Wang On Group Limited — Capital/Financing Update 2002

Jul 9, 2002

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)

PLACING OF OPTIONS TO PURCHASE

CONVERTIBLE NOTES OF DAILYWIN GROUP LIMITED

Placing Agent

On 9th July, 2002, the Company and the Placing Agent entered into a placing agreement in relation to a private placing of the Options to the Placees at the placing price equivalent to 2.5% of the principal amount of the Option Notes on a fully underwritten basis.

The Option Placing was completed on 9th July, 2002 immediately following signing of the Option Placing Agreement and simultaneously with the completion of the Underwriting Agreement on the same day.

OPTION PLACING AGREEMENT

Date

9th July, 2002

Parties

The Company and the Placing Agent.

Basis of Placing

The placing of the Options by the Placing Agent is on a fully underwritten basis.

Placing price

HK$25,000 per Option, representing 2.5% of the principal amount of the Option Note under the Option.

Option Note purchase price

The consideration payable by the holder of an Option for the purchase of each Option Note upon the exercise of an Option shall be HK$1,000,000, representing 100% of the principal amount of the Option Note.

Option period

An Option is exercisable in whole at any time during the Initial Period. The holder of an Option may by payment to Rich Time of a consideration of 3% of the principal amount of the Option Note extend the Initial Period for an additional 6 months from the Initial Period to the Extended Period provided that a notice in writing is given by the holder of the Option to the Company not less than 10 business days before the expiry of the Initial Period stating its/his intention to extend the option period which notice shall be accompanied by payment for the said consideration.

Transferability

Subject to the consent from Rich Time, an Option may be transferred in its entirety at any time during the Initial Period and the Extended Period (as the case may be).

Independence of the Placing Agent and the Placees

The Placing Agent is, and the Placees and their respective beneficial owners are, independent of and not connected with the directors, chief executive or substantial shareholders of the Company and any of its subsidiaries or an associate (as defined in the Listing Rules) of any of them.

Right of the holders of the Options

The holders of the Options will not be entitled to any interest payable on the principal amount of the Convertible Notes by virtue of their being the holders of the Options.

Completion

The Option Placing was completed on 9th July, 2002 immediately following signing of the Option Placing Agreement and simultaneously with the completion of the Underwriting Agreement on the same day.

REASON FOR THE OPTION PLACING

The Board believes that the Option Placing provides a possible channel for the Group to realize its relatively illiquid investment in the Convertible Notes which it has received under the Agreement and which will not fall due for repayment until the expiry of a 3-year period. Besides, it will receive the placing price totalling HK$1,600,000 under the Option Placing and will receive a maximum of a further HK$1,920,000 if the holders of the Options elect to extend the Initial Period to the Extended Period. The Board considers that the terms of the Placing, which have been arrived at after arm's length negotiations between the Company and the Placing Agent, are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

USE OF PROCEEDS

The Company intends to use the net proceeds from the Option Placing of approximately HK$1,200,000 for the Group's general working capital.

DEFINITIONS

"Agreement"	the agreement dated 22nd May, 2002 made between the Company, Town Health and Dailywin pursuant to which, inter alia, Dailywin agreed to issue the Convertible Notes, of which the Company (or its nominee(s)) would receive the Convertible Notes in the principal amount of HK$64,000,000
"Board"	board of Directors
"Company"	Wang On Group Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange
"Convertible Notes"	3.8% convertible notes in the aggregate principal amount of HK$84,000,000 due on 8th July, 2005 issued by Dailywin pursuant to the Agreement, details of which were set out in the joint announcement dated 22nd May, 2002 issued by the Company, Town Health and Dailywin
"Dailywin"	Dailywin Group Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange
"Dailywin Share(s)"	share(s) of HK$0.01 each in the issued share capital of Dailywin
"Directors"	directors of the Company
"Extended Period"	the 6 months period commencing from the date immediately after the expiry date of the Initial Period to 9th July, 2003
"Group"	the Company and its subsidiaries
"Hong Kong"	the Hong Kong Special Administrative Region of the People's Republic of China
"Initial Period"	the 6 months period commencing from 10th July, 2002 up to and including 9th, January, 2003
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange
"Options"	64 options, each with a denomination of principal amount of HK$1,000,000 Option Note, granted by Rich Time entitling the holders thereof, upon full exercise of the options, to require Rich Time to sell the Option Notes to them in an aggregate principal amount of HK$64,000,000
"Option Notes"	Convertible Notes in the aggregate principal amount of HK$64,000,000 which are the subject of the Options, and which Rich Time is required to sell to the holders of the Options upon the exercise of the Options
"Option Placing"	a private placing of the Options to the Placees pursuant to the Option Placing Agreement
"Option Placing Agreement"	a placing agreement dated 9th July, 2002 made between the Company and the Placing Agent in relation to the Option Placing
"Placee(s)"	professional, institutional and/or individual investors procured by the Placing Agent to take up the Options in accordance with the Option Placing Agreement
"Placing Agent"	Kingston Securities Limited, a dealer registered under the Securities Ordinance (Chapter 333 of the Laws of Hong Kong)
"Rich Time"	Rich Time Strategy Limited, a company incorporated in the British Virgin Islands and a wholly-owned indirect subsidiary of the Company
"Share(s)"	share(s) of HK$0.01 each in the capital of the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Town Health"	Town Health International Holdings Company Limited, a company incorporated in the Cayman Islands with limited liability and the shares of which are listed on the Growth Enterprise Market of the Stock Exchange
"Underwriting Agreement"	the agreement dated 13th June, 2002 made between the Company and the Placing Agent relating to the placing and underwriting of certain Dailywin Shares which the Company (or its nominee(s)) would receive in connection with the transactions under the Agreement
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"%"	per cent.

By Order of the Board

Wang On Group Limited

Tang Ching Ho

Chairman and Managing Director

Hong Kong, 9th July, 2002

Please also refer to the published version of this announcement in The Standard dated 10 July 2002.