News Release For Immediate Release Lexicon To Diversify Into F&B Business With Renowned Coffee Retailer, Tom N Toms Singapore, August 25, 2009 The Lexicon Group Limited ( Lexicon or the Group ), a sponsored Catalist Company on the Singapore Exchange ( SGX ), announced today that it has entered into a conditional joint-venture agreement with TNT Global to incorporate a joint-venture company, Tom N Toms International Pte Ltd (the JVC or Tom N Toms International ), for the purpose of undertaking the business of retailing coffee, coffee related accessories and paraphernalia, the operation of coffeehouses and cafes under the Tom N Toms brand (the Tom N Toms Franchise ), as well as, the marketing and sales of the Tom N Toms Franchise within 21 countries in Eastern Europe and South-East Asia (the Territories ) (Please refer to Annex 1). Tom and Toms is a famous brand in Korea, which offers a wide variety of coffee-related cultural contents. Re-established in 2004, it has grown to be a renowned coffee retailer housing 160 coffeehouses within Korea. TNT Global is the exclusive master franchisee of the Tom N Toms Franchise outside Korea. Under this agreement, both the Group and TNT Global will each subscribe for 50% of the ordinary shares in the capital of the Tom N Toms International, which will have an initial issued and paid-up share capital of S$3 million (the Paid-Up Capital ). Lexicon will contribute S$1.5 million in cash into the Paid- Up Capital, and will allot and issue 25 million new ordinary shares to TNT Global, credited as fully paid up and shall rank pari passu with existing issued shares capital of the Group. This agreement will also see the JVC enter into an area master franchise agreement with TNT Global, and will be granted the perpetual exclusive rights to the Tom N Toms Franchise. Executive Vice-Chairman and Managing Director of Lexicon, Mr Ricky Ang commented, We are very excited for the set up about this new venture and for the opportunities that are sure to ensue. With its differentiated marketing strategies, Tom N Toms brand has been able to experience phenomenal growth rate of over 60% every year for the past 2-3 years, and have opened 160 successful branches within five years in South Korea. This is a model of high scalability and flexibility, where we not only own the rights of franchising, but can also set up and operate our own outlets. If we were to adopt and integrate this unique business model, it is very feasible for us to have at least 300 new franchises in the Territories that we will have the rights to operate in. Countries within the Territories can be broadly classified into the Eastern Europe district and the South-East Asia District. 1
Countries that fall into the Eastern Europe District include that of Russia, Poland, Czech Republic, Slovakia and Croatia. According to the data as at October 2008 from CIA World Factbook, the GDP of these countries reached US$1, 757 billion, US$567.4 billion, US$217.2 billion, US$100.6 billion and US$64.0 billion respectively. Taking a deeper look, the Purchasing Power Parity ( PPP ) per capita of Russia - with a population of 141.4 million - reached US$15,737.98. The PPP of Poland per capita is US$17,326.86; Czech Republic is US$26,757.93; Slovakia is US$20,119.31; and Croatia is US$15,351.70. On the South-East Asian side, countries included in this region include Indonesia, Singapore, Vietnam and Brunei, of which GDP reached US$510.8 billion, US$154.5 billion, US$90.9 billion and US$17.2 billion respectively. Indonesia, with a large population of 234.7 million, has a PPP per capital of US$3,902.53. Singapore s PPP per capital reached US$53,590.93; Vietnam reached US$2,892.25; and Brunei reached US$52,432.48. (Please refer to Annex 2 for Table 1) Mr Ang continued, After much research and studies, we have realised the astounding growth potential for the Tom N Toms Franchise outside of South Korea, especially within the 21 countries stipulated within the Territories. According to The Economist, all of these countries are classified as emerging markets and are in the process of rapid growth and industrialisation, which means that citizens are experiencing growing purchasing capacity and are empowered with bigger disposable income for consumables. According to the Specialty Coffee Association of America (SCAA), there is a tremendous growth in the speciality coffee industry boosted by customers demands for better quality coffee. We believe that the Tom N Toms Franchise will yield high returns for the Group in the near future. Out of the 300 franchisee outlets, both Lexicon and/or Tom N Toms International expects to directly own and manage one-third of it, while collecting area master franchiser royalties of up to US$30,000 per franchisee per year for the rest of the franchises, and up to 5% of outlet s turnover. Mr Ang explains his rationale for this joint venture, Although the Group is currently in the midst of a possible reverse takeover, business is still as usual and we are continually seeking ways to accelerate expansion and increase profitability. Regulatory constraints in most Asian countries have made it difficult for the Group to expand our media business beyond Singapore and Malaysia. Hence, we are looking to diversify our business into other operations that are synergistic in nature, such as well-known F&B franchising and other lifestyle businesses. We are currently looking at other notable F&B brands using this same business model, and will inform all shareholders of all developments accordingly. 2
The investment is funded entirely through internal funding. The proposed joint venture is not expected to have a material effect on the net assets, gearing and earnings of Lexicon based on its account for the current financial year. END About The Lexicon Group Limited The Lexicon Group Limited (formally known as Sun Business Network Ltd) is a sponsored Catalist-listed company on the Singapore Exchange. Incorporated in Singapore in October 1994, the Group is a leading homegrown publisher of niche magazines, which include more than 20 titles in different languages. The Group also has a considerable presence in the region as its publications are circulated in Singapore, Malaysia and the PRC. In the PRC market, the Group has built its presence with the establishment of Club Calibre Haute Horlogerie, the first and only luxury club in the PRC, to complement the Group s niche publishing activities that will focus on the luxury watch market. In addition, the Lexicon Group also holds substantial investments in NASDAQ OTCBB-listed Nextmart Inc and UK-AIM-listed Sun 3C Media Plc. For more information, please visit our website at www.lexicon.com.sg For further information, please contact: Issued on Behalf of: By: For iglobal Contact: During office hours (Office): After office hours (Mobile): Email: Contact: During office hours (Office): After office hours (Mobile): Email: The Lexicon Group Limited iglobal Consultancy Pte Ltd Ms Adeline Chew (65) 6438 1671 (65) 9320 1249 adeline.chew@iglobal.com.sg Ms Priscilla Ang (65) 6438 1671 (65) 9220 2021 priscilla.ang@iglobal.com.sg 3
Annex 1 List of countries within the Territories Eastern Europe - Belarus - Bosnia and Herzegovina - Bulgaria - Croatia - Czech Republic - Hungary - Kazakhstan - Poland - Romania - Russia - Serbia - Slovakia - Tatarstan - Ukraine South-East Asia - Brunei - Cambodia - Indonesia - Malaysia - Philippines - Singapore - Vietnam 4
Annex 2 Table 1 Eastern Europe GDP (US$) GDP (PPP) (US$) Country Total GDP/ Country Total (US$) GDP (PPP)/ Country Total (US$) Belarus 57,680,000,000 105,200,000,000 9,724,723 5,931.27 10,817.79 Bosnia and Herzegovina 19,360,000,000 27,730,000,000 4,552,198 4,252.89 6,091.56 Bulgaria 51,930,000,000 86,320,000,000 7,322,858 7,091.49 11,787.75 Croatia 63,950,000,000 68,980,000,000 4,493,312 14,232.26 15,351.70 Czech Republic 217,200,000,000 273,700,000,000 10,228,744 21,234.28 26,757.93 Hungary 164,300,000,000 203,900,000,000 9,956,108 16,502.43 20,479.89 Kazakhstan 141,200,000,000 167,600,000,000 15,284,929 9,237.86 10,965.05 Poland 567,400,000,000 667,400,000,000 38,518,241 14,730.68 17,326.86 Romania 213,900,000,000 278,400,000,000 22,276,056 9,602.24 12,497.72 Russia 1,757,000,000,000 141,377,752 12,427.70 Tatarstan (Part of 29,292,000,000 2,225,000,000,000 3,779,265 7,750.71 Russia) 15,737.98 Serbia 52,180,000,000 77,280,000,000 10,150,265 5,140.75 7,613.59 Slovakia 100,600,000,000 109,600,000,000 5,447,502 18,467.18 20,119.31 Ukraine 198,000,000,000 337,000,000,000 46,299,862 4,276.47 7,278.64 South-East Asia Brunei 17,180,000,000 19,640,000,000 374,577 45,865.07 52,432.48 Cambodia 10,820,000,000 25,900,000,000 13,995,904 773.08 1,850.54 Indonesia 510,800,000,000 915,900,000,000 234,693,997 2,176.45 3,902.53 Malaysia 214,700,000,000 386,600,000,000 24,821,286 8,649.83 15,575.34 Philippines 172,300,000,000 320,600,000,000 91,077,287 1,891.80 3,520.09 Singapore 154,500,000,000 244,000,000,000 4,553,009 33,933.60 53,590.93 Vietnam 90,880,000,000 246,600,000,000 85,262,356 1,065.89 2,892.25 Source http://www.photius.com/rankings/population/population_2008_1.html List of countries by GDP http://en.wikipedia.org/wiki/list_of_countries_by_gdp_(nominal) List of countries by GDP (PPP) http://wapedia.mobi/en/list_of_countries_by_gdp_(ppp) 5