Wang On Group Limited — Capital/Financing Update 2001

Jul 11, 2001

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

WANG ON GROUP LIMITED

(incorporated in Bermuda with limited liability)

Amended terms of proposed investment in

a pharmaceutical enterprise in Mainland China

On 10 July, 2001, the Company and the other relevant parties entered into the New Agreement and the New Guarantee under which certain terms of the Previous Agreement and the Previous Guarantee were varied.

Previous Agreement and Previous Guarantee

Reference is made to the announcement issued by Wang On Group Limited (the "Company") on 18 June, 2001 (the "Previous Announcement") regarding the agreement (the "Previous Agreement") made on 15 June, 2001 between Advance Century Limited ("Advance Century"), a wholly-owned subsidiary of the Company, and certain independent third parties who are independent of and not connected with the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or their respective associates, in relation to an investment in a sino-foreign equity joint venture pharmaceutical enterprise in Changsha, Hunan Province, known as 湖南湘雅製藥有限公司 (Hunan Xiangya Pharmaceutical Co., Ltd.) (the "Joint Venture") under the Previous Agreement. Subject to the fulfillment of certain conditions, Advance Century would subscribe (the "Investment") the amount of HK$15,000,000 to take up a 22% shareholding in China Field Enterprises Limited ("China Field"). China Field would hold an 80% equity interest in the Joint Venture by contributing the aggregate amount of HK$17,000,000 (including the HK$15,000,000 subscribed by Advance Century under the Investment and HK$2,000,000 to be subscribed by 廣州瑞日藥業有限公司（「瑞日」） which would take up a 11.5% shareholding in China Field), as further capital to the Joint Venture and by taking up the transfer of an existing interest equity interest in the Joint Venture.

The Mainland Chinese partner in the Joint Venture is associated with 湖南醫科大學 (Hunan Medical University) and currently holds a 51% equity interest in the Joint Venture, which would be reduced to 20% upon completion of the Investment. On 15 June, 2001, at the same time as the Previous Agreement was entered into, the existing Hong Kong partners in the Joint Venture who together hold the remaining 49% equity interest in the Joint Venture undertook to compensate Advance Century in the event that the audited turnover of the Joint Venture fell short of a guaranteed level of RMB30,000,000 for the period from 1 August, 2001 to 31 March, 2002 or RMB50,000,000 for the period from 1 April, 2002 to 31 March, 2003, or the dividends received by Advance Century from China Field fell short of HK$1,500,000, during each of the 12-month periods commencing 1 August, 2001 and 2002 respectively (the "Previous Guarantee"). The compensation receivable by Advance Century would be equal to the shortfall from the guaranteed level of turnover or dividend.

New Agreement and New Guarantee

On 10 July, 2001, the relevant parties entered into a new agreement (the "New Agreement") to vary certain terms of the Previous Agreement. The existing Hong Kong partners in the Joint Venture also executed a new undertaking (the "New Guarantee") to vary certain terms of the Previous Guarantee. The principal variations to the terms of the Previous Agreement and the Previous Guarantee are the following:-

1. The amount to be subscribed by Advance Century to China Field to take up a 22% shareholding in China Field has been reduced to HK$11,250,000;

2. 瑞日 will no longer subscribe for a shareholding in China Field; and

3. Advance Century will be compensated to the extent that the amount of dividends it receives during each of the 12-month periods commencing 1 August, 2001 and 2002 respectively falls short of HK$1,125,000, but there will be no guaranteed level of turnover.

Reasons for the variations

Following execution of the Previous Agreement and the Previous Guarantee, the Company immediately commenced a due diligence review of the financial, contractual and legal position of the Joint Venture. As a result of the results of such review, the parties have renegotiated some of the original terms of the Previous Agreement and the Previous Guarantee. The New Agreement and the New Guarantee were entered into on 10 July 2001 following conclusion of such renegotiations.

Paragraph 2 of the Listing Agreement

Neither the Previous Agreement (or the Previous Guarantee) nor the New Agreement (or the New Guarantee) amounts to a notifiable transaction for the Company under Chapter 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. This announcement is made pursuant to the Company's general disclosure obligation under paragraph 2 of the Listing Agreement.

By Order of the Board

Wang On Group Limited

Tang Ching Ho

Chairman and Managing Director

Hong Kong, 10 July, 2001

Please also refer to the published version of this announcement in the i-Mail.