Brockman Mining Limited — Capital/Financing Update 2005

Jun 2, 2005

THIS CIRCULAR IS SOLELY FOR YOUR INFORMATION AND YOU ARE ADVISED TO READ AND NOTE THE CONTENTS OF THIS CIRCULAR

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares or warrants in Wong’s International (Holdings) Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance on the whole or any part of the contents of this circular.

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WONG’S INTERNATIONAL (HOLDINGS) LIMITED *

(Incorporated in Bermuda with limited liability)

(Stock Code: 99)

DISCLOSEABLE TRANSACTION

A letter from the Chairman of Wong’s International (Holdings) Limited is set out on pages 2 to 4 of this circular.

* For identification purpose only

1 June 2005

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Appendix — General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5

DEFINITIONS

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

“Board”	the board of directors of the Company
“Company”	Wong’s International (Holdings) Limited, a company
	incorporated in Bermuda with limited liability whose shares
	are listed on the main board of the Stock Exchange
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Latest Practicable Date”	27 May 2005, 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
“Model Code”	the Model Code for Securities Transactions by Directors of
	Listed Companies as set out in Appendix 10 of the Listing
	Rules
“Repurchase Agreement”	the agreement between Season and TWL dated 22 April 2005
	whereby Season agrees to sell, and TWL agrees to repurchase,
	2,550,000 shares in TWL (equivalent to 30% of the issued
	share capital of TWL) held by Season
“Season”	Season Industries Limited, a company incorporated in Hong
	Kong with limited liability and a wholly owned subsidiary of
	the Company
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tomiyama”	Hong Kong Tomiyama Limited, a company incorporated in
	Hong Kong with limited liability and a third party
	independent of and not connected with the Company and its
	connected persons (as defined in the Listing Rules)
“TWL”	Tomiyama Wong Limited, a company incorporated in Hong
	Kong with limited liability and a 70:30 joint venture between
	Tomiyama and the Group prior to the entering into of the
	Repurchase Agreement

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LETTER FROM THE CHAIRMAN

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WONG’S INTERNATIONAL (HOLDINGS) LIMITED *

(Incorporated in Bermuda with limited liability)

(Stock Code: 99)

Executive Directors:

Wong Chung Mat, Ben (Chairman) Wong Chung Ah, Johnny Chan Tsze Wah, Gabriel Chan Wing Kwong, Paulus Tan Chang On, Lawrence Wan Man Keung

Independent Non-Executive Directors: Dr. Li Ka Cheung, Eric, G.B.S., O.B.E., J.P. Dr. Yu Sun Say, S.B.S., J.P. Mr. Alfred Donald Yap, J.P.

Principal Office: Wong’s Industrial Centre 180A Wai Yip Street Kwun Tong Kowloon Hong Kong

Registered Office: Clarendon House Church Street Hamilton HM11 Bermuda

1 June 2005

To the Shareholders,

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

In the Company’s announcement dated 11 May 2005, the Company announced that on 22 April 2005, Season, a wholly owned subsidiary of the Company, entered into a repurchase agreement with TWL whereby Season agrees to sell, and TWL agrees to repurchase, 2,550,000 shares in TWL (equivalent to 30% of the issued share capital of TWL) held by Season. The consideration for the sale, which amounts to HK$9,250,000, will be payable in cash in full on completion.

Pursuant to the Repurchase Agreement, completion shall take place as soon as possible after signing of the Repurchase Agreement but in any event on or before 30 June 2005, unless extended by the parties in writing.

* For identification purpose only

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LETTER FROM THE CHAIRMAN

The entering into of the Repurchase Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to give you further details of the Repurchase Agreement and other information prescribed by the Listing Rules.

2. INFORMATION ON TWL AND TOMIYAMA

TWL was established in 1995 as a 70:30 joint venture of Tomiyama and the Group. TWL and Tomiyama are principally engaged in the business of metal stamping and wire harness cable assemblies for the end products of copiers, fax machines, scanners as well as desktop computers.

For the year ended 31 March 2003, the audited turnover, profit before taxation and profit after taxation of TWL were HK$198,825,000, HK$7,306,000 and HK$6,498,000, respectively. For the year ended 31 March 2004, the audited turnover, profit before taxation and profit after taxation of TWL were HK$229,498,000, HK$10,993,000 and HK$9,357,000, respectively. Based on the audited balance sheet of TWL as at 31 March 2004, both the audited net tangible assets and net asset value of TWL amounted to HK$41,334,000.

The Directors confirm that, to the best of their knowledge, information and belief having made all reasonable enquiry, Tomiyama and its ultimate beneficial owner are third parties independent of and not connected with the Company and its connected persons (as defined in the Listing Rules).

3. REASONS FOR ENTERING INTO THE REPURCHASE AGREEMENT

The consideration was agreed by the parties after arm’s length negotiations by reference to the net book value of the Group’s interest in TWL. For the purposes of this transaction, the Company has retained an independent valuation firm to opine on the fair market value of the 30% equity interest in TWL, based on (a) the prospective and historical price-earning ratios of TWL; (b) the net asset value of TWL; (c) a comparison with price-earning ratios of Hong Kong listed companies which are primarily engaged in the manufacture and distribution of metal parts and components of office equipment on an OEM/ODM basis; (d) a lack-of-marketability discount to reflect that TWL is unlisted; and (e) a discount to reflect that the disposal is in respect of a minority stake. The Directors note that the consideration is within the range of the valuation set out in the valuation report.

The Directors believe that the terms of the Repurchase Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole, taking into account the following factors:

• (i) The investment in TWL is a non-core business of the Group. The disposal will enable the Group to focus its management resources on the core business of the Group.

• (ii) The costs of raw materials used by TWL (mainly cold roll steel) have remained high for a prolonged period of time. The profit margin of the manufacturing business of TWL is thin and its results are likely to be adversely affected if the costs of raw materials increase further.

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LETTER FROM THE CHAIRMAN

• (iii) The Group’s interest in TWL is a minority interest in an unlisted company. The disposal represents a good opportunity for the Company to realize its interest in TWL.

It is currently expected that the net proceeds generated from the disposal will be utilized for repaying bank loans and/or for the general working capital of the Group.

4. FINANCIAL EFFECTS OF THE TRANSACTION

Immediately prior to the entering of the Repurchase Agreement, TWL was a 30% owned associate of the Group. After completion of the Repurchase Agreement, the Group will cease to have any interest in TWL and TWL will become a wholly owned subsidiary of Tomiyama.

The total capital injection paid by the Group in respect of its interest in TWL amounted to HK$2,550,000. The net asset value of the Group’s 30% interest in TWL, as reflected in the audited consolidated balance sheet of the Group as at 31 December 2004, amounted to HK$15,514,000. Accordingly, completion of the Repurchase Agreement is expected to result in a loss on disposal in the amount of approximately HK$6,264,000.

Based on the audited consolidated accounts of the Group for the year ended 31 December 2004, the profit after taxation attributable to the 30% interest in TWL (using the equity method of accounting) amounted to approximately HK$2,906,000, representing approximately 10.19% of the Group’s profit after taxation (HK$28,525,000) during the same period. The Company does not consider that completion of the Repurchase Agreement will result in any material effect on the assets and liabilities of the Group.

5. GENERAL

The Group is principally engaged in the development, manufacture, marketing and distribution of electronic products, including micro-computers, telecommunication equipment, broadband communication products, internet appliances, wireless communication or networking equipment and other electronic products.

The entering into of the Repurchase Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to give you further details of the Repurchase Agreement and other information prescribed by the Listing Rules.

Your attention is drawn to the Appendix of this circular which contains certain additional information in relation to the Company.

Yours faithfully,

For and on behalf of the Board

Wong’s International (Holdings) Limited Wong Chung Mat, Ben Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement in this circular misleading.

2. INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:

2.1 Long positions in shares of the Company

		Number of
		ordinary	Percentage
Name of Directors	Capacity	shares	interests
Wong Chung Mat, Ben	Beneficial owner and founder	75,810,699	16.24%
	of discretionary trust
	(Note 1)
Wong Chung Ah, Johnny	Beneficial owner, interest of	40,693,487	8.72%
	child or spouse and founder
	of discretionary trust
	(Note 2)
Chan Tsze Wah, Gabriel	Beneficial owner	1,237,500	0.27%
Chan Wing Kwong, Paulus	Beneficial owner	1,800,000	0.39%
Tan Chang On, Lawrence	Beneficial owner	10,000	0.00%

Notes:

1. Mr. Wong Chung Mat, Ben was deemed (by virtue of the SFO) to be interested in 75,810,699 shares in the Company. These shares were held in the following capacity:

2. (a) 1,000,000 shares were held by Mr. Wong Chung Mat, Ben personally.

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GENERAL INFORMATION

APPENDIX

• (b) 74,810,699 shares were held by Salop Investment Limited (which was in turn wholly owned by Batsford Limited) for a discretionary trust, of which Mr. Wong Chung Mat, Ben was regarded as the founder (by virtue of the SFO). The references to 74,810,699 shares deemed to be interested by Mr. Wong Chung Mat, Ben (as disclosed herein), Salop Investment Limited (as disclosed in the section headed “Interests of substantial shareholders”) and Batsford Limited (as disclosed in Note 4(a) under the section headed “Interests of substantial shareholders”) relate to the same block of shares. Mr. Wong Chung Mat, Ben is a director of Salop Investment Limited.

• Mr. Wong Chung Ah, Johnny was deemed (by virtue of the SFO) to be interested in 40,693,487 shares in the Company. These shares were held in the following capacity:

• (a) 1,000,000 shares were held by Mr. Wong Chung Ah, Johnny personally.

• (b) 1,235,000 shares were held by Ms. Luk Kit Ching, wife of Mr. Wong Chung Ah, Johnny.

• (c) 38,458,487 shares were held by Kong King International Limited for a discretionary trust, of which Mr. Wong Chung Ah, Johnny was regarded as the founder (by virtue of the SFO). Kong King International Limited was wholly owned by Mountainview International Limited, which was wholly owned by Bermuda Trust (Cook Islands) Limited. Bermuda Trust (Cook Islands) Limited was accustomed/obliged to act in accordance with the directions or instructions of HSBC International Trustee Limited. The references to 38,458,487 shares deemed to be interested by Mr. Wong Chung Ah, Johnny (as disclosed herein), Kong King International Limited, Mountainview International Limited and Bermuda Trust (Cook Islands) Limited (as disclosed in the section headed “Interests of substantial shareholders”), and HSBC International Trustee Limited (as disclosed in Note 3(b) under the section headed “Interests of substantial shareholders”) relate to the same block of shares. The Company was informed by Bermuda Trust (Cook Islands) Limited that with effect from 7 December 2004, its name has been changed to HSBC Trustee (Cook Islands) Limited. Mr. Wong Chung Ah, Johnny is a director of Kong King International Limited.

2.2 Long positions in shares of associated corporations of the Company

			Number of
	Associated		ordinary	Percentage
Name of Director	corporation	Capacity	shares	interests
Wong Chung Ah,	Wong’s Properties	Interest of controlled	2	50%
Johnny	Limited	corporations (Note)

Note: Mr. Wong Chung Ah, Johnny was deemed (by virtue of the SFO) to be interested in 2 shares in Wong’s Properties Limited. These shares were held by Blessea Investment Limited, which was 50% owned by Glorious Glow Limited, which in turn was wholly owned by Mr. Wong Chung Ah, Johnny.

Certain Directors held qualifying shares in certain subsidiaries of the Group on trust for the Company or other subsidiaries of the Group.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or chief executives of the Company or their respective associates had any 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) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

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GENERAL INFORMATION

APPENDIX

• 2.3 Short positions in shares of the Company

None of the Directors had short positions in respect of shares of the Company.

3. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, persons (other than a Director or chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO were as follows:

3.1 Long positions in shares of the Company

		Number of
Name of substantial		ordinary	Percentage
shareholders	Capacity	shares	interests
W. S. Wong & Sons Company	Beneficial owner and interest	195,338,803	41.84%
Limited	of controlled corporations
	(Note 1)
Salop Investment Limited	Beneficial owner (Note 2)	74,810,699	16.02%
HSBC International Trustee	Interest of controlled	274,754,836	58.84%
Limited	corporations and trustee
	(Note 3)
Batsford Limited	Trustee (Note 4)	270,949,502	58.03%
		Number of
		ordinary	Percentage
Name of other persons	Capacity	shares	interests
Kong King International	Beneficial owner (Note 5)	38,458,487	8.24%
Limited
Mountainview International	Trustee (Note 5)	38,458,487	8.24%
Limited
Bermuda Trust (Cook Islands)	Trustee (Note 5)	38,458,487	8.24%
Limited
Wong Chung Yin, Michael	Founder of discretionary trust	30,183,960	6.46%
	(Note 6)

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GENERAL INFORMATION

APPENDIX

Notes:

1. W. S. Wong & Sons Company Limited was a company controlled by the Wong family and was deemed (by virtue of the SFO) to be interested in 195,338,803 shares in the Company. These shares were held in the following capacity:

2. (a) 191,830,837 shares were held by W. S. Wong & Sons Company Limited.

3. (b) 110,000 shares were held by Good Blend Limited, which was wholly owned by W. S. Wong & Sons Company Limited.

4. (c) 3,397,966 shares were held by Micro-Age Superstore Limited, which was wholly owned by W. S. Wong & Sons Company Limited.

Each of Levy Investment Limited and Salop Investment Limited owned 19% of W. S. Wong & Sons Company Limited, and was in turn wholly owned by Batsford Limited. Accordingly, W. S. Wong & Sons Company Limited was regarded as a controlled corporation of Batsford Limited (by virtue of the SFO). The references to 195,338,803 shares deemed to be interested by W. S. Wong & Sons Company Limited (as disclosed herein) and Batsford Limited (as disclosed in Note 4(c) below) relate to the same block of shares.

Kong King International Limited owned 19% of W. S. Wong & Sons Company Limited. Each of Floral Inc. and Sycamore Assets Limited owned 10% of W. S. Wong & Sons Company Limited. Kong King International Limited and Floral Inc. were accustomed/obliged to act in accordance with the directions or instructions of HSBC International Trustee Limited. Sycamore Assets Limited was wholly owned by HSBC International Trustee Limited. Accordingly, W. S. Wong & Sons Company Limited was regarded as a controlled corporation of HSBC International Trustee Limited (by virtue of the SFO). The references to 195,338,803 shares deemed to be interested by W. S. Wong & Sons Company Limited (as disclosed herein) and HSBC International Trustee Limited (as disclosed in Note 3(e) below) relate to the same block of shares.

Mr. Wong Chung Mat, Ben and Mr. Wong Chung Ah, Johnny are directors of W. S. Wong & Sons Company Limited.

1. Please see Note 1(b) under the section headed “Interests of Directors and chief executives”.

2. HSBC International Trustee Limited was deemed (by virtue of the SFO) to be interested in 274,754,836 shares in the Company. These shares were held in the following capacity:

3. (a) 17,584,960 shares were held by Levy Pacific Limited for a discretionary trust, of which Mr. Wong Chung Yin, Michael was regarded as the founder (by virtue of the SFO) and HSBC International Trustee Limited was regarded as the trustee (by virtue of the SFO). The references to 17,584,960 shares deemed to be interested by HSBC International Trustee Limited (as disclosed herein) and Mr. Wong Chung Yin, Michael (as disclosed in Note 6(b) below) relate to the same block of shares.

4. (b) 38,458,487 shares were held by Kong King International Limited for a discretionary trust, of which Mr. Wong Chung Ah, Johnny was regarded as the founder (by virtue of the SFO). Kong King International Limited was wholly owned by Mountainview International Limited, which was wholly owned by Bermuda Trust (Cook Islands) Limited. Bermuda Trust (Cook Islands) Limited was accustomed/obliged to act in accordance with the directions or instructions of HSBC International Trustee Limited. Please see Note 2(c) under the section headed “Interests of Directors and chief executives”.

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GENERAL INFORMATION

APPENDIX

• (c) 11,357,150 shares were held by Floral Inc. which was wholly owned by Bermuda Trust (International) Limited, for a discretionary trust. Bermuda Trust (International) Limited was accustomed/obliged to act in accordance with the directions or instructions of HSBC International Trustee Limited. The Company was informed by Bermuda Trust (International) Limited that with effect from 4 January 2005, its name has been changed to HSBC Institutional Trust Services (BVI) Limited.

• (d) 12,015,436 shares were held by Sycamore Assets Limited, which was wholly owned by HSBC International Trustee Limited, for a discretionary trust.

• (e) 195,338,803 shares were deemed to be interested by W. S. Wong & Sons Company Limited, which was regarded as a controlled corporation of HSBC International Trustee Limited (by virtue of the SFO). Please see Note 1 above.

• Batsford Limited was deemed (by virtue of the SFO) to be interested in 270,949,502 shares in the Company. These shares were held in the following capacity:

• (a) 74,810,699 shares were held by Salop Investment Limited (which was in turn wholly owned by Batsford Limited) for a discretionary trust, of which Mr. Wong Chung Mat, Ben was regarded as the founder (by virtue of the SFO). Please see Note 1(b) under the section headed “Interests of Directors and chief executives”.

• (b) 800,000 shares were held by Levy Investment Limited (which was in turn wholly owned by Batsford Limited) for a discretionary trust, of which Mr. Wong Chung Yin, Michael was regarded as the founder (by virtue of the SFO). The references to 800,000 shares deemed to be interested by Batsford Limited (as disclosed herein) and Mr. Wong Chung Yin, Michael (as disclosed in Note 6(a) below) relate to the same block of shares.

• (c) 195,338,803 shares were deemed to be interested by W. S. Wong & Sons Company Limited, which was regarded as a controlled corporation of Batsford Limited (by virtue of the SFO). Please see Note 1 above.

• Please see Note 2(c) under the section headed “Interests of Directors and chief executives”.

• Mr. Wong Chung Yin, Michael was deemed (by virtue of the SFO) to be interested in 30,183,960 shares in the Company. These shares were held in the following capacity:

• (a) 800,000 shares were held by Levy Investment Limited (which was in turn wholly owned by Batsford Limited) for a discretionary trust, of which Mr. Wong Chung Yin, Michael was regarded as the founder (by virtue of the SFO). Please see Note 4(b) above.

• (b) 17,584,960 shares were held by Levy Pacific Limited for a discretionary trust, of which Mr. Wong Chung Yin, Michael was regarded as the founder (by virtue of the SFO) and HSBC International Trustee Limited was regarded as the trustee (by virtue of the SFO). Please see Note 3(a) above.

• (c) 11,799,000 shares were held for The Pacific Way Unit Trust. Mr. Wong Chung Yin, Michael was regarded as the founder of the discretionary trust (by virtue of the SFO) in relation to the same block of shares.

Save as disclosed, the Directors are not aware of any other persons who, as at the Latest Practicable Date, had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

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GENERAL INFORMATION

APPENDIX

• 3.2 Aggregate short positions in the shares and underlying shares of the Company

As at the Latest Practicable Date, the Company had not been notified of any short positions being held by any substantial shareholder in the shares of the Company.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their associates is considered by the Company to have interests in businesses which compete with, or might compete with, either directly or indirectly, the businesses of the Group, other than those businesses where such Directors have been appointed to represent the interests of the Company and/or other members of the Group.

5. SERVICE CONTRACTS

No Director has entered into a service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation, other than statutory compensation.

6. LITIGATION

Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration or claim of material importance and, so far as the Directors are aware, no litigation or arbitration or claim of material importance is pending or threatened by or against the Company or any of its subsidiaries.

7. MISCELLANEOUS

• (a) The Qualified Accountant of the Company is Mr. Chan Tsze Wah, Gabriel, B. Soc. Sc., FCCA, CPA.

• (b) The Secretary of the Company is Mr. Chan Tsze Wah, Gabriel.

• (c) The principal share and transfer office registrars of the Company is Butterfield Fund Services (Bermuda) Limited, Rosebank Centre, 11 Bermudiana Road, Pembroke, Bermuda. The share and transfer office registrars of the Company in Hong Kong is Standard Registrars Limited, G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) This circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

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