[TodayIR] HKRH: KRH Announces the Implementation of

  [TodayIR] HKRH: KRH Announces the Implementation of CGS’Agreement with Luk
   Fook - Two Renowned Brands to Generate Synergies Further Enhances Brand
 Position of 3D-GOLD and Expands Retail Network to Meet Demand from Different
                             Strata of Customers

(Hong Kong, 28 January 2014) – Hong Kong Resources Holdings Company Limited
("HKRH" or the "Group"; SEHK: 2882) is pleased to announce the implementation
of CGS’ agreement with Luk Fook 3D Management Company Limited (“Luk Fook”;
wholly-owned by Luk Fook Holdings (International) Limited; SEHK: 0590) and CGS
Group (“CGS”). Luk Fook will purchase 50% issued share capital in CGS, the
wholly-owned subsidiary of HKRH at a consideration of HK$ 282,700,000. The
consideration and transaction are subject to conditions precedent to the CGS
Agreement. CGS is engaged in the retailing and franchising of jewellery in
Hong Kong, Macau and the PRC under the brand name of “3D-GOLD” and “La Milky
Way”. Upon completion, CGS will continue to be one of the Group’s major
business arms and subsidiaries.

In addition, HKRH has agreed to issue, and Luk Fook has agreed to subscribe
for the HKRH convertible bonds in an aggregate principal amount of
HK$57,080,000, carrying interest of 3% per annum, due five years from the
issue date. Based on the exchange rate of HK$0.18 per share, the bonds can be
converted into 317,111,111 HKRH shares, representing approximately 9.09% of
its enlarged issue share capital.

CGS has also agreed to grant Share Option to Luk Fook. Upon full exercise of
the CGS share option, a total of 205 CGS Share Option shares will be issued to
Luk Fook, representing approximately 5.48% of its enlarged issue share
capital. The gross and net proceeds from the exercise of the CGS Share Option
in full are estimated to be approximately US$5,000,000, and the proceeds shall
be used for the purpose of general working capital and business expansion of
the CGS Group. This allows HKRH to further strengthen the relationship with
Luk Fook, which Luk Fook will be HKRH’s strategic partner in CGS.

Upon completion, Maxigood Enterprises Limited, a wholly-owned subsidiary of
Luk Fook will become one of the suppliers of CGS. Moreover, Luk Fook’s related
company and a member of CGS will enter into the Competitiveness Enhancement
Agreement. Pursuant to the Competitiveness Enhancement Agreement, Luk Fook’s
related party shall provide to member(s) of CGS such services and assistance
that enhance and improve operation efficiency and competitiveness.

HKRH and Luk Fook have agreed that each party is to provide funding of
HK$100,000,000 to CGS by way of shareholders’ loans for the purpose of general
working capital and business expansion of CGS.

Dr. Kennedy Wong, Chairman of HKRH and 3D-GOLD, said, “I am delighted in
announcing Luk Fook’s investment in CGS Group under HKRH. I am confident that
3D-GOLD’s brand awareness, which has been strengthened over the past years,
successful marketing strategies and strong design capability, coupled with Luk
Fook’s rich operational experience, expertise and extensive network will
generate powerful synergies. These synergies will lead to a more rapid
enhancement of 3D-GOLD’s brand position and expand its retail network,
bolstering its long-term development. As a result, this will create greater
value for HKRH and deliver better returns to our shareholders and investors.

“The investment will also improve the liquidity and cash flow position of
HKRH. We will continue investing resources in our existing businesses and look
forward to cooperating with Luk Fook on the business of CGS Group to achieve
results that benefit both parties. We believe that the two renowned jewellery
brands will be able to meet the vast demands of customers at different levels
of the market.

“HKRH is highly confident in the prospects of the jewellery retail business
and “3D-GOLD”, it will maintain its holdings in “3D-GOLD” over the long term
and direct resources in the “3D-GOLD” business. The Group will also continue
to engage in and contribute to the jewellery market in Hong Kong, Macau and
the PRC through the “3D-GOLD” brand.”
 
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