the Group s fixed assets and goodwill ( specified non-current assets ). The geographical location of customers is based on the location at which the services were provided or the goods delivered. The geographical location of the specified non-current assets is based on the physical location of the asset in the case of fixed assets, and the location of the operating to which they are allocated in the case of goodwill. Revenue from external Specified customers non-current assets 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 Hong Kong (place of domicile) 1,410,924 1,331,873 312,894 232,620 The PRC 151,424 133,630 86,999 75,979 1,562,348 1,465,503 399,893 308,599 86 FAIRWOOD HOLDINGS LIMITED

13 (a) Cost or valuation: 13 Fixed Assets (a) The Group Leasehold land and Leasehold Other Investment buildings improvements assets Sub-total properties Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 April 2008 93,397 251,822 328,380 673,599 45,374 718,973 Exchange adjustments 138 461 640 1,239 1,239 Additions 24,470 36,281 60,751 60,751 Disposals (32,267) (17,877) (50,144) (50,144) Transfer 2,828 2,828 (2,869) (41) Surplus/(deficit) on revaluation 241 241 (1,370) (1,129) At 31 March 2009 96,604 244,486 347,424 688,514 41,135 729,649 Representing: Cost 96,604 244,486 347,424 688,514 688,514 Valuation 2009 41,135 41,135 96,604 244,486 347,424 688,514 41,135 729,649 Accumulated depreciation and impairment: At 1 April 2008 30,134 191,035 190,852 412,021 412,021 Exchange adjustments 63 280 269 612 612 Charge for the year 2,312 23,053 23,959 49,324 49,324 Written back on disposal (30,056) (13,951) (44,007) (44,007) Transfer (41) (41) (41) Impairment losses 680 3,761 4,441 4,441 Reversal of impairment losses (297) (2) (299) (299) At 31 March 2009 32,468 184,695 204,888 422,051 422,051 Net book value: At 31 March 2009 64,136 59,791 142,536 266,463 41,135 307,598 87

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 13 (a) 13 Fixed Assets (continued) (a) The Group (continued) Cost or valuation: Interests in leasehold land held for own Leasehold use under land and Leasehold Other Investment operating buildings improvements assets Sub-total properties leases Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 April 2009 96,604 244,486 347,424 688,514 41,135 729,649 Exchange adjustments 19 68 87 174 174 Additions 19,103 49,705 83,036 151,844 8,098 159,942 Disposals (32,782) (42,514) (75,296) (75,296) Transfer to non-current 17 assets held for sale (note 17) (7,757) (7,757) (2,800) (10,557) Surplus on revaluation 3,743 3,743 At 31 March 2010 107,969 261,477 388,033 757,479 42,078 8,098 807,655 Representing: Cost 107,969 261,477 388,033 757,479 8,098 765,577 Valuation 2010 42,078 42,078 Accumulated depreciation, amortisation and impairment: 107,969 261,477 388,033 757,479 42,078 8,098 807,655 At 1 April 2009 32,468 184,695 204,888 422,051 422,051 Exchange adjustments 8 41 45 94 94 Charge for the year 2,648 23,255 28,329 54,232 212 54,444 Written back on disposal (32,699) (39,206) (71,905) (71,905) Transfer to non-current 17 assets held for sale (note 17) (3,310) (3,310) (3,310) Impairment losses 4,394 2,995 7,389 7,389 At 31 March 2010 31,814 179,686 197,051 408,551 212 408,763 Net book value: At 31 March 2010 76,155 81,791 190,982 348,928 42,078 7,886 398,892 88 FAIRWOOD HOLDINGS LIMITED

13 (a) 13 Fixed Assets (continued) (a) The Group (continued) The analysis of cost or valuation of the properties of the Group is as follows: Leasehold land and buildings, at cost 2010 2009 $ 000 $ 000 Long-term leasehold in Hong Kong 61,721 69,478 Medium-term leasehold in Hong Kong 19,103 Medium-term leasehold outside Hong Kong 27,145 27,126 107,969 96,604 Investment properties, at valuation Medium-term leasehold in Hong Kong 6,898 8,345 Medium-term leasehold outside Hong Kong 35,180 32,790 42,078 41,135 Interests in leasehold land held for own use under operating leases, at cost Medium-term leasehold in Hong Kong 8,098 (b) 3,743,000 1,370,000 (b) All investment properties of the Group were revalued as at 31 March 2010 on an open market value basis calculated by reference to net rental income allowing for reversionary income potential. The valuations were carried out by an independent firm of surveyors, Asset Appraisal Limited, who have among their staff Fellows of the Hong Kong Institute of Surveyors with recent experience in the location and category of property being valued. The revaluation surplus of $3,743,000 (2009: revaluation deficit of $1,370,000) for the year has been credited to the consolidated income statement. (c) (c) Other assets include furniture, equipment, air-conditioning plant, motor vehicles, computer systems and initial purchases of cutlery and utensils. 89

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 13 (d) 7,389,000 4,441,000 299,000 7,389,000 4,142,000 10% 10% 13 Fixed Assets (continued) (d) During the year, the Group s management identified several branches which continued to under-perform and estimated the recoverable amounts of the fixed assets of those branches. Based on these estimates, the carrying amount of the fixed assets was written down by $7,389,000 (2009: $4,441,000) during the year. The Group s management re-estimated the recoverable amounts of the fixed assets of certain branches which had been impaired in prior years and no impairment loss was written back (2009: reversal of impairment losses of $299,000) during the year. As a result, the net impairment losses on fixed assets of $7,389,000 (2009: $4,142,000) were recognised during the year. The estimates of recoverable amount were based on the fixed assets value in use, determined using a discount rate of 10% (2009: 10%). (e) 68,813,000 43,302,000 (e) At 31 March 2010, the net book value of properties pledged as security for banking facilities granted to certain subsidiaries of the Group amounted to $68,813,000 (2009: $43,302,000). (f) (f) The Group leases out investment properties under operating leases. The leases initially run for one to three years. None of the leases includes contingent rentals. The Group s total future minimum lease payments under non-cancellable operating leases are receivable as follows: 2010 2009 $ 000 $ 000 Within 1 year 3,197 6,088 After 1 year but within 5 years 3,600 2,990 6,797 9,078 90 FAIRWOOD HOLDINGS LIMITED

14 14 Goodwill 2010 2009 $ 000 $ 000 Cost, at 1 April and 31 March 1,001 1,001 Impairment tests for cash-generating units containing goodwill Goodwill is allocated to the Group s cash-generating units ( CGU ) identified according to the area of operation and business segment as follows: 2010 2009 $ 000 $ 000 Restaurant operation The PRC 1,001 1,001 The recoverable amount of the CGU is determined based on valuein-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimate rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates. Key assumptions used for value-in-use calculations: 2010 2009 Gross margin 14% 13% Growth rate 5% 3% Discount rate 10% 10% Management determined the budgeted gross margin based on past performance and their expectation for market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the relevant CGU. 91

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 15 15 Investments in Subsidiaries The Company 2010 2009 $ 000 $ 000 Unlisted shares, at cost 79,808 77,941 Amounts due from subsidiaries 302,061 386,147 381,869 464,088 Less: Impairment losses (71,657) (109,771) 310,212 354,317 (a) (a) The amounts due from subsidiaries are unsecured, recoverable on demand and interest-free. (b) 128131 (b) Details of the subsidiaries at 31 March 2010 are set out on pages 128 to 131 of the financial statements. 16 16 Other Financial Asset Other financial asset represents a principal protected structured note placed with financial institution which is subject to call option at the discretion of the financial institution before the maturity dates. Interest is receivable on a quarterly basis and calculated at variable interest rates with reference to the London Interbank Offered Rate ( LIBOR ). The structured note is denominated in United States dollars. 92 FAIRWOOD HOLDINGS LIMITED

17 17 Non-current Assets Held for Sale 2010 2009 $ 000 $ 000 Leasehold land and buildings 4,447 13 (note 13) 13 Investment properties (note 13) 2,800 7,247 18 (a) Certain leasehold land and buildings and investment properties are presented as non-current assets held for sale following the decision of the Group s management to dispose of these properties. Efforts to dispose of these assets commenced in March 2010 and a sale and purchase agreement was entered into with a third party on 22 April 2010. The sale and purchase was completed on 30 June 2010. 18 Inventories (a) Inventories in the consolidated balance sheet comprise: The Group 2010 2009 $ 000 $ 000 Food and beverages 17,629 23,892 Consumables, packing materials and other sundry items 4,539 5,340 22,168 29,232 93

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 18 (b) 18 Inventories (continued) (b) The analysis of the amount of inventories recognised as an expense is as follows: 2010 2009 $ 000 $ 000 Carrying amount of inventories sold 437,027 425,079 Write down of inventories 337 196 437,364 425,275 19 19 Trade and Other Receivables The Group The Company 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 Trade and other debtors 9,059 4,681 Rental deposits paid 10,269 11,137 Deposits and prepayments 19,820 20,541 207 207 Amounts due from subsidiaries 61,912 35,500 39,148 36,359 62,119 35,707 (a) (a) Ageing analysis Included in trade and other receivables are trade debtors (net of allowance for doubtful debts), based on the invoice date, with the following ageing analysis as of the balance sheet date: The Group 2010 2009 $ 000 $ 000 1 to 30 days 4,055 1,083 31 to 90 days 554 31 91 to 180 days 93 181 to 365 days 3 4,705 1,114 The Group s sales to customers are mainly on a cash basis. The Group also grants credit terms of 30 to 90 days to certain customers to which the Group provides catering services. 94 FAIRWOOD HOLDINGS LIMITED

19 (b) 1(k) 19 Trade and Other Receivables (continued) (b) Impairment of trade debtors Impairment losses in respect of trade debtors are recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against the trade debtor directly (see note 1(k)). During the years ended 31 March 2010 and 2009, the Group did not record any material impairment losses in respect of its trade debtors. (c) (c) Trade debtors that are not impaired The ageing analysis of trade debtors that are neither individually nor collectively considered to be impaired is as follows: The Group 2010 2009 $ 000 $ 000 Neither past due nor impaired 3,912 1,077 Less than 1 month past due 343 36 1 to 3 months past due 399 1 3 to 6 months past due 48 6 to 12 months past due 3 793 37 4,705 1,114 (d) Trade debtors that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default. Trade debtors that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances. (d) All amounts due from subsidiaries of the Company are unsecured, recoverable on demand and interest-free. 95

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 20 20 Bank Deposits and Cash The Group The Company 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 Deposits with banks 94,099 110,946 Cash at bank and in hand 113,393 70,152 205 158 Cash and cash equivalents in the cash flow statement 207,492 181,098 205 158 Pledged bank deposits 2,550 Bank deposits and cash in the balance sheet 210,042 181,098 205 158 2,550,000 1,447,000 Bank deposits of $2,550,000 (2009: $Nil) are pledged to a bank to secure a loan of $1,447,000 as at 31 March 2010 (2009: $Nil) borrowed by an independent third party food processing contractor. Included in bank deposits and cash in the consolidated balance sheet are the following amounts denominated in a currency other than the functional currency of the entity to which they relate: The Group 2010 2009 $ 000 $ 000 United States dollars USD7,786 USD8,098 96 FAIRWOOD HOLDINGS LIMITED

21 21 Trade and Other Payables The Group The Company 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 Rental deposits received 488 1,232 Creditors and accrued expenses 222,882 189,143 1,339 1,320 Amounts due to subsidiaries 27,875 27,889 Financial liabilities measured at amortised cost 223,370 190,375 29,214 29,209 Derivative financial instruments 28(a)(iii) (note 28(a)(iii)) 116 223,486 190,375 29,214 29,209 All of the trade and other payables (including amounts due to related parties) are expected to be settled or recognised as income or are repayable within one year. Included in trade and other payables are trade creditors, based on the invoice date, with the following ageing analysis as of the balance sheet date: The Group 2010 2009 $ 000 $ 000 1 to 30 days 70,850 57,627 31 to 90 days 1,577 1,741 91 to 180 days 89 1,089 181 to 365 days 86 499 Over one year 1,054 472 73,656 61,428 All amounts due to subsidiaries of the Company are unsecured, interest-free and repayable on demand. 97

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 22 22 Bank Loans At 31 March 2010, the bank loans were repayable as follows: The Group 2010 2009 $ 000 $ 000 Within 1 year 3,589 350 After 1 year but within 2 years 10,658 After 2 years but within 5 years 19,952 5,670 After 5 years 11,066 41,676 5,670 Total bank loans 45,265 6,020 At 31 March 2010, the bank loans were secured as follows: The Group 2010 2009 $ 000 $ 000 Bank loans secured 30,059 350 unsecured 15,206 5,670 45,265 6,020 13(e) At 31 March 2010, certain of the above bank loans were secured by charges on properties of the Group (note 13(e)). Certain of the Group s banking facilities are subject to the fulfilment of covenants relating to the Group s balance sheet ratios, as are commonly found in lending arrangements with financial institutions. If the Group were to breach the covenants, the drawn down facilities would become payable on demand. The Group regularly monitors its compliance with these covenants. 98 FAIRWOOD HOLDINGS LIMITED

22 28(a)(ii) 23 5% 20,000 24 (i) (ii) (iii) 1 22 Bank Loans (continued) Further details of the Group s management of liquidity risk are set out in 28(a)(ii). As at 31 March 2010, none of the covenants relating to drawn down facilities had been breached (2009: None). 23 Employee Retirement Benefits The Group operates a Mandatory Provident Fund Scheme (the MPF Scheme ) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees in Hong Kong under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution retirement scheme administered by independent trustees. Under the MPF Scheme, the employer and its employees are each required to make contributions to the Scheme at 5% of the employees relevant income, subject to a cap of monthly relevant income of $20,000. Contributions to the plan vest immediately. Employees engaged by the Group outside Hong Kong are covered by appropriate local defined contribution retirement schemes pursuant to the local labour rules and regulations. 24 Equity-settled Share-based Transactions The Company has adopted a share option scheme on 18 September 2002 under which the Directors are authorised, at their discretion, to invite any Director (including Non-executive Director and Independent Non-executive Director) or any employee of the Company or its subsidiaries or any consultant, agent, representative, advisor, supplier of goods or services, customer, contractor, business ally and joint venture partner to take up options to subscribe for shares of the Company at a price which shall not be less than the highest of (i) the nominal value of the share; (ii) the closing price of the share as stated in the daily quotation sheet of the Stock Exchange on the date of offer; and (iii) the average closing price of the shares as stated in the daily quotation sheets of the Stock Exchange for the 5 business days immediately preceding the date of offer. Save as determined by the Board and provided in the offer of the relevant options, there is no minimum period for which an option must be held before an option can be exercised under the share option scheme. Each option gives the holder the right to subscribe for one ordinary share in the Company. 99

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 24 (a) Options granted to Directors: 24 Equity-settled Share-based Transactions (continued) (a) The terms and conditions of the grants that existed during the year are as follows, whereby all options are settled by physical delivery of shares: Number of Contractual instruments Vesting conditions life of options 1,400,000 7.0 on 8 April 2009 1,400,000 Exercisable in five tranches 7.0 years during the period from 1 April 2010 to 31 March 2016 400,000 6.8 on 1 March 2010 400,000 Exercisable in five tranches 6.8 years during the period from 1 January 2011 to 31 December 2016 Options granted to employees: 100,000 5.1 on 1 September 2004 100,000 Exercisable during 5.1 years the period from 23 September 2008 to 22 September 2009 800,000 6.0 on 6 April 2009 800,000 Exercisable in five tranches 6.0 years during the period from 5 April 2010 to 4 April 2017 100 FAIRWOOD HOLDINGS LIMITED

24 (a) 24 Equity-settled Share-based Transactions (continued) (a) The terms and conditions of the grants that existed during the year are as follows, whereby all options are settled by physical delivery of shares: (continued) Number of Contractual instruments Vesting conditions life of options 3,600,000 7.0 on 8 April 2009 3,600,000 Exercisable in five tranches 7.0 years during the period from 1 April 2010 to 31 March 2016 100,000 6.9 on 4 May 2009 100,000 Exercisable in five tranches 6.9 years during the period from 1 April 2010 to 31 March 2016 200,000 6.7 on 10 July 2009 200,000 Exercisable in five tranches 6.7 years during the period from 1 July 2010 to 30 June 2016 101

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 24 (b) 24 Equity-settled Share-based Transactions (continued) (b) The number and weighted average exercise prices of share options are as follows: 2010 2009 Weighted Weighted average Number average Number exercise of exercise of price options price options 000 000 Outstanding at the beginning of the year $2.33 100 $8.96 4,781 Granted during the year $6.42 6,500 Exercised during the year $2.33 (100) $2.33 (200) Lapsed during the year $6.26 (140) $6.45 (721) Cancelled during the year $6.26 (640) $9.97 (3,760) Outstanding at the end of the year $6.44 5,720 $2.33 100 Exercisable at the end of the year $2.33 100 6.006.95 6.4432.325 5.92 0.48 The weighted average share price at the date of exercise for shares options exercised during the year was $6.00 (2009: $6.95). The options outstanding at 31 March 2010 had exercise price of $6.443 (2009: $2.325) and a weighted average remaining contractual life of 5.92 years (2009: 0.48 years). 102 FAIRWOOD HOLDINGS LIMITED

24 (c) 24 Equity-settled Share-based Transactions (continued) (c) Fair value of share options and assumptions The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on a trinomial lattice model. The contractual life of the share option is used as an input into this model. Expectations of early exercise are incorporated into the trinomial lattice model. Options Options Options Options Options granted at granted at granted at granted at granted at 6 April 8 April 4 May 10 July 1 March Fair value of share options and assumptions 2009 2009 2009 2009 2010 Fair value at $0.64 $0.69 $0.62 $0.57 $0.87 measurement date Share price $6.30 $6.26 $6.29 $6.91 $8.08 Exercise price $6.30 $6.26 $6.29 $7.69 $8.08 Expected volatility 25.06% 26.05% 25.30% 27.10% 25.86% 29.15% 34.01% 28.01% 29.91% 27.07% Option life (expressed as weighted average life used in the modelling under trinomial lattice 3.00 3.51 2.91 2.98 2.84 model) years years years years years Expected dividend yield 6.19% 6.23% 6.20% 5.64% 5.69% Risk-free interest rate (based on Exchange 0.44% 0.59% 0.21% 0.08% 0.21% Fund Notes) 1.70% 1.80% 1.64% 1.79% 1.62% The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility based on publicly available information. Expected dividend yield is based on historical dividends. Change in the subjective input assumptions could materially affect the fair value estimate. Share options were granted under a service condition. The condition has not been taken into account in the grant date fair value measurement of the services received. There were no market conditions associated with the share option grants. 103

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 25 (a) 25 Income Tax in the Balance Sheet (a) Current taxation in the consolidated balance sheet represents: The Group 2010 2009 $ 000 $ 000 Provision for Hong Kong Profits Tax for the year 12,037 13,423 Provisional Profits Tax paid (9,722) (15,641) 2,315 (2,218) Balance of Profits Tax provision relating to prior years 358 (7) 2,673 (2,225) PRC taxation 538 538 Amount of taxation expected to be settled within one year 3,211 (1,687) Representing: Current tax recoverable (8) (2,239) Current tax payable 3,219 552 3,211 (1,687) 104 FAIRWOOD HOLDINGS LIMITED

25 (b) 25 Income Tax in the Balance Sheet (continued) (b) Deferred tax assets and liabilities recognised: The components of deferred tax (assets)/liabilities recognised in the consolidated balance sheet and the movements during the year are as follows: Deferred tax arising from: The Group Depreciation allowances Revaluation in excess of of investment related properties depreciation Total $ 000 $ 000 $ 000 At 1 April 2008 153 901 1,054 Charged to the consolidated income statement 1,873 1,873 At 31 March 2009 153 2,774 2,927 At 1 April 2009 153 2,774 2,927 Charged to the consolidated income statement 223 4,952 5,175 At 31 March 2010 376 7,726 8,102 The Group 2010 2009 $ 000 $ 000 Net deferred tax assets recognised on the consolidated balance sheet (37) (35) Net deferred tax liabilities recognised on the consolidated balance sheet 8,139 2,962 8,102 2,927 105

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 25 (c) 25 Income Tax in the Balance Sheet (continued) (c) Deferred tax assets not recognised: The Group 2010 2009 $ 000 $ 000 Deductible temporary differences 2,843 2,464 Accumulated unused tax losses 40,563 40,476 43,406 42,940 26 The Group has not recognised deferred tax assets in respect of the above tax losses and deductible temporary differences of certain subsidiaries as management of the Group considers that it is not probable as at 31 March 2010 that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity. The tax losses do not expire under current tax legislation. 26 Provisions The Group 2010 2009 $ 000 $ 000 Provision for long service payments 12,920 12,320 Provision for reinstatement costs for rented premises 15,000 14,534 27,920 26,854 Less: Amount included under current liabilities (4,335) (5,489) 23,585 21,365 106 FAIRWOOD HOLDINGS LIMITED

26 (a) 26 Provisions (continued) (a) Provision for long service payments The Group 2010 2009 $ 000 $ 000 At 1 April 12,320 11,530 Additional provisions made 1,285 1,820 Provision utilised (685) (1,030) At 31 March 12,920 12,320 (b) Under the Hong Kong Employment Ordinance, the Group is obligated to make lump sum payments on cessation of employment in certain circumstances to employees who have completed at least five years of service with the Group. The amount payable is dependent on the employees final salary and years of service, and is reduced by entitlement accrued under the Group s retirement schemes that are attributable to contributions made by the Group. The Group does not set aside any assets to fund the above. (b) Provision for reinstatement costs for rented premises The Group 2010 2009 $ 000 $ 000 At 1 April 14,534 13,657 Additional provisions made 1,571 1,877 Provision utilised (1,105) (1,000) At 31 March 15,000 14,534 Under the terms of the rental agreements signed with landlords, the Group shall remove and re-instate the rental premises at the Group s cost upon expiry of the relevant rental agreements. Provision is therefore made for the best estimate of the expected reinstatement costs to be incurred. 107

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 27 (a) 49 (b) 27 Capital and Reserves (a) The Group The reconciliation between the opening and closing balances of each component of the Group s consolidated equity is set out in the consolidated statement of changes in equity on page 49. (b) The Company Share Share Contributed Capital Retained capital premium surplus reserve profits Total Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 April 2008 127,106 56,610 1,463 223,762 408,941 Dividends approved in respect of the previous year 10(b) (51,670) (51,670) Profit for the year 28,194 28,194 Shares issued under share option scheme 27(c)(i) 200 265 465 Issue expenses (8) (8) Equity-settled share-based transactions 187 1,205 496 1,888 Repurchase of own shares par value paid 27(c)(ii) (1,719) (1,719) premium and transaction costs paid 27(c)(ii) (219) (12,350) (12,569) Dividends declared in respect of the current year 10(a) (12,549) (12,549) At 31 March 2009 125,587 225 44,260 2,668 188,233 360,973 At 1 April 2009 125,587 225 44,260 2,668 188,233 360,973 Dividends approved in respect of the previous year 10(b) (35,192) (35,192) Profit for the year 38,069 38,069 Shares issued under share option scheme 27(c)(i) 100 133 233 Issue expenses (4) (4) Equity-settled share-based transactions 96 1,771 1,867 Dividends declared in respect of the current year 10(a) (22,624) (22,624) At 31 March 2010 125,687 450 44,260 4,439 168,486 343,322 108 FAIRWOOD HOLDINGS LIMITED

27 (c) 27 Capital and Reserves (continued) (c) Share capital Authorised: 2010 2009 Number of Number of shares Amount shares Amount 000 $ 000 000 $ 000 1 Ordinary shares of $1 each 240,000 240,000 240,000 240,000 Issued and fully paid: At 1 April 125,587 125,587 127,106 127,106 Shares issued under share (i) option scheme (note (i)) 100 100 200 200 (ii) Shares repurchased (note (ii)) (1,719) (1,719) At 31 March 125,687 125,687 125,587 125,587 Notes: (i) (i) Share issued under share option scheme 100,000200,000 233,000465,000 100,000 200,000133,000 265,000 96,000187,000 1(p)(ii) During the year, options were exercised to subscribe for 100,000 (2009: 200,000) ordinary shares in the Company at a consideration of $233,000 (2009: $465,000), of which $100,000 (2009: $200,000) was credited to share capital and the balance of $133,000 (2009: $265,000) was credited to the share premium account. $96,000 (2009: $187,000) has been transferred from the capital reserve to the share premium account in accordance with policy set out in note 1(p)(ii). 109

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 27 (c) 27 Capital and Reserves (continued) (c) Share capital (continued) Notes: (continued) (ii) (ii) Purchase of own shares During the year ended 31 March 2009, the Company repurchased its own shares on the Stock Exchange as follows: Number of Highest price Lowest price shares paid per paid per Aggregate Date of repurchase repurchased share share price paid $ $ $ 000 22 May 2008 82,500 8.78 8.76 724 26 May 2008 200,000 8.72 8.72 1,744 27 May 2008 299,500 8.72 8.72 2,612 28 May 2008 249,500 8.72 8.72 2,176 30 May 2008 350,000 8.72 8.70 3,051 8 September 2008 300,000 7.60 7.60 2,280 9 September 2008 57,500 7.50 7.45 430 11 September 2008 50,000 7.25 7.25 363 17 September 2008 60,000 6.70 6.70 402 18 September 2008 70,000 6.25 6.25 437 1,719,000 14,219 The repurchased shares were cancelled and accordingly the issued share capital of the Company was reduced by the nominal value of these shares. The premium and transaction costs paid on the repurchase of the shares were charged to the Company s and the Group s reserves. The Company did not purchase any of its own shares during the year ended 31 March 2010. 110 FAIRWOOD HOLDINGS LIMITED

27 (c) 27 Capital and Reserves (continued) (c) Share capital (continued) Notes: (continued) (iii) (iii) Terms of unexpired and unexercised share options at the balance sheet date Exercise Date granted Exercise period price 2010 2009 $ Number Number 1 September 2004 23 September 2008 to 22 September 2009 2.325 100,000 6 April 2009 5 April 2010 to 4 April 2017 6.30 800,000 8 April 2009 1 April 2010 to 31 March 2016 6.26 4,220,000 4 May 2009 1 April 2010 to 31 March 2016 6.29 100,000 10 July 2009 1 July 2010 to 30 June 2016 7.69 200,000 1 March 2010 1 January 2011 to 31 December 2016 8.08 400,000 5,720,000 100,000 1 24 (d) (i) 150157 Each option entitles the holder to subscribe for one ordinary share in the Company. Further details of these options are set out in note 24 to the financial statements. (d) Nature and purpose of reserves (i) Share premium The application of the share premium account is governed by sections 150 and 157 of the Company s Bye-Laws and the Bermuda Companies Act 1981. (ii) 1(t) (ii) Exchange reserve The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of PRC operations. The reserve is dealt with in accordance with the accounting policies set out in note 1(t). 111

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 27 (d) (iii) 27 Capital and Reserves (continued) (d) Nature and purpose of reserves (continued) (iii) Contributed surplus Pursuant to a reorganisation in 1999, the former holding company of the Group became a subsidiary of the Company. The excess of the consolidated net assets of the subsidiaries acquired by the Company over the nominal value of the shares issued by the Company has been credited to the Company s contributed surplus. The Group s contributed surplus represents the excess of the aggregate of the nominal value of the share capital and share premium of the former holding company over the nominal value of the shares issued by the Company under the reorganisation. The application of the Company s contributed surplus is governed by the Bermuda Companies Act 1981. Under the Bermuda Companies Act 1981, contributed surplus of the Company is available for distribution. However, the Company cannot declare or pay a dividend or make a distribution out of contributed surplus if: (a) (a) it is, or would after the payment be, unable to pay its liabilities as they become due; or (b) (b) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts. (iv) 1(p)(ii) (iv) Capital reserve The capital reserve comprises the fair value of the actual or estimated number of unexercised share options granted to employees of the Company recognised in accordance with the accounting policy adopted for share-based payments in note 1(p)(ii). (v) (v) Land and buildings revaluation reserve The land and buildings revaluation reserve comprises the change arising on the revaluation of property held for own use upon transfer to investment property. (vi) 212,746,000 232,493,000 28.0 28.0 35,192,000 35,164,000 (vi) Distributability of reserves At 31 March 2010, the aggregate amount of reserves available for distribution to equity shareholders of the Company was $212,746,000 (2009: $232,493,000). After the balance sheet date the Directors proposed a final dividend of 28.0 cents (2009: final dividend of 28.0 cents) per share amounting to $35,192,000 (2009: $35,164,000). These dividends have not been recognised as a liability at the balance sheet date. 112 FAIRWOOD HOLDINGS LIMITED

27 (e) 45,265,0006,020,000 11.0% 1.6%) 209,833,000183,439,000 28 (a) 27 Capital and Reserves (continued) (e) Capital management The Group s primary objectives when managing capital are to safeguard the Group s ability to continue as a going concern, so that it can continue to provide returns for shareholders, by pricing products commensurately with the level of risk and by securing access to finance at a reasonable cost. As 31 March 2010, the Group has total borrowings amounting to $45,265,000 (2009: $6,020,000). The gearing ratio, representing the ratio of total borrowings to the total share capital and reserves of the Group was 11.0% at 31 March 2010 (2009: 1.6%). The Group had structured note, time deposits and cash balances as at 31 March 2010 amounting to $209,833,000 (2009: $183,439,000). The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions. 28 Financial Instruments (a) Financial risk management and fair value Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group s business. The Group s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below. (i) (i) Credit risk The Group s credit risk is primarily attributable to trade and other receivables, bank deposits and cash at bank. In respect of trade and other receivables, the Group has policies in place to ensure that catering services are provided to customers with an appropriate credit history. Sales to retail customers are made in cash, Octopus or via major credit cards. At the balance sheet date, there were no significant concentrations of credit risk. The Group s structured note, time deposits and cash balances are normally placed with financial institutions of high credit quality. 113

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 28 (a) (i) 30 20 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (i) Credit risk (continued) The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. Except for the financial guarantee given by the Company in respect of banking facilities granted to certain subsidiaries as disclosed in note 30, the Group does not provide any other guarantees which would expose the Group to credit risk except for the pledge of bank deposits to a bank to secure a loan borrowed by an independent third party food processing contractor (see note 20). (ii) (ii) Liquidity risk The Group s policy is to regularly monitor its liquidity requirement and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term. The following table shows the remaining contractual maturities at the balance sheet date of the Group s and the Company s non-derivative and derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the balance sheet date) and the earliest date the Group and the Company can be required to pay: 114 FAIRWOOD HOLDINGS LIMITED

28 (a) (ii) 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (ii) Liquidity risk (continued) The Group 2010 More than More than Total 1 year 2 years contractual but less but less More Carrying undiscounted Within than than than amount cash flow 1 year 2 years 5 years 5 years $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Bank loans 45,265 49,719 4,863 11,645 21,502 11,709 Rental deposits received 1,614 1,614 488 777 349 Creditors and accrued expenses 222,882 222,882 222,882 Derivative financial instruments 116 1,861 249 543 1,004 65 269,877 276,076 228,482 12,965 22,855 11,774 The Group 2009 More than More than Total 1 year 2 years contractual but less but less More Carrying undiscounted Within than than than amount cash flow 1 year 2 years 5 years 5 years $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Bank loans 6,020 6,579 577 226 5,776 Rental deposits received 1,907 1,907 1,232 260 415 Creditors and accrued expenses 189,143 189,143 189,143 197,070 197,629 190,952 486 6,191 115

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 28 (a) (ii) 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (ii) Liquidity risk (continued) The Company 2010 Total contractual Carrying undiscounted Within amount cash flow 1 year $ 000 $ 000 $ 000 Creditors and accrued expenses 1,339 1,339 1,339 Amounts due to subsidiaries 27,875 27,875 27,875 29,214 29,214 29,214 The Company 2009 Total contractual Carrying undiscounted Within amount cash flow 1 year $ 000 $ 000 $ 000 Creditors and accrued expenses 1,320 1,320 1,320 Amounts due to subsidiaries 27,889 27,889 27,889 29,209 29,209 29,209 116 FAIRWOOD HOLDINGS LIMITED

28 (a) (iii) 2.9% 6.3% 24,133,000 22 2.63% 2.74% 116,000 21 50 86,000 15,000 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (iii) Interest rate risk The Group s interest rate risk arises primarily from structured note and bank loans. All bank loans bear interest at market rates. For the bank loans, when appropriate and at times of interest rate uncertainty or volatility, interest rate swaps may be used to assist in the Group s management of interest rate exposure. The effective interest rate of the Group s bank loans as at 31 March 2010 is 2.9% (2009: 6.3%). During the year ended 31 March 2010, interest rate swaps, denominated in Hong Kong dollars, have been entered into to achieve an appropriate mix of fixed and floating rate exposure consistent with the Group s policy. At 31 March 2010, the Group had interest rate swaps with a notional contract amount of $24,133,000 (2009: $Nil) to fix the interest rate of certain bank borrowings so as to reduce the impact of interest rate fluctuation. The swaps mature over the next 6.5 years, matching the maturity of the related loans (see note 22) and have fixed swap rates ranging from 2.63% to 2.74%. The net fair value of swaps entered into by the Group at 31 March 2010 was $116,000 (2009: $Nil). These amounts are recognised as derivative financial instruments and are included within Trade and other payables (note 21). At 31 March 2010, it is estimated that a general increase/ decrease of 50 basis points in interest rates, with all other variables held constant, would have increased/decreased the Group s profit after tax by approximately $86,000 (2009: decreased/increased by approximately $15,000). The sensitivity analysis above indicates the instantaneous change in the Group s profit after tax that would arise assuming that the change in interest rates had occurred at the balance sheet date and applied to re-measure those financial instruments held by the Group which expose the Group to fair value interest rate risk at the balance sheet date. In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative instruments held by the Group at the balance sheet date, the impact on the Group s profit after tax is estimated as an annualised impact on interest expenses or income of such a change in interest rates. The analysis is performed on the same basis for 2009. 117

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 28 (a) (iv) 16 20 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (iv) Currency risk The Group s exposure to currency risk at the balance sheet date arose from structured note and cash at bank denominated in United States Dollars ( USD ) (see notes 16 and 20). As USD is pegged to HKD, the Group does not expect any significant movements in the USD/HKD exchange rate. (v) (1) 7 (v) Fair values (1) Financial instruments carried at fair value The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels of the fair value hierarchy defined in HKFRS 7, Financial instruments: Disclosures, with the fair value of each financial instrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows: Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments; Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data; and Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data. 118 FAIRWOOD HOLDINGS LIMITED

28 (a) (v) (1) 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (v) Fair values (continued) (1) Financial instruments carried at fair value (continued) Liabilities The Group 2010 Level 1 Level 2 Level 3 Total $ 000 $ 000 $ 000 $ 000 Derivative financial instruments 116 116 (2) During the year there were no significant transfers between financial instruments in Level 1, Level 2 and Level 3. (2) Fair values of financial instruments carried at other than fair value The carrying amounts of the Group s and the Company s financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 March 2010 and 2009 except as follows: Asset The Group 2010 2009 Carrying Fair Carrying Fair Amount value amount value $ 000 $ 000 $ 000 $ 000 Other financial asset at amortised cost 2,341 2,279 2,341 2,016 Amounts due from and to subsidiaries are unsecured, interestfree and recoverable/repayable on demand. Given these terms, it is not meaningful to disclose their fair values. 119

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 28 (a) (vi) (1) (2) (3) 28 Financial Instruments (continued) (a) Financial risk management and fair value (continued) (vi) Estimation of fair value (1) Other financial asset at amortised cost The fair value is estimated as the present value of future cash flows, discounted at current market interest rates for similar financial instruments. (2) Derivative financial instruments The fair value of interest rate swap is determined by discounting the future cash flows of the contracts at the current market interest rates. (3) Interest rate used for determining fair value The Group uses the interest rate curve of Hong Kong Interbank Offered Rate ( HIBOR ) as of 31 March 2010 plus an adequate constant credit spread to discount financial instruments. The interest rates used are as follows: The Group 2010 2009 Other financial asset at amortised cost 1.78% 5.96% Derivative financial instruments 0.69% 2.33% (b) Financial assets (b) Categories of financial instruments The Group The Company 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 Loans and receivables Debtors, deposits and prepayments 80,009 75,101 207 207 Amounts due from subsidiaries 363,973 383,533 Other financial asset at amortised cost 2,341 2,341 Bank deposits and cash 210,042 181,098 205 158 292,392 258,540 364,385 383,898 120 FAIRWOOD HOLDINGS LIMITED

28 (b) Financial liabilities 28 Financial Instruments (continued) (b) Categories of financial instruments (continued) The Group The Company 2010 2009 2010 2009 $ 000 $ 000 $ 000 $ 000 Financial instruments at fair value through profit or loss 116 Amortised cost Rental deposits received 1,614 1,907 Creditors and accrued expenses 222,882 189,143 1,339 1,320 Amounts due to subsidiaries 27,875 27,889 Bank loans 45,265 6,020 269,761 197,070 29,214 29,209 269,877 197,070 29,214 29,209 29 (a) 29 Commitments (a) Capital commitments outstanding at 31 March 2010 not provided for in the financial statements were as follows: 2010 2009 $ 000 $ 000 Contracted for 968 29,560 Authorised but not contracted for 31,814 99,270 32,782 128,830 29,944,000 116,611,000 10,408,00012,487,000 Included in capital commitments outstanding at 31 March 2010 is an amount of $29,944,000 (2009: $116,611,000) for the future development of the new central food processing plant to facilitate the Group s long term business growth. In addition, the Group had outstanding other commitments of $10,408,000 at 31 March 2010 (2009: $12,487,000) in respect of the contracting fee for operation of a fast food restaurant not provided for in the financial statements. 121

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 29 (b) 29 Commitments (continued) (b) At 31 March 2010, the total future minimum lease payments under non-cancellable operating leases in respect of properties are payable as follows: The Group 2010 2009 $ 000 $ 000 Within 1 year 199,830 172,706 After 1 year but within 5 years 218,426 219,653 After 5 years 21,539 30,064 439,795 422,423 9% 20% 9% 20%) 2,400,0005,765,000 30 79,608,000 36,149,000 The Group leases a number of properties under operating leases. The leases typically run for an initial period of one to nine years, with an option to renew the lease when all terms are renegotiated. Lease payments are usually increased to reflect market rentals. The contingent rent payments are determined based on 9% to 20% (2009: 9% to 20%) of the turnover over the base rents and are excluded from the information disclosed above. Part of the leased properties has been sublet by the Group. The total future minimum sublease payments expected to be received under non-cancellable subleases at 31 March 2010 are $2,400,000 (2009: $5,765,000). 30 Contingent Liabilities At 31 March 2010, guarantees are given to banks by the Company in respect of mortgage loans and other banking facilities extended to certain wholly-owned subsidiaries. As at the balance sheet date, the Directors do not consider it probable that a claim will be made against the Company under the guarantee arrangement. The maximum liability of the Company at the balance sheet date under the guarantee is the amount of the facilities drawn down by all the subsidiaries that are covered by the guarantee, being $79,608,000 (2009: $36,149,000). The Company has not recognised any deferred income in respect of the guarantee as its fair value cannot be reliably measured and there is no transaction price. 122 FAIRWOOD HOLDINGS LIMITED

31 31 Material Related Party Transactions In addition to the transactions and balances disclosed elsewhere in these financial statements, the Group entered into the following material related party transactions. (a) 7 5(b) (a) Remuneration for key management is the amounts paid to the Company s Directors as disclosed in note 7. Total remuneration is included in staff cost (see note 5(b)). (b) Pengto Pengto 1,437,000 1,247,000 (b) During the year, a subsidiary of the Company leased a property from New Champion. New Champion is wholly beneficially owned by Pengto, a company beneficially owned by a trust of which Mr Dennis Lo Hoi Yeung is a discretionary object. In addition, Mr Dennis Lo Hoi Yeung is a director of New Champion. Rental expenses incurred during the year amounted to $1,437,000 (2009: $1,247,000). (c) 5,000180,000 (c) During the year, New Champion agreed to grant a licence to a subsidiary of the Company to use a storeroom in Hong Kong. Licence fee paid during the year amounted to $5,000 (2009: $180,000). (d) 1,136,000 1,966,000 32 (a) 17 (b) 10 33 1 8 2 (d) During the year, a subsidiary of the Company leased a property from Front Land. The ultimate beneficial owners of Front Land are Mr Lo Hoi Chun, who is a cousin of Mr Dennis Lo Hoi Yeung, and his associate. Rental expenses incurred during the year amounted to $1,136,000 (2009: $1,966,000). 32 Non-adjusting Post Balance Sheet Events (a) After the balance sheet date, the Group disposed of certain leasehold land and buildings and investment properties. Further details are disclosed in note 17. (b) After the balance sheet date the Directors proposed a final dividend. Further details are disclosed in note 10. 33 Comparative Figures As a result of the application of HKAS 1 (revised 2007), Presentation of financial statements, and HKFRS 8, Operating segments, certain comparative figures have been adjusted to conform to current year s presentation and to provide comparative amounts in respect of items disclosed for the first time in 2010. Further details of these developments are disclosed in note 2. 123

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 34 14 24 28 34 Accounting Estimates and Judgements Notes 14, 24 and 28 contain information about the assumptions and their risk factors relating to goodwill impairment, fair value of share options granted and financial instruments. Other key sources of estimation uncertainty are as follows: (a) (a) Impairment of fixed assets Internal and external sources of information are reviewed at each balance sheet date to assess whether there is any indication that a fixed asset may be impaired. If any such indication exists, the recoverable amount of the fixed asset is estimated. Changes in facts and circumstances may result in revisions to the conclusion of whether an indication of impairment exists and revised estimates of recoverable amounts, which would affect profit or loss in future years. (b) (b) Depreciation Fixed assets are depreciated on a straight-line basis over the estimated useful lives of the assets. The Group reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group s historical experience with similar assets. The depreciation expense for future periods is adjusted if there are material changes from previous estimates. (c) 13(b) (c) Valuation of investment properties As described in note 13(b), the investment properties are stated at fair value based on the valuation performed by an independent firm of professional surveyors after taking into consideration the net rental income allowing for reversionary income potential. In determining the fair value, the surveyors have based on a method of valuation which involves certain estimates including current market rents for similar properties in the same location and condition and expected future market rents. In relying on the valuation report, the management has exercised their judgement and are satisfied that the method of valuation is reflective of the current market condition. 124 FAIRWOOD HOLDINGS LIMITED

34 (d) (e) 26(a) 34 Accounting Estimates and Judgements (continued) (d) Income tax The Group is subject to income taxes in various jurisdictions. Judgement is required in determining the provision for income tax. There are transactions during the ordinary course of business, for which calculation of the ultimate tax determination is uncertain. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the year in which such determination is made. Recognition of deferred tax assets depends on the management s expectation of future taxable profit that will be available against which the tax losses can be utilised. The outcome of their actual utilisation may be different. (e) Provision for long service payments As explained in note 26(a), the Group makes provision for long service payments in accordance with the requirement of the Hong Kong Employment Ordinance. The Group has based the estimation on its recent employees statistics and adopted certain assumptions in assessing the provision for long service payments. It is possible that these assumptions adopted by the Group in assessing the provision for long service payments may not be indicative of the future situation. Any increase or decrease in the provision would affect profit or loss in future years. (f) 26(b) (f) Provision for reinstatement costs As explained in note 26(b), the Group makes provision for reinstatement costs based on the best estimate of the expected costs to be incurred upon expiry of the respective rental agreements, which are subject to uncertainty and might differ from the actual costs incurred. Any increase or decrease in the provision would affect profit or loss in future years. 125

Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 35 35 Possible Impact of Amendments, New Standards and Interpretations Issued But Not Yet Effective for the Year Ended 31 March 2010 Up to the date of issue of these financial statements, the HKICPA has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 31 March 2010 and which have not been adopted in these financial statements: Effective for accounting periods beginning on or after 3 HKFRS 3 (Revised), Business combinations 1 July 2009 27 Amendments to HKAS 27, Consolidated and separate financial statements 1 July 2009 39 Amendments to HKAS 39, Financial instruments: Recognition and 1 July 2009 measurement Eligible hedged items 17 HK(IFRIC) 17, Distributions of non-cash assets to owners 1 July 2009 Improvements to HKFRSs 2009 1 July 2009 or 1 January 2010 126 FAIRWOOD HOLDINGS LIMITED

35 35 Possible Impact of Amendments, New Standards and Interpretations Issued But Not Yet Effective for the Year Ended 31 March 2010 (continued) The Group is in the process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to result in significant impacts on the Group s or the Company s results of operations and financial position. 127

Principal Subsidiaries (Expressed in Hong Kong dollars) Place of incorporation/ establishment and Particulars of issued/ Percentage of shares Name of company operation registered capital held by the Company Principal activity directly indirectly 2 1 100% Benley Development Limited Hong Kong 2 shares of $1 each Property investment Cision Development Limited 2 1 100% Cision Development Limited Hong Kong 2 shares of $1 each Operation of a restaurant 10,000 1 100% Fairwood (Shenzhen) Development Limited Hong Kong 10,000 shares of $1 each Investment holding Fairwood B.V.I. Limited* 579,437 0.01 100% Fairwood B.V.I. Limited* The British Virgin 579,437 shares of US$0.01 each Investment holding Islands/Hong Kong 2 1 100% Fairwood Fast Food (Management) Limited Hong Kong 2 shares of $1 each Restaurant licences holding 1010 100% Fairwood Fast Food Limited Hong Kong 579,437 Operation of a chain 10 of fast food restaurants 10 ordinary shares of $10 each and 579,437 non-voting deferred shares of $10 each Fairwood Trademark B.V.I. Limited* 1 1 100% Fairwood Trademark B.V.I. Limited* The British Virgin 1 share of US$1 Trademark holding Islands/Hong Kong 2 1 100% Finemax Development Limited Hong Kong 2 shares of $1 each Operation of a fast food restaurant 128 FAIRWOOD HOLDINGS LIMITED

Place of incorporation/ establishment and Particulars of issued/ Percentage of shares Name of company operation registered capital held by the Company Principal activity directly indirectly 2 1 100% Great Choice Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Joybo Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Leon Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Maxlane Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Professional Institutional Catering Limited Hong Kong 2 shares of $1 each Operation of canteens and a restaurant 2 1 100% Profit Hero Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Santic Development Limited Hong Kong 2 shares of $1 each Property investment * 2,600,000 100% Shenzhen Fairwood Fast Food Limited * The PRC US$2,600,000 Operation of a chain of fast food restaurants 2 1 100% Smarteam Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Starwide Development Limited Hong Kong 2 shares of $1 each Management of food counters 129

Principal Subsidiaries (Expressed in Hong Kong dollars) Place of incorporation/ establishment and Particulars of issued/ Percentage of shares Name of company operation registered capital held by the Company Principal activity directly indirectly 2 1 100% Suncity Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Tacco Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Time Best Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Union Hero Development Limited Hong Kong 2 shares of $1 each Property investment 2 1 100% Wallam Development Limited Hong Kong 2 shares of $1 each Property investment * (*Companies not audited by KPMG) 130 FAIRWOOD HOLDINGS LIMITED

(a) 8% 8%6% 7% (a) At 31 March 2010, the financial statements of the subsidiaries not audited by KPMG reflect total turnover and total net assets constituting approximately 8% (2009: 8%) and 6% (2009: 7%) respectively of the related consolidated totals. (b) (b) None of the subsidiaries has any loan capital in issue. 131

Five-year Group Financial Summary (Expressed in Hong Kong dollars) Results: Year ended 31 March 2010 2009 2008 2007 2006 $ 000 $ 000 $ 000 $ 000 $ 000 Turnover 1,562,348 1,465,503 1,433,476 1,204,863 986,700 Profit from operations 111,718 94,812 121,169 95,818 73,998 Finance costs (1,332) (199) (1,361) (2,829) (721) Profit before taxation 110,386 94,613 119,808 92,989 73,277 Income tax (17,117) (14,591) (18,781) (8,320) 1,806 Profit attributable to equity shareholders of the Company 93,269 80,022 101,027 84,669 75,083 Assets and liabilities: Fixed assets 398,892 307,598 306,952 277,407 245,234 Prepayment for fixed assets 3,683 Goodwill 1,001 1,001 1,001 1,001 1,001 Rental deposits paid 40,861 38,742 29,261 31,897 22,619 Other financial asset 2,341 2,341 39,345 40,439 Deferred tax asset 37 35 25 488 3,326 Current assets 278,613 248,928 248,693 226,546 190,964 Total assets 721,745 602,328 625,277 577,778 463,144 Current liabilities (234,629) (196,766) (232,061) (218,468) (147,167) Non-current liabilities (74,526) (30,672) (23,263) (25,478) (26,836) Net assets 412,590 374,890 369,953 333,832 289,141 132 FAIRWOOD HOLDINGS LIMITED

(1) Note: (1) Coupon expenses for the year ended 31 March 2008 has been reclassified from cost of sales to turnover (as deductions) to conform with the presentation adopted for the year ended 31 March 2009. The revised presentation reflects better the nature of these transactions. However, it is not practicable to reclassify the balances of earlier years for comparison purposes. 133

Investment Properties held by the Group as at 31 March 2010 Location Existing use Term of lease 1035 1040 Shop Unit Nos. 1035 1040 Shops Medium-term on Level 2, Lowu Commercial Plaza, Guangchang South Road, Luohu District, Shenzhen, PRC 62 70 A 14 A1 A2 3 A3 P13 L4 L5 L6 L11 L12 L13 L14 L31 Units A1 and A2 on Warehouses and Medium-term 14th Floor of Block A, and car parking Private Car Parking Space Nos. A3 and P13 and spaces Lorry Parking Space Nos. L4, L5, L6, L11, L12, L13, L14 and L31 on 3rd Floor, Po Yip Building, Nos. 62-70 Texaco Road, Tsuen Wan, New Territories 134 FAIRWOOD HOLDINGS LIMITED

Store Address FAIRWOOD FAST FOOD RESTAURANTS Hong Kong Address Phone no. 41A-43 Shop Nos. 4-9, G/F, Smithfield Court, 2856 8688 4-9 41A-43 Smithfield, Kennedy Town 188 Shop No. 36 on First Floor, Hong Kong Plaza, 2856 4452 1 36 No. 188 Connaught Road West 38-48 2 2/F, Manning House, 38-48 Queen s Road Central, 2856 8661 Central 368 2 Shop 203, 2/F, Welland Plaza, Welland Building, 2856 8640 203 368 Queen s Road Central, Central Concession HOK 53, In-Town Check-In Hall, 2856 8662 HOK 53 MTR Hong Kong Station, 1 Harbour View Road 16 B Shop B, G/F and Shop A2 & A3, Upper G/F, 2856 8665 A2 A3 Far East Finance Centre, 16 Harcourt Road, Admiralty 12 Shop No. G3, G/F., Bank of America Tower, 2856 4451 G3 12 Harcourt Road, Admiralty 138 Shop D1, 1/F, China Overseas Building, 2856 8651 1D1 138 Lockhart Road, Wanchai 128-150 Portion A, 1/F, Ming Fung Building, 2856 8659 1 A 128-150 Wanchai Road, Wanchai 183 Shops 201-206, Hopewell Centre, 2856 8663 201-206 183 Queen s Road East, Wanchai 1-5 Basement of Causeway Bay Commercial 2856 4458 Building, Nos. 1-5 Sugar Street, Causeway Bay 135

Store Address Hong Kong (Continued) Address Phone no. 19-23 Shop No. 1 on G/F and the whole 1/F, 2856 8682 1 Professional Building, 19-23 Tung Lo Wan Road 148 1 Shop No. 1 on the Ground Floor of No. 148 2856 8679 Electric Road Kiosk 6 Kiosk 6, Basement Floor, Island Place, North Point 2856 4457 12 Shops Nos. S32-S36, 2/F, Kornhill Plaza (North), 2856 8689 S32-S36 1 Kornhill Road 25 Shop Nos. D 23-26, G/F, No. 25 Tai On Street, 2856 8669 D 23-26 Lei King Wan, Sai Wan Ho 2 M/F, Galaxy Plaza, 2 Mong Lung Street, Shaukeiwan 2856 8611 104 Shop No. 104, 1/F., Hing Tung Shopping Centre, 2856 4453 Shaukeiwan 201 Shop 201, Tin Wan Shopping Centre, 2856 8645 Tin Wan Estate, Aberdeen 18, 20-24 26 Shops 18, 20 to 24 and 26 on the Ground 2856 4461 Floor of Site 2, Aberdeen Centre 5 Shop 5, Multi-storey Carpark, Ap Lei Chau Estate, 2856 8623 Ap Lei Chau 5 501, Shop Nos. 501, 532-533 and 535-538, 5/F, 2856 8683 532-533 535-538 Chi Fu Landmark, Pokfulam 1 113 Shop No. 113, Level 1, Hing Wah Shopping Centre, 2856 8687 Hing Wah Estate, Chai Wan 136 FAIRWOOD HOLDINGS LIMITED

Kowloon Address Phone no. 7 1 Lower Ground Floor, Yue Hwa International Building, 2856 8628 LG/F No. 1 Kowloon Park Drive, No. 7 Ashley Road, Tsim Sha Tsui 8 1 The Entire 1/F, Grand Centre, No. 8 2856 4468 Humphreys Avenue, Tsim Sha Tsui Concession KOW 57, In-Town Check-In Hall, 2856 8646 KOW 57 MTR Kowloon Station, 1 Austin Road West G002-03 Shop Nos. G002-03 and Open Seating Area, 2856 4460 Ground Level at Elements, 1 Austin Road West 303-305 Shops 303-305, Level 3, Grand Century Place, 2856 8655 Mongkok 3-5 1 A Portion A of 1/F, Hung Wai Building, 2856 8657 3-5 Fa Yuen Street, Mongkok 2 F25 Shop No. F25, 2/F, Oi Man Shopping Centre, 2856 8695 Oi Man Estate, Homantin 48 Shops 2-4 Lower G/F, Ka Hing Lau, Ka Wai Chuen, 2856 8633 1 2-4 48 Ma Tau Wai Road, Hung Hom 5D-F Shop 2, G/F, 5D-F Ma Hang Chung Road, 2856 8621 2 To Kwa Wan 331-361 Shop 2 and Shop 25-26, G/F., Chong Chien Court, 2856 8678 225-26 No. 331-361 To Kwa Wan Road 18 G/F, Precious Industrial Centre, 2856 8691 No. 18 Cheung Yue Street, Cheung Sha Wan 1 Shop 1, Hoi Lai Shopping Centre, Hoi Lai Estate, 2856 8685 Sham Shui Po 3 Shop 312-313, 3/F, Dragon Centre, 2856 8637 312-313 37K Yen Chow Street, Sham Shui Po 137

Store Address Kowloon (Continued) Address Phone no. Shop Nos. 125B-127, First Floor, Fu Cheong 2856 8638 125B-127 Shopping Centre, Sham Mong Road, Sham Shui Po, Kowloon 42 9-13 Shops 9-13, G/F, Block 42, Shek Kip Mei Estate 2856 8607 Level 2, Wang Fai Centre, Wang Tau Hom Estate, 2856 8627 Lok Fu 3 317 Shop 317, Tsz Wan Shan Shopping Centre, 2350 4863 Tsz Wan Shan 1 Shop 1, Market Block, Ping Shek Estate, Choi Hung 2323 8123 80 Unit 108, 1/F, Commercial & Garage Block 2856 8629 1 108 of Richland Garden, 80 Wang Kwong Road, Kowloon Bay 771 Shops F210-212, Podium One, Phase III, 2856 8670 F210-212 Amoy Plaza, 77 Ngau Tau Kok Road 51-63 2 Shops 2, G/F, Mido Mansion, 2856 8605 51-63 Yue Man Square, Kwun Tong 68 1 116 Shop 116, 1/F, Kwun Tong Plaza, 2856 8694 68 Hoi Yuen Road, Kwun Tong 1 B-8 Shop B8, Basement 1, Commercial Complex, 2856 8632 Laguna City, Kwun Tong 392 6 1 1 Shop No.1, 1/F, Millennium City 6, No. 392 Kwun 2856 4465 Tong Road, Kwun Tong 85 1 Shops 32 & 33, Unit 1, Level 5, Sceneway Garden, 2856 8690 32 33 8 Sceneway Road, Lam Tin 2 206 Shop No. 206, 2/F., Lei Yue Mun Plaza 2856 8671 138 FAIRWOOD HOLDINGS LIMITED

New Territories Address Phone no. 102 Shop 102, G/F, Po Lam Shopping Centre, 2856 8610 Po Lam Estate, Tseung Kwan O 8 Shop 8, Block 2 & Shop 9, Block 3, G/F, 2856 8643 9 Verbena Heights, Tseung Kwan O 15 1 Shop 126-127, 1/F, The Lane, 15 Pui Shing Road, 2856 8667 126-127 Hang Hau, Tseung Kwan O Shop Nos. 204 & 207A, Level 2, Metro City Phase I, 2856 8692 204 207A Tseung Kwan O 8 Shop No. R02 on Second Level of the Commercial 2856 8696 R02 Development of Metro Town, Tseung Kwan O 1 13 Shop 3, Commercial Block 1, Kwong Yuen Estate, 2856 8613 Shatin B35 B35, Stationer Restaurant, Tai Wai Railway Station, 2856 8622 Shatin 3 32 Shop 32, Level 3, Shatin Plaza, Shatin 2856 8641 138 Shop Nos. 502 & 502A, Level 5, Grand Central Plaza, 2856 4463 502 502A 138 Shatin Rural Committee Road, Shatin Shop Nos. 5-8 on Level 2 of Sunshine Bazaar, 2856 8664 5-8 Ma On Shan 608 Shop No. 364A, Level 3, Ma On Shan Plaza, 2856 8634 364A Ma On Shan 5 Shop 5, Wan Tau Tong Shopping Centre, 2856 8624 Wan Tau Tong Estate, Tai Po 202 Shop 202, 2/F. Fu Shin Shopping Centre, 2856 8699 Fu Shin Estate, Tai Po 114 Shop 114, G/F, Wah Ming Shopping Centre, 2856 8617 Wah Ming Estate, Fanling 139

Store Address New Territories (Continued) Address Phone no. 8 Shop G23, Regentville Phase I, 8 Wo Mun Street, 2856 8653 G23 Luen Wo Hui, Fanling 86-88, Shop Nos. 51B, 52C, 86-88 on Level 2, 2856 8666 51B, 52C Fanling Town Centre, Fanling 1-6 Tin Ping Cooked Food Centre, Stall Nos. 1-6, 2856 8608 Tin Ping Estate, Sheung Shui 25-28 Shop Nos. 25 to 28, Podium Floor, 2856 8697 Choi Yuen Shopping Centre, Choi Yuen Estate, Sheung Shui 39 Shop Nos. 405-6, Level 4, Landmark North, 2856 8639 405-6 No. 39 Lung Sum Avenue, Shek Wu Hui, Sheung Shui 118 Shop LG118, Cheung Hang Shopping Centre, 2856 8616 Cheung Hang Estate, Tsing Yi Shop No. 101 on 1/F, Greenfield Garden, 2856 8684 101 Commercial Centre at Phase 2, No.1 Fung Shue Wo Road, Tsing Yi 2 Shop No. 2, On Yam Shopping Centre, 2481 5017 On Yam Estate, Kwai Chung 1 Shops 209-211, Fu Pik House, Tai Wo Hau Estate, 2856 8620 209-211 Tsuen Wan L1, 181-182 Shop Nos. 181-182, Level 1, Metroplaza, 2856 4456 Kwai Fong, Kwai Chung 125-130 Shop Nos. 125-130, First Floor, Kwai Fong 2856 4462 Shopping Centre, Kwai Fong Estate, Kwai Chung 210 Portion of 2/F, Fou Wah Centre, 2856 8614 22 210 Castle Peak Road, Tsuen Wan 3983 17 Shop 17, Level 3, Discovery Park-Shopping Centre, 2856 4466 398 Castle Peak Road, Tsuen Wan 140 FAIRWOOD HOLDINGS LIMITED

New Territories (Continued) Address Phone no. 68 Shop 3A1, 3/F., City Landmark I, 2856 8626 3 3A1 68 Chung On Street, Tsuen Wan 213 Shop 213, Leung King Shopping Centre, 2856 8612 Leung King Estate, Tuen Mun 106 Shop 106, Commercial Centre, Kin Sang Estate, 2856 8618 Tuen Mun 69-74 Shops 69-74, Chi Lok Fa Yuen, Tuen Mun 2856 8625 CX3-5 Shops CX3-5, Siu Lun Court Shopping Centre, 2856 8631 Siu Lun Court, Tuen Mun 333 Shops 118-119, G/F, Hanford Plaza, 2856 8635 118-119 333 Castle Peak Road, Tuen Mun 13B, 5B, 6-9, Shop Nos. 3B, 5B, 6-9, 16-17A on 1/F, 2856 8668 16-17A Tuen Mun Town Plaza Phase II, Tuen Mun 168-23665 Shop No. 65, Ocean Walk, 168-236 Wu Chui Road, 2856 8686 Tuen Mun 108 Shop No. 108, First Floor, Po Tin Shopping 2856 4454 Centre, Tuen Mun G/F & 1/F, Winland Building, 2856 8609 Shui Che Kwun Street, Yuen Long 105-107 Shops 105-107, Long Ping Commercial Centre, 2856 8630 Long Ping Estate, Yuen Long Shop A168, Kingswood Richly Plaza, Tin Shui Wai, 2856 8636 A168 Yuen Long 12-18 Shop Nos. G83, G83A, G88 & G88A on 2856 8693 G83, G83A, G88 G88A G/F of Phase 1, Kingswood Ginza, 12-18 Tin Yan Road, Tin Shui Wai 2A Shop No. 2A, Ground Floor, Tin Shui 2856 4455 Shopping Centre, Tin Shui Wai 141

Store Address New Territories (Continued) Address Phone no. 18-24 1 1/F, Yuen Long Commercial Centre, 2856 8649 18-24 Kau Yuk Road, Yuen Long (2 )2 239243 Shop Nos. 239 and 243, Second Floor, Chung Fu 2856 4464 Shopping Centre (Phase 2), Tin Shui Wai 1 Shop No. 18, Podium First Floor, 2856 4459 18 Caribbean Bazaar, Caribbean Coast, Tung Chung, Lantau Island 1 Unit No. 7T090, Departures Check-in Hall, 2856 8698 7T090 Passenger Terminal Building, Hong Kong International Airport, No. 1 Cheong Hong Road, Lantau Island The PRC Address Phone no. Ground Floor, Datan Edifice, Heping Road, 755-2556 8140 Luohu District, Shenzhen Shop Nos. 1028-1034, on Level 2, 755-8232 6136 2 1028-1034 Lowu Commercial Plaza, Guangchang South Road, Luohu District, Shenzhen A M/F, District A, Railway Station Building, 755-8233 9123 Luohu District, Shenzhen Shop No. GA-23, Ground Floor, 20-6130 0267 GA-23 Lobby of Railway Station of East Guangzhou, Guangzhou 133 Shop 0304B, Basement 1, Hengbao Plaza, 20-8124 2908 0304B 133 Baohua Road, Liwan District, Guangzhou 234 Basement 1, Xin Du Hui, 234 Zhong 20-8130 7658 Shan Liu Road, Yuexiu District, Guangzhou 1 Shop 1WS059, Basement 1, Guangzhou 20-8333 8821 1WS059 Dongman Xincheng Plaza, 1 Jixiang Road, Yuexiu District, Guangzhou 142 FAIRWOOD HOLDINGS LIMITED

The PRC (Continued) Address Phone no. 829-831 Shop 048, Basement 1, and Shop 106A, 20-8890 0918 106A048 Ground Floor, 829-831 Renmin North Road, Yuexiu District, Guangzhou 258-262 Shop No. B01, First Floor, 258-262 Enning Road, 20-8194 7072 B01 Liwan District, Guangzhou 121 Basement 1, 121 Linhe East Road, 20-3824 0122 Tianhe District, Guangzhou 63 Shop No. 1013, Basement 1, Dongfang Baotai 20-3809 6177 1013 Shopping Plaza, 63 Linhe Road Central, Tianhe District, Guangzhou 31 Shop Nos. 2C01, 2C01-1, Second Floor, 20-8683 8231 2C01, 2C01-1 Jincheng Plaza, 31 Xiuquan Main Rood, Huadu District, Guangzhou 33 Shop Nos. 237-243, 245-247, 2D11, 757-8321 3260 237-243, 245-247, 2D11 First Floor, Baihua Plaza, 33 Zumiao Road, Chancheng District, Foshan 63 Shop 2G001, First Floor, Tianyou Cheng, 757-2881 9352 2G001 63 Ronggui Guizhou Road Central, Shunde District, Foshan 6F-02 Shop 6F-02, Joy City, Xidang, Xicheng District, 10-5971 6101 Beijing 143

Store Address BOILING TEA Address Phone no. 168-23664 Shop No. 64, Ocean Walk, 168-236 Wu Chui Road, 2856 8676 Tuen Mun BUDDIES CAFÉ Address Phone no. Shop Nos. 29 and 30 on Podium First Floor 2856 8652 29-30 of Caribbean Bazaar, Caribbean Coast, Tung Chung, Lantau Island 12 Shop 12, Block 3, Kwong Yuen Shopping Centre, 2856 8673 Kwong Yuen Estate, Shatin THE LEAF RESTAURANT Address Phone no. 1 Shop Nos. S37-S38, 2/F, Kornhill Plaza (North), 2856 8648 2 S37-S38 1 Kornhill Road, Quarry Bay KENTING TEA HOUSE Address Phone no. 38 5 Unit 8 on L11 of Mega Box, Enterprise Square Five, 2856 8674 Megabox 11 8 38 Wang Chiu Road, Kowloon Bay 144 FAIRWOOD HOLDINGS LIMITED