Convenience Retail Asia Limited — Proxy Solicitation & Information Statement 2011

Dec 8, 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares of Fountain Set (Holdings) Limited, you should at once hand this circular, the accompanying form of proxy and the 2011 Annual Report to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Hong Kong with limited liability) (Stock code: 420)

PROPOSALS FOR RE-ELECTION OF DIRECTORS, GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES AND NOTICE OF ANNUAL GENERAL MEETING

The notice convening the Annual General Meeting of Fountain Set (Holdings) Limited (the “Company”) to be held at Block A, 6th Floor, Eastern Sea Industrial Building, 29-39 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong on Thursday, 12th January, 2012 at 3:00 p.m. or any adjournment thereof is set out on pages 13 to 16 of this circular.

Whether or not you are able to attend the Annual General Meeting of the Company, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the registered office of the Company at Block A, 7th Floor, Eastern Sea Industrial Building, 29-39 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong as soon as possible and in any event not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.

9th December, 2011

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
General Mandate to Issue Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Action to be Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Voting by Way of Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix I – Directors Proposed to be Re-elected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix II – Explanatory Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Notice of Annual General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

“AGM”	the Annual General Meeting of the Company to be held at Block
	A, 6th Floor, Eastern Sea Industrial Building, 29-39 Kwai Cheong
	Road, Kwai Chung, New Territories, Hong Kong on Thursday,
	12th January, 2012 at 3:00 p.m. or any adjournment thereof;
“Articles”	the Articles of Association of the Company;
“Board”	Board of Directors;
“Company”	Fountain Set (Holdings) Limited;
“Companies Ordinance”	Companies Ordinance, Chapter 32 of the Laws of Hong Kong;
“Director(s)”	the director(s) of the Company;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Latest Practicable Date”	5th December, 2011, being the latest practicable date prior to
	the printing of this circular for ascertaining certain information
	contained in this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“Ordinary Resolution(s)”	the proposed ordinary resolution(s) as referred to in the notice of
	AGM;
“Repurchase Mandate”	a general mandate to the Directors to exercise the power of the
	Company to repurchase Shares during the period as set out in the
	Ordinary Resolution referred to in item 5(A) of the notice of AGM
	up to 10 per cent. of the issued share capital of the Company as at
	the date of the passing of the said Ordinary Resolution;
“SFO”	the Securities and Futures Ordinance, Chapter 571 of the Laws of
	Hong Kong;
“Share(s)”	share(s) of HK$0.20 each in the share capital of the Company;

1

DEFINITIONS

“Share Buyback Rules” the relevant rules set out in the Listing Rules to regulate the repurchase of shares by companies with primary listing of their own securities on the Stock Exchange; “Share Issue Mandate” a general mandate to the Directors to exercise the power of the Company to allot and issue Shares during the period as set out in the Ordinary Resolution referred to in item 5(B) of the notice of AGM up to 20 per cent. of the issued share capital of the Company as at the date of the passing of the said Ordinary Resolution; “Stock Exchange” The Stock Exchange of Hong Kong Limited; and “Takeovers Code” the Hong Kong Codes on Takeovers and Mergers.

2

LETTER FROM THE CHAIRMAN

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(Incorporated in Hong Kong with limited liability) (Stock code: 420)

Executive Directors:

Mr. Ha Chung Fong (Chairman) Mr. Ha Kam On, Victor (Group Managing Director) Mr. Ha Hon Kuen Dr. Yen Gordon

Registered office: Block A, 7th Floor Eastern Sea Industrial Building 29-39 Kwai Cheong Road Kwai Chung, New Territories Hong Kong

Non-executive Director:

Mr. Chan Yuk Yin

Independent Non-executive Directors:

Mr. Ng Kwok Tung Mr. Wong Kwong Chi Mr. Chow Wing Kin, Anthony, SBS, JP Mrs. Fung Yeh Yi Hao, Yvette

9th December, 2011

To the shareholders

Dear Sir or Madam,

PROPOSALS FOR RE-ELECTION OF DIRECTORS, GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES AND NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

At the annual general meeting of the Company held on 20th, January, 2011, resolutions were passed giving general mandates to the Directors to issue and allot Shares and to exercise the powers of the Company to repurchase its own Shares in accordance with the Share Buyback Rules. These general mandates will lapse at the conclusion of the AGM. It is therefore proposed to renew the general mandates to issue and allot Shares and to repurchase Shares at the AGM.

The purpose of this circular is to provide you with information regarding resolutions to be proposed at the AGM relating to re-election of Directors, renewal of the general mandates to issue and allot Shares and to repurchase Shares and to seek your approval of the Ordinary Resolutions relating to the said general mandates at the AGM.

3

LETTER FROM THE CHAIRMAN

RE-ELECTION OF DIRECTORS

The Board currently consists of nine Directors, namely Mr. Ha Chung Fong, Mr. Ha Kam On, Victor, Mr. Ha Hon Kuen, Dr. Yen Gordon, Mr. Chan Yuk Yin, Mr. Ng Kwok Tung, Mr. Wong Kwong Chi, Mr. Chow Wing Kin, Anthony and Mrs. Fung Yeh Yi Hao, Yvette.

Pursuant to article 102 of the Articles, Mr. Ha Hon Kuen, Mr. Ng Kwok Tung and Mrs. Fung Yeh Yi Hao, Yvette shall retire by rotation at the AGM and, being eligible, will offer themselves for reelection. In accordance with article 93 of the Articles, Mr. Chan Yuk Yin who was appointed after the last annual general meeting held on 20th January, 2011 shall retire at the AGM but he will not offer himself for re-election. Mr. Chan Yuk Yin will thus retire with effect from the conclusion of the AGM.

Brief biographical details of the retiring Directors who are proposed to be re-elected at the AGM are set out in Appendix I to this circular.

GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution will be proposed at the AGM to grant to the Directors the Repurchase Mandate, details of which are set out in Ordinary Resolution as referred to in item 5(A) of the notice of AGM. The Shares which may be repurchased pursuant to the Repurchase Mandate is limited to a maximum of 10 per cent. of the issued share capital of the Company as at the date of the passing of the resolution approving the Repurchase Mandate.

An explanatory statement as required under the Share Buyback Rules, giving certain information regarding the Repurchase Mandate, is set out in Appendix II to this circular.

GENERAL MANDATE TO ISSUE SHARES

An ordinary resolution will be proposed at the AGM to grant to the Directors the Share Issue Mandate. As at the Latest Practicable Date, there were a total of 794,010,960 Shares issued. Subject to the passing of the Ordinary Resolution as referred to in item 5(B) of the notice of AGM and on the basis that no further Shares are issued or repurchase prior to the AGM, the Company would be allowed under the Issue Mandate to issue a maximum of 158,802,192 new Shares.

In addition, an ordinary resolution will also be proposed to authorise an extension of the Share Issue Mandate by adding to the aggregate number of Shares which may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to the Share Issue Mandate the number of Shares purchased under the Repurchase Mandate, if granted. Such extended amount shall not exceed 10 per cent. of the aggregate of the nominal amount of the shares capital of the Company in issue as at the date of the passing of the Ordinary Resolution as referred to in item 5(C) of the notice of AGM.

Details of the Share Issue Mandate and the extension of the Share Issue Mandate are set out in Ordinary Resolutions as referred to in items 5(B) and 5(C) of the notice of AGM respectively.

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LETTER FROM THE CHAIRMAN

ANNUAL GENERAL MEETING

At the AGM, resolutions will be proposed to the shareholders in respect of the ordinary business of the Company to be considered at the AGM, being the approval and adoption of the audited Financial Statements, the Directors’ report and the Independent Auditors’ report for the year ended 31st August, 2011, the payment of a final dividend, the re-election of Directors, the fixing of the Directors’ fees and the re-appointment of Auditors and the special business of the Company to be considered at the AGM, being the proposed grant of the Repurchase Mandate, the Share Issue Mandate and the extension of the Share Issue Mandate. The notice of AGM is set out on pages 13 to 16 of this circular expected to be dispatched to the shareholders together with this circular.

ACTION TO BE TAKEN

A form of proxy for use at the AGM is enclosed with this circular. Whether or not you are able to attend the AGM, you are requested to complete the accompanying form of proxy and return it to the registered office of the Company in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the AGM or any adjourned meeting if you so desire.

VOTING BY WAY OF POLL

Pursuant to the Listing Rules, all votes at the AGM will be taken by poll and the Company will announce the results of the poll in the manner prescribed under the Listing Rules.

Pursuant to article 73 of the Articles, at any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is taken as may from time to time be required under the Listing Rules or any other applicable laws, rules or regulations or unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

• (i) by the Chairman of the Meeting; or

• (ii) by at least three members present in person or by proxy for the time being entitled to vote at the meeting; or

• (iii) by any member or members present in person or by proxy and representing not less than onetenth of the total voting rights of all the members having the right to vote at the meeting; or

• (iv) by a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

5

LETTER FROM THE CHAIRMAN

Pursuant to article 79 of the Articles, at any general meeting on a show of hands, every member who (being an individual) is present in person or (being a corporation) is present by a representative duly authorised under Section 115 of the Companies Ordinance shall have one vote, and on a poll every member present in person or by proxy shall have one vote for every share of which he is the holder which is fully paid up or credited as fully paid up. On a poll a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

RECOMMENDATION

The Directors consider that the re-election of Directors, the granting of Repurchase Mandate, the Share Issue Mandate and the extension of the Share Issue Mandate are in the best interests of the Company as well as its shareholders as a whole. Accordingly, the Directors recommend that all shareholders of the Company should vote in favour of the resolutions to be proposed at the AGM to give effect to them.

Yours faithfully, By order of the Board HA CHUNG FONG Chairman

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DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX I

The followings are the particulars of the three Directors proposed to be re-elected at the AGM of the Company:

1. Mr. Ha Hon Kuen , aged 47, is an Executive Director of the Company. He is also a director of various subsidiaries of the Group. Mr. Ha joined the Group in 1993, joined the Group’s Board in 1996 as a Non-executive Director and re-designated to an Executive Director on 1st March, 2010. He holds a Bachelor degree in Science from the University College of Swansea, UK. Prior to joining the Group, Mr. Ha had several years’ working experience in securities and finance field. He has not held directorships in any other listed public companies in the past three years.

Mr. Ha has entered into a service contract with the Company without specific term. He is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles. Mr. Ha was entitled to have the director’s emolument of approximately HK$1,431,000 for the year ended 31st August, 2011 which was determined by the Board with reference to market terms, his duties and responsibilities within the Company, the Company’s remuneration policy and the Articles.

Mr. Ha is the son of Mr. Ha Chung Fong, the brother of Mr. Ha Kam On, Victor and Ms. Ha Kam Yee and the brother-in-law of Dr. Yen Gordon. Except as disclosed, Mr. Ha does not have any relationship with any other directors, senior management or substantial or controlling shareholders of the Company. As at the Latest Practicable Date, Mr. Ha had 5,000,000 share options granted by the Company. Other than as disclosed above, he had no other interests in the shares of the Company within the meaning of Part XV of the SFO.

Save as disclosed above, there are no other matters concerning the re-election of Mr. Ha that needs to be brought to the attention of the shareholders of the Company nor is there any information to be disclosed pursuant to any of the requirements set out in Rule 13.51(2) of the Listing Rules.

1. Mr. Ng Kwok Tung , aged 61, joined the Group’s Board in 1993 as an Independent Non-executive Director. He is the Chairman the Audit Committee, and a member of both the Remuneration Committee and the Nomination Committee of the Company. Mr. Ng is a practicing accountant. He is also an Independent Non-executive Director of Universe International Holdings Limited and a Non-executive Director of Wah Ha Reality Company Limited, both of which are listed companies in Hong Kong. He holds a Bachelor of Commerce Degree and a Licentiate in Accountancy from McGill University, Canada and a Diploma in Chinese Law from the University of East Asia, Macao. Mr. Ng is a Member of Hong Kong Institute of Certified Public Accountants, Institute of Chartered Accountants of British Columbia, Order of Chartered Accountants of Quebec, The Canadian Institute of Chartered Accountants, The Taxation Institute of Hong Kong, The Society of Chinese Accountants and Auditors, and the Society of Registered Financial Planners.

Mr. Ng has entered into a service contract with the Company for a term of one year commencing 16th November, 1995 and subsequently, the terms of his contract were extended and his existing term is one year up to 31st August, 2012. He is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles. Mr. Ng was entitled to have the Director’s fee of approximately HK$250,000 for the year ended 31st August, 2011 which was determined by the Board with reference to market terms, his duties and responsibilities within the Company, the Company’s remuneration policy and the Articles.

7

APPENDIX I

DIRECTORS PROPOSED TO BE RE-ELECTED

Mr. Ng does not have any relationship with any other directors, senior management or substantial or controlling shareholders of the Company. As at the Latest Practicable Date, Mr. Ng did not have any interest in the shares of the Company within the meaning of Part XV of the SFO.

Save as disclosed above, there are no other matters concerning the re-election of Mr. Ng that needs to be brought to the attention of the shareholders of the Company nor is there any information to be disclosed pursuant to any of the requirements of rule 13.51(2) of the Listing Rules.

1. Mrs. Fung Yeh Yi Hao , Yvette, aged 50, joined the Group’s Board in 2000 as a Non-executive Director and re-designated to an Independent Non-executive Director on 1st March, 2010. She is a member of the Remuneration Committee and the Nomination Committee of the Company. Mrs. Fung is also a Director of Hsin Chong International Holdings Ltd and Chair of The Yeh Family Philanthropy. She also serves as an Independent Non-executive Director of Tai Ping Carpets International Limited, a listed company in Hong Kong. From September 2003 to September 2008, she was the Deputy Chairman and Executive Director of Synergis Holdings Limited, a Hong Kong listed company. From September 1999 to November 2009, she was also an Independent Nonexecutive Director of Doxen Energy Group Limited (formerly known as Hong Kong Catering Management Limited), a Hong Kong listed company. She holds a B.A. Degree in Psychology from Stanford University, USA, a M.B.A. from University of California, Los Angeles, USA and a J.D. from Stanford Law School, USA. She is a Member of the Council of The Hong Kong University of Science and Technology, a Council Member of the Hong Kong Society for the Deaf, a Member of the Public Affairs Forum (Home Affairs Bureau) and a Member of the Board of Visitors of Stanford Law School.

Mrs. Fung has entered into a service contract with the Company for a term of eighteen months commencing 1st March, 2000 and subsequently, the terms of her contract was extended and her existing contract was for a term of one year up to 31st August, 2012. She is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles. Mrs. Fung was entitled to have the director’s fee of approximately HK$200,000 for the year ended 31st August, 2011 which was determined by the Board with reference to market terms, her duties and responsibilities within the Company, the Company’s remuneration policy and the Articles.

Mrs. Fung does not have any relationship with any other directors, senior management or substantial or controlling shareholders of the Company. As at the Latest Practicable Date, Mrs. Fung beneficially owned 70,000 Shares. Other than as disclosed above, she had no other interests within the meaning of Part XV of the SFO.

Save as disclosed above, there are no other matters concerning the re-election of Mrs. Fung that needs to be brought to the attention of the shareholders of the Company nor is there any information to be disclosed pursuant to any of the requirements set out in Rule 13.51(2) of the Listing Rules.

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EXPLANATORY STATEMENT

APPENDIX II

This appendix serves as an explanatory statement, as required by the Share Buyback Rules, to provide you with requisite information for your consideration of the Repurchase Mandate and also constitutes the Memorandum required under section 49BA of the Companies Ordinance. Reference in this appendix to “Share(s)” mean share(s) of HK$0.20 each in the capital of the Company.

1. SHARE BUYBACK RULES

The Share Buyback Rules permit companies whose primary listings are on the Stock Exchange to repurchase their shares on the Stock Exchange or on any other stock exchange on which the shares of the companies may be listed and recognised by the Securities and Futures Commission and the Stock Exchange for this purpose subject to certain restrictions, the most important of which are summarised below:

• (a) The shares proposed to be purchased by the company are fully-paid up.

• (b) The company has previously sent to its shareholders an explanatory statement complying with the Share Buyback Rules.

• (c) The shareholders of the company have given a specific approval or a general mandate to the directors of the company to make such purchase, by way of an ordinary resolution which complies with the Share Buyback Rules and which has been passed at a general meeting of the company duly convened and held and the company has delivered a copy of such resolution, together with the necessary supporting documentation, to the Stock Exchange in accordance with the Share Buyback Rules.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 794,010,960 Shares, all of which are fully paid up.

Subject to the passing of the Ordinary Resolution as referred to in item 5(A) of the notice of AGM and on the basis that no further Shares are issued or repurchased prior to the AGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 79,401,096 Shares which are fully paid up.

3. REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and its shareholders to have a general authority from shareholders to enable the Directors to repurchase the Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets of the Company and/or its earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and its shareholders.

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EXPLANATORY STATEMENT

APPENDIX II

4. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the Memorandum and Articles of Association of the Company and the Companies Ordinance. It is proposed that repurchases of Shares under the Repurchase Mandate in these circumstances would be financed from available cash flow or working capital facilities of the Company and its subsidiaries.

The Companies Ordinance provides that the amount of capital repaid in connection with a share repurchase may only be paid from the distributable profits of the company or from the proceeds of a new issue of shares made for the purpose. The Companies Ordinance further provides that the amount of premium payable on repurchase may only be paid out of distributable profits of the company. Where the repurchased shares were issued at a premium, any premium payable on repurchase may be paid out of the proceeds of a fresh issue of shares made for the purpose of the share repurchase up to certain limits specified by the Companies Ordinance.

There might be material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements contained in the Annual Report for the year ended 31st August, 2011) in the event that the proposed repurchase of Shares was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

10

EXPLANATORY STATEMENT

APPENDIX II

5. SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange during each of the previous twelve months preceding the Latest Practicable Date were as follows:

		Shares
	Highest		Lowest
	HK$		HK$
2010
December	1.6500		1.4100
2011
January	1.7500		1.4400
February	1.4800		1.2700
March	1.4100		1.2800
April	2.0500		1.5000
May	2.0200		1.6500
June	1.7400		1.3700
July	1.6100		1.4300
August	1.4800		1.0700
September	1.2600		0.8800
October	0.9800		0.7400
November	1.2900		0.9000
December (up to the Latest Practicable Date)	1.0100		0.9600

6. GENERAL

The Directors have undertaken to the Stock Exchange that they will exercise the powers of the Company to make share repurchases pursuant to the proposed Ordinary Resolution as referred to in item 5(A) of the notice of AGM in accordance with the Listing Rules and the applicable laws of Hong Kong.

If as a result of the share repurchases, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a shareholder or a group of shareholders acting in concert, depending on the level of increase of the shareholders’ interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

11

EXPLANATORY STATEMENT

APPENDIX II

As at the Latest Practicable Date, Mr. Ha Chung Fong, Mr. Ha Kam On, Victor and Dr. Yen Gordon together with their respective associates (as defined in the Listing Rules) were interested in an aggregate of 343,630,044 Shares, representing approximately 43.28 per cent. of the issued share capital of the Company. Based on such shareholding, and in the event that the Directors exercised in full the Repurchase Mandate, the beneficial interests of Mr. Ha Chung Fong, Mr. Ha Kam On, Victor and Dr. Yen Gordon together with their respective associates in the issued share capital of the Company would be increased to approximately 48.09 per cent. of the issued share capital of the Company. The Directors believe that such an increase will give rise to an obligation of Mr. Ha Chung Fong, Mr. Ha Kam On, Victor and Dr. Yen Gordon together with their respective associates to make a mandatory offer under Rule 26 of the Takeovers Code. The Directors have no present intention to exercise the power to repurchase Shares pursuant to the Repurchase Mandate to such an extent that Mr. Ha Chung Fong, Mr. Ha Kam On, Victor and Dr. Yen Gordon together with their respective associates will have an obligation to make a mandatory offer under Takeovers Code and the number of Shares held by the public would be reduced to less than 25 per cent. of the issued share capital of the Company.

Save as aforesaid, the Directors are not aware of any obligation of any shareholders or a group of shareholders acting in concert to make a mandatory offer under the Takeovers Code as a consequence of any repurchases made under the Repurchase Mandate.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates presently intend to sell Shares to the Company under the Repurchase Mandate in the event that the Repurchase Mandate is approved by the shareholders.

The Company has not been notified by any connected persons (as defined in the Listing Rules) that they have a present intention to sell any Shares, or that they have undertaken not to sell any Shares held by them to the Company in the event that the Repurchase Mandate is approved by the shareholders.

7. SHARES REPURCHASED BY THE COMPANY

The Company had not purchased any of the Shares (whether on the Stock Exchange or otherwise) during the six months preceding the date of this circular.

12

NOTICE OF ANNUAL GENERAL MEETING

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(Incorporated in Hong Kong with limited liability) (Stock code: 420)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Fountain Set (Holdings) Limited (“the Company”) will be held at Block A, 6th Floor, Eastern Sea Industrial Building, 29-39 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong on Thursday, 12th January, 2012 at 3:00 p.m. or any adjournment thereof for the following purposes:

1. To receive and consider the audited Financial Statements, the Directors’ Report and the Independent Auditors’ Report for the year ended 31st August, 2011.

2. To declare a final dividend.

3. To re-elect Directors and to fix the Directors’ fees.

4. To re-appoint Auditors and to authorise the Directors to fix their remuneration.

5. As special business, to consider and, if thought fit, to pass with or without amendments, the following resolutions as Ordinary Resolutions of the Company:

ORDINARY RESOLUTIONS

• (A) “ THAT :

• (i) subject to paragraph (ii) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all powers of the Company to repurchase shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (“Stock Exchange”) or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

• (ii) the aggregate nominal amount of shares of the Company to be repurchased by the Company pursuant to the approval in paragraph (i) of this Resolution shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution, and the said approval shall be limited accordingly; and

13

NOTICE OF ANNUAL GENERAL MEETING

• (iii) for the purposes of this Resolution,

“Relevant Period” means the period from passing of this Resolution until whichever is the earliest of:

• (a) the conclusion of the next Annual General Meeting of the Company; or

• (b) the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held; or

• (c) the revocation or variation of the authority given under this resolution by ordinary resolution of the shareholders of the Company in general meeting.”

(B) “ THAT :

• (i) subject to paragraph (iii) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make and grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require shares to be allotted be and is hereby generally and unconditionally approved;

• (ii) the approval in paragraph (i) of this Resolution shall authorise the Directors of the Company during the Relevant Period to make and grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require shares to be allotted after the end of the Relevant Period;

• (iii) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (i) of this Resolution, otherwise than pursuant to (a) a Rights Issue (as hereinafter defined); or (b) an issue of shares upon the exercise of subscription rights under any option scheme or similar arrangement for the time being adopted for the grant or issue to the grantees as specified in such scheme or similar arrangement of shares or rights to acquire shares of the Company; or (c) any issue of shares pursuant to the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes and other securities of the Company which carry rights to subscribe for or are convertible into shares of the Company; or (d) an issue of shares pursuant to any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of the dividend on shares of the Company in accordance with the Articles of Association of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution, and the said approval shall be limited accordingly; and

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NOTICE OF ANNUAL GENERAL MEETING

• (iv) for the purposes of this Resolution,

“Relevant Period” means the period from passing of this Resolution until whichever is the earliest of:

• (a) the conclusion of the next Annual General Meeting of the Company; or

• (b) the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held; or

• (c) the revocation or variation of the authority given under this resolution by ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares of the Company or issue of option, warrants or other securities giving the right to subscribe for shares of the Company, open for a period fixed by the Directors of the Company to holders of shares, or any class of shares, whose names appear on the register of members of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their holdings of such shares (or, where appropriate, such other securities) as at that date (subject to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

• (C) “ THAT the general mandate granted to the Directors of the Company to exercise the powers of the Company to allot, issue and deal with any additional shares of the Company pursuant to the Ordinary Resolution referred to in item 5(B) of the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to the Ordinary Resolution referred to in item 5(A) of the notice convening this meeting, provided that such extended amount shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution.”

By order of the Board WONG KIN MAN Secretary

Hong Kong, 9th December, 2011

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NOTICE OF ANNUAL GENERAL MEETING

Registered Office:

Block A, 7th Floor

Eastern Sea Industrial Building 29-39 Kwai Cheong Road Kwai Chung, New Territories

Hong Kong

Notes:

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company.

2. In order to be valid, the form of proxy together with any power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority, must be deposited at the registered office of the Company at Block A, 7th Floor, Eastern Sea Industrial Building, 29-39 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. Completion and return of the form of proxy will not preclude a member of the Company from attending and voting in person at the meeting convened or any adjournment thereof and in such event, the authority of the proxy shall be deemed to be revoked.

4. The register of members of the Company will be closed from Monday, 9th January, 2012 to Thursday, 12th January, 2012, both days inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, for registration not later than 4:30 p.m. on Friday, 6th January, 2011.

5. At the meeting, the Chairman of the meeting will exercise his power under article 73 of the Articles of Association of the Company to put each of the resolutions set out in this notice to be voted by way of poll as may from time to time be required under the Listing Rules or any other applicable laws, rules or regulations or unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded. On a poll, every member present in person (or in the case of a corporation by its corporate representative) or by proxy shall have one vote for each share of any class of which he is the holder.

6. As at the date hereof, the Board comprises a total of nine directors, including Mr. Ha Chung Fong, Mr. Ha Kam On, Victor, Mr. Ha Hon Kuen and Dr. Yen Gordon as Executive Directors; Mr. Chan Yuk Yin as Non-executive Director; and Mr. Ng Kwok Tung, Mr. Wong Kwong Chi, Mr. Chow Wing Kin, Anthony, SBS, JP and Mrs. Fung Yeh Yi Hao, Yvette as Independent Non-Executive Directors.

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