10:29     HON PO GROUP<00228> - Announcement (4)                              

    Notes fall to be issuable in up to four tranches. Convertible Notes       
    of                                                                        
    up to maximum aggregate principal amount of HK$25,000,000 may be issued   
    in each tranche. Each tranche of the Convertible Notes (other than the    
    first tranche) will only be issued if the immediately preceding tranche   
    of the Convertible Notes has been placed in full.                         
                                                                              
    Interest                                                                  
                                                                              
    Non-interest bearing                                                      
                                                                              
    Maturity                                                                  
                                                                              
    Second anniversary from the date of the issue of the relevant             
    Convertible Notes.                                                        
                                                                              
    Conversion                                                                
                                                                              
    Each Convertible Note is convertible into Conversion Shares in whole      
    or                                                                        
    in part (in the amount or integral multiples of HK$50,000) at the         
    Conversion Price.                                                         
                                                                              
    Conversion Price                                                          
                                                                              
    The initial conversion price is HK$0.05 per Share, subject to adjustment  
     on events such as share consolidation, share sub-division and capital    
    distribution.                                                             
                                                                              
    The Conversion Price of HK$0.05 per Share represents (i) a discount       
    of                                                                        
    about 94.74% to the closing price of HK$0.19 per Pre-Consolidation Share  
     as quoted on the Stock Exchange on the Last Trading Date; (ii) a         
    discount of about 89.29% to the average closing price per                 
    Pre-Consolidation Share of about HK$0.0934 as quoted on the Stock         
    Exchange for the last five trading days up to and including the Last      
    Trading Date; and (iii) a discount of about 87.83% to the average         
    closing price per Pre-Consolidation Share of about HK$0.0822 as quoted    
    on the Stock Exchange for the last ten trading days up to and including   
    the Last Trading Date.                                                    
                                                                              
    The Conversion Price has been agreed after arms' length negotiations      
    between the management and the Placing Agent, the Company having taken    
    into account in its negotiations with the Placing Agent the following     
    factors:-                                                                 
                                                                              
    (a)   the Company has reported unaudited consolidated net liabilities     
    as                                                                        
     at 30th June, 2004 of approximately HK$21.6 million (which amount        
    increased to approximately HK$35.6 million (audited) as at 31st           
    December, 2004) and, in such circumstances and having regard to the       
    fact                                                                      
     that the Group operates principally in the restaurant industry, the      
    Company perceives that convertible notes which have a higher conversion   
    price (or a conversion price which is close to or at a premium to the     
    market price of the Shares) will have little attraction to investors;     
    and                                                                       
                                                                              
    (b)   the conversion of the Convertible Notes would also have a positive  
     effect on the Company's net asset value.                                 
                                                                              
    The Directors consider, having regard to the above factors, the           
    opportunity to raise substantial funds through the issue of the           
    Convertible Notes (which has not in the past been available to the        
    Company other than in respect of the First Convertible Notes issue and    
    may not in the future be replicated as that is dictated largely by the    
    condition of the equity market and the market for the Shares) and this    
    being the conversion price at which the Placing Agent was prepared to     
    undertake placing of the Company's convertible notes, the Conversion      
    Price for the Convertible Notes to be fair and reasonable.                
                                                                              
    Conversion                                                                
                                                                              
    Each holder may convert the whole or part (in the amount or integral      
    multiple of HK$50,000 of the principal amount of the relevant             
    Convertible Note) into new Conversion Shares. The number of new           
    Conversion Shares is determined by dividing the principal amount of       
    the                                                                       
    relevant Convertible Note to be converted by the then prevailing          
    Conversion Price, rounded down to the nearest integral number of Shares.  
                                                                              
                                                                              
    If the conversion rights attaching to the Convertible Notes were          
    exercised in full at the initial Conversion Price, the Company will       
    issue an aggregate of 2,000,000,000 new Conversion Shares, representing   
    approximately 1322.75% of the existing issued share capital of the        
    Company and approximately 92.97% of the issued share capital of the       
    Company enlarged by the issue of the Conversion Shares.                   
                                                                              
    The Conversion Shares will be issued pursuant to the resolution at the    
    EGM by the Shareholders. Shareholders?approval for the allotment and