Wang On Group Limited — Capital/Financing Update 2003

Mar 3, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, 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 in Wang On Group 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 or transfer 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 upon the whole or any part of the contents of this circular.

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WANG ON GROUP LIMITED

(incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION

PROPOSED ACQUISITION OF AN EFFECTIVE INTEREST OF APPROXIMATELY 52.26% IN AND SHAREHOLDER’S LOAN OF LUXEMBOURG MEDICINE COMPANY LIMITED

Joint financial advisers

KINGSTON CORPORATE FINANCE LIMITED

Kingsway Capital Limited

3rd March, 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Acquisition Agreement I and the Acquisition Agreement II . . . . . . . . . . . . . . . . . . .	5
Conversion of the Convertible Notes by the Wang On Group . . . . . . . . . . . . . . . . . . . . .	7
Information on the LMC Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information on the WYT Holdings Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Reasons for the Bio Chapter Acquisition, the LMC Acquisition and
the acquisition of the Shareholder’s Loan by the Wang On Group. . . . . . . . . . . . . . . .	10
Shareholding of the Wang On Group and the Town Health Group
in WYT Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Effect of completion of the Acquisition Agreements
on the earnings of the Wang On Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

– i –

DEFINITIONS

In this circular the following expressions have the meanings respectively set opposite them unless the context otherwise requires:

• “Acquisition Agreement I” the agreement dated 17th February, 2003 entered into between Wang On and Town Health in respect of the Bio Chapter Acquisition and the acquisition of the Shareholder’s Loan

• “Acquisition Agreement II”

• the agreement dated 17th February, 2003 entered into between Biomore Investments and the Two Individual Shareholders in respect of the LMC Acquisition

• “Acquisition Agreements” Acquisition Agreement I and Acquisition Agreement II

• “Bio Chapter”

• Bio Chapter Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect whollyowned subsidiary of Town Health

• “Bio Chapter Acquisition”

• the acquisition by Wang On of 27,799 shares of US$1.00 each in the capital of Bio Chapter pursuant to the Acquisition Agreement I

• “Biomore Investments”

• Biomore Investments Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of Wang On

• “Board”

• board of Directors

• “Business Day”

• a day (other than a Saturday or a Sunday) on which banks are open for business in Hong Kong

• “Conversion”

• conversion of the Convertible Notes in the aggregate principal amount of HK$12 million by Rich Time

• “Convertible Notes”

• 3.8% convertible notes in the aggregate principal amount of HK$84 million due on 8th July, 2005 issued by WYT Holdings on 9th July, 2002 (as to which those in the principal amount of HK$76 million are currently held by Rich Time)

• “Directors” directors of Wang On

• “GEM”

the Growth Enterprise Market of the Stock Exchange

– 1 –

DEFINITIONS

• “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Latest Practicable Date” 27th February, 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “LMC” Luxembourg Medicine Company Limited, a company incorporated in Hong Kong with limited liability

• “LMC Acquisition” the acquisition by Wang On of 517,556 LMC Shares from each of the Two Individual Shareholders pursuant to the Acquisition Agreement II

• “LMC Group” LMC and its subsidiaries

• “LMC Shares” shares of HK$0.01 each in the share capital of LMC

• “PRC” the People’s Republic of China

• “Rich Time” Rich Time Strategy Limited, a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of Wang On

• “SDI Ordinance” Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong)

• “Shareholder’s Loan” the loan due by LMC to the Town Health Group in the amount of HK$2,655,305.48 as at 31st December, 2002

• “Share Options” options to subscribe for shares of Wang On granted under a share option scheme adopted by Wang On on 6th February, 1995, which was subsequently terminated on 3rd May, 2002

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

– 2 –

DEFINITIONS

• “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 GEM

• “Town Health Group” Town Health and its subsidiaries

• “Two Individual Shareholders” two individual shareholders of LMC who together are interested in approximately 2.38% of the total issued LMC Shares

• “Wang On”

• 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

• “Wang On Group” Wang On and its subsidiaries

• “Wang On Share(s)” share(s) of HK$0.1 each in the capital of Wang On

• “Warrants”

• unlisted warrants issued by Wang On on 3rd July, 2002 which entitle the holders thereof to subscribe for one share of Wang On (subject to adjustment) at an initial subscription price of HK$0.017 (subject to adjustment) per share of Wang On at any time during the period from 3rd July, 2002 to 31st July, 2003 (both dates inclusive)

• “WYT Holdings”

Wai Yuen Tong Medicine Holdings Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange

• “WYT Holdings Group”

WYT Holdings and its subsidiaries

• “WYT Holdings Share(s)” share(s) of HK$0.01 each in the capital of WYT Holdings

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “US$”

• United States dollars, the lawful currency of the United States of America

• “%”

per cent.

– 3 –

LETTER FROM THE BOARD

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WANG ON GROUP LIMITED

(incorporated in Bermuda with limited liability)

Executive Directors: Mr. Tang Ching Ho (Chairman and Managing Director) Ms. Yau Yuk Yin (Deputy Chairman and Deputy Managing Director) Mr. Chan Chun Hong, Thomas

Registered office: Clarendon House 2 Church Street 41 Cedar Avenue Hamilton HM 11 Bermuda

Independent non-executive Directors: Dr. Lee Peng Fei, Allen, CBE, JP Mr. Wong Chun, Justein, MBE, JP Dr. Siu Yim Kwan, Sidney

Head office and

principal place of business: 12th Floor, Tower 1 South Seas Centre No. 75 Mody Road Tsimshatsui East Kowloon Hong Kong

3rd March, 2003

To the Shareholders and holders of the Share Options and Warrants

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

PROPOSED ACQUISITION OF AN EFFECTIVE INTEREST OF APPROXIMATELY 52.26% IN AND SHAREHOLDER’S LOAN OF LUXEMBOURG MEDICINE COMPANY LIMITED

INTRODUCTION

It was announced on 17th February, 2003 that Wang On entered into an agreement with Town Health on the same date pursuant to which Wang On has conditionally agreed to acquire from the Town Health Group (i) the entire issued share capital of Bio Chapter at a consideration of HK$67,332,186; and (ii) the Shareholder’s Loan at a consideration of HK$2,655,305. The sole asset of Bio Chapter is its approximate 49.88% equity interest in

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LETTER FROM THE BOARD

LMC. The total consideration of HK$69,987,491 will be satisfied by Wang On by the transfer of 2,120,833,061 WYT Holdings Shares held by Rich Time to Town Health (or as it may direct) at a transfer price of HK$0.033 per WYT Holdings Share.

It was also announced on 17th February, 2003 that Biomore Investments entered into an agreement with the Two Individual Shareholders on the same date pursuant to which Biomore Investments has conditionally agreed to acquire 1,035,112 LMC Shares from the Two Individual Shareholders (as to 517,556 LMC Shares from each of them) at a consideration of HK$3,214,282. Such consideration will be satisfied partly by payment of cash in the amount of HK$1,480,000 and partly by procuring the transfer of 52,554,000 WYT Holdings Shares to the Two Individual Shareholders (or as they may direct) at a transfer price of HK$0.033 per WYT Holdings Share.

The acquisitions contemplated under the Acquisition Agreements constitute a discloseable transaction for Wang On under the Listing Rules, and the purpose of this circular is to give you information regarding, amongst other things, further details of the Acquisition Agreements.

THE ACQUISITION AGREEMENT I AND THE ACQUISITION AGREEMENT II

Date of the Acquisition Agreement I and the Acquisition Agreement II

17th February, 2003

Parties and assets involved

Acquisition Agreement I Acquisition Agreement II Vendors : Town Health Two Individual Shareholders Purchaser : Wang On Biomore Investments Assets to be : (i) 27,799 shares of US$1.00 each acquired in the issued capital of Bio Individual Shareholders (as to Chapter, representing the 517,556 LMC Shares from each of entire issued share capital of them), representing approximately Bio Chapter, the sole asset of 2.38% of the total issued LMC which is its approximate Shares. 49.88% equity interest in LMC; and

1,035,112 LMC Shares from the Two Individual Shareholders (as to 517,556 LMC Shares from each of them), representing approximately 2.38% of the total issued LMC Shares.

(ii) the Shareholder’s Loan.

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LETTER FROM THE BOARD

Each of Town Health and the Two Individual Shareholders is independent of and not connected with any of the directors, chief executive, substantial shareholders of Wang On or any of its subsidiaries or an associate (as defined in the Listing Rules) of any of them.

Consideration

Set out below are the details of the consideration payable by Wang On and the method of settlement under the Acquisition Agreements:

Acquisition Agreement I Acquisition Agreement II Consideration : A sum of HK$69,987,491, of which A sum of HK$3,214,282, which shall HK$67,332,186 shall be attributable be payable by Wang On to the Two to the Bio Chapter Acquisition and Individual Shareholders in equal HK$2,655,305 shall be attributable shares to the acquisition of the Shareholder’s Loan Method of : By the transfer of 2,120,833,061 Partly by payment of cash in the settlement of WYT Holdings Shares held by Rich amount of HK$1,480,000 and partly consideration Time to Town Health (or as it may by procuring the transfer of direct) at a transfer price of 52,554,000 WYT Holdings Shares to HK$0.033 per WYT Holdings Share the Two Individual Shareholders (or as they may direct) at a transfer price of HK$0.033 per WYT Holdings Share

The consideration for the Bio Chapter Acquisition and the LMC Acquisition was arrived at after arm’s length negotiations between all parties to the Acquisition Agreements by reference to the following:

• the historical audited net profit of the LMC Group. For the fifteen months ended 31st March, 2001 and the year ended 31st March, 2002, the LMC Group recorded an audited profit attributable to shareholders of approximately HK$10,644,000 and HK$9,544,000 respectively; and

• the expected future growth potential of the LMC Group after taking into account the LMC Group’s well-known and long established brand name “Madame Pearl’s” and its future business expansion in the PRC.

The consideration for the acquisition of the Shareholder’s Loan was arrived at after arm’s length negotiations between Wang On and Town Health by reference to the face value of the Shareholder’s Loan.

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LETTER FROM THE BOARD

The transfer price of HK$0.033 per WYT Holdings Share (i) equals the closing price of HK$0.033 per WYT Holdings Share as quoted on the Stock Exchange on 30th January, 2003 (being the last day of trading in WYT Holdings Shares on the Stock Exchange prior to the release of an announcement by WYT Holdings in relation to a proposed major and connected transaction); (ii) represents a discount of approximately 0.3% to the average closing price of HK$0.0331 per WYT Holdings Share as quoted on the Stock Exchange for the 10 trading days up to and including 30th January, 2003; (iii) represents a discount of approximately 2.9% the closing price of HK$0.034 per WYT Holdings Share as quoted on the Stock Exchange on the Latest Practicable Date; and (iv) represents a discount of approximately 2.1% the average closing price of HK$0.0337 per WYT Holdings Share as quoted on the Stock Exchange for the 10 trading days up to and including the Latest Practicable Date.

Conditions precedent

Completion of each of the Acquisition Agreements is conditional upon the following conditions being fulfilled:

• (i) the passing by the shareholders of Town Health of the necessary resolution approving the sale of the entire issued share capital of Bio Chapter and the Shareholder’s Loan upon the terms of the Acquisition Agreement I in accordance with the GEM Listing Rules; and

• (ii) Wang On having procured the Conversion to take place after fulfillment of the condition set out in (i) above.

In the event that the above conditions are not fulfilled on or before 31st March, 2003 (or such later date as may be agreed between the parties to the Acquisition Agreement I and the Acquisition Agreement II (as the case may be)), the Acquisition Agreement I and the Acquisition Agreement II (as the case may be) shall lapse.

Completion

Completion of the Acquisition Agreements shall take place on the second Business Day after the fulfillment of the above conditions, or such later date as the relevant parties may agree in writing prior to completion.

CONVERSION OF THE CONVERTIBLE NOTES BY THE WANG ON GROUP

Currently, Wang On (through Rich Time) is the holder of the Convertible Notes in the aggregate principal amount of HK$76 million.

– 7 –

LETTER FROM THE BOARD

To facilitate the Bio Chapter Acquisition and to ensure that the Wang On Group will remain the single largest shareholder of WYT Holdings after completion of the Acquisition Agreements, Wang On has agreed under the Acquisition Agreement I to procure the Conversion to take place after the shareholders of Town Health have passed the necessary resolution to approve the sale of the entire issued share capital of Bio Chapter and the Shareholder’s Loan upon the terms of the Acquisition Agreement I in accordance with the GEM Listing Rules. The Conversion will result in the issue of 1,200,000,000 WYT Holdings Shares at a conversion price of HK$0.01 each, representing approximately 8.22% of the total issued WYT Holdings Shares as at the Latest Practicable Date and approximately 7.60% of the total issued WYT Holdings Shares after the Conversion has taken place (assuming no new WYT Holdings Shares will be issued prior to the Conversion). If the necessary resolution is not passed by the shareholders of Town Health, the Conversion will not take place.

INFORMATION ON THE LMC GROUP

The LMC Group is principally engaged in the sale of cough syrup under the brand name “Madame Pearl’s” including “AntiHist Syrup”, “Cough Mixture” and “Dry Cough Mixture”, etc., and other healthcare products in the form of tablets and capsule.

The audited consolidated net profit of the LMC Group for the fifteen months ended 31st March, 2001 and the year ended 31st March, 2002 are set out as follows:

	Fifteen months
	ended	Year ended
	31st March,	31st March,
	2001	2002
	(Note)
	HK$’000	HK$’000
Profit before taxation	12,597	11,324
Profit attributable to shareholders	10,644	9,544

Note: As a result of Town Health becoming its controlling shareholder in February 2001, LMC changed its financial year-end date from 31st December to 31st March in 2001, in order to be consistent with the financial year-end date of Town Health.

The LMC Group recorded an unaudited loss for the six months ended 30th September, 2002 of approximately HK$5.5 million.

The audited consolidated net asset value of the LMC Group was approximately HK$10,520,000 as at 31st March, 2002 (comprising total assets of approximately HK$25,972,000 and total liabilities of approximately HK$15,452,000).

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LETTER FROM THE BOARD

LMC is currently owned as to approximately 49.88% by Bio Chapter, as to approximately 47.53% by Biomore Investments, as to approximately 2.38% by the Two Individual Shareholders and as to the remaining balance of approximately 0.21% by other three individuals who are independent of and not connected with any of the directors, chief executive, substantial shareholders of Wang On or any of its subsidiaries or an associate (as defined in the Listing Rules) of any of them. After completion of the Acquisition Agreements, LMC will be owned as to approximately 99.79% by the Wang On Group and as to the balance of approximately 0.21% by the aforesaid three individuals.

At present, the board of directors of LMC consists of 6 members, out of which 2 members are representatives of Wang On, 2 members are representatives of Town Health and 2 members are full-time staff of LMC. Upon completion of the Acquisition Agreement I, Town Health shall procure the resignation of the 2 board members of LMC nominated by it at the request of Wang On.

INFORMATION ON THE WYT HOLDINGS GROUP

The WYT Holdings Group is principally engaged in (i) the business of manufacturing, processing and retailing of traditional Chinese medicine which includes Chinese medicinal products sold under the name “Wai Yuen Tong” and a range of products manufactured by selected medicinal materials with traditional prescription; and (ii) the manufacture and sale of watches and bags.

The audited consolidated net loss of the WYT Holdings Group for the two years ended 31st March, 2002 are set out as follows:

	Year ended	Year ended
	31st March,	31st March,
	2001	2002
	HK$’000	HK$’000
Loss before taxation	31,260	33,682
Loss after taxation	31,491	33,787
Loss attributable to shareholders	31,491	33,552

The unaudited net deficit in the net tangible assets of the WYT Holdings Group as at 30th September, 2002 was approximately HK$105,666,000.

It is the present intention of Wang On that after completion of the Acquisition Agreements, its 2 existing representatives will continue to be its only appointees in the board of WYT Holdings to involve in its management. Wang On has also been notified by the directors of Town Health that at present, they do not intend to appoint any director to the board of WYT Holdings after completion of the Acquisition Agreements.

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LETTER FROM THE BOARD

REASONS FOR THE BIO CHAPTER ACQUISITION, THE LMC ACQUISITION AND THE ACQUISITION OF THE SHAREHOLDER’S LOAN BY THE WANG ON GROUP

The Wang On Group is principally engaged in the commercial management of Chinese wet markets, shopping centers, car parks and property investment. It also has interests in the pharmaceutical business through its investments in LMC and WYT Holdings.

Currently, the Wang On Group (through Biomore Investments) is interested in approximately 47.53% of the total issued LMC Shares and LMC is accounted for as an associate company of Wang On. After completion of the Acquisition Agreements, the shareholding of the Wang On Group in LMC will increase to approximately 99.79%, thereby enabling Wang On to treat LMC as a subsidiary and consolidate its results into those of Wang On. Having considered the expected future growth potential of the LMC Group after taking into account the LMC Group’s well-known and long established brand name “Madame Pearl’s” and its future business expansion in the PRC, the Directors consider that the Bio Chapter Acquisition, the LMC Acquisition and the acquisition of the Shareholder’s Loan are in the interest of the Wang On Group.

In view of the above, the Directors consider the terms of the Acquisition Agreements to be fair and reasonable and are in the best interest of Wang On and its shareholders as a whole.

SHAREHOLDING OF THE WANG ON GROUP AND THE TOWN HEALTH GROUP IN WYT HOLDINGS

The shareholding of the Wang On Group and the Town Health Group in WYT Holdings (including the number of WYT Holdings Shares held and the approximate percentage of shareholding) prior to and immediately after the Conversion (assuming no new WYT Holdings Shares will be issued prior to the Conversion), upon completion of the Acquisition Agreements (assuming no new WYT Holdings Shares will be issued after the Conversion but before the completion of the Acquisition Agreements) and assuming full conversion of the Convertible Notes in the remaining outstanding principal amount of HK$64,000,000 at the initial conversion price of HK$0.01, are presented as follows:

Wang On Group Town Health Group Other shareholders Total	A 5,847,388,666 2,591,111,334 6,151,419,864	40.08% 17.76% 42.16% 100.00%	B 7,047,388,666 2,591,111,334 6,151,419,864	44.63% 16.41% 38.96% 100.00%	C 4,874,001,605 4,711,944,395 6,203,973,864	30.87% 29.84% 39.29% 100.00%	D 11,274,001,605 4,711,944,395 6,203,973,864	50.81% 21.23% 27.96%
	14,589,919,864		15,789,919,864		15,789,919,864		22,189,919,864	100.00%

• A. The existing shareholding structure of WYT Holdings.

• B. After the Conversion which will result in the issue of 1,200,000,000 WYT Holdings Shares at a conversion price of HK$0.01 each (assuming no new WYT Holdings Shares will be issued prior to the Conversion).

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LETTER FROM THE BOARD

• C. After B above and completion of the Acquisition Agreements, upon which 2,120,833,061 WYT Holdings Shares will be transferred from the Wang On Group to Town Health (or as it may direct) and 52,554,000 WYT Holdings Shares will be transferred from the Wang On Group to the Two Individual Shareholders (or as they may direct) who are categorised as other shareholders (assuming no new WYT Holdings Shares will be issued after the Conversion but before the completion of the Acquisition Agreements).

• D. After C above and the issue of 6,400,000,000 WYT Holdings Shares to the Wang On Group assuming full conversion of the Convertible Notes in the remaining outstanding principal amount of HK$64,000,000 by Rich Time at the initial conversion price of HK$0.01.

EFFECT OF COMPLETION OF THE ACQUISITION AGREEMENTS ON THE EARNINGS OF THE WANG ON GROUP

At present, the Wang On Group is interested in approximately 47.53% and 40.08% of the issued share capital of LMC and WYT Holdings respectively, and each of LMC and WYT Holdings is accounted for as an associate of Wang On. Immediately after completion of the Acquisition Agreements, the Wang On Group will be interested in approximately 99.79% and 30.87% of the issued share capital of LMC and WYT Holdings respectively, and while WYT Holdings will continue to be accounted for as an associate of Wang On, LMC will be treated as a subsidiary of Wang On. Therefore, after completion of the Acquisition Agreements, the Wang On Group will be able to consolidate the results of LMC Group into those of Wang On, while its percentage of share of profit/loss from WYT Holdings will decrease from 40.08% to 30.87%.

FURTHER INFORMATION

The sale by Town Health of its interest in Bio Chapter and the transfer of the Shareholder’s Loan to Wang On together constitute a major transaction for Town Health under the GEM Listing Rules and will be subject to its shareholders’ approval at an extraordinary general meeting to be convened for such purpose. Origin Limited, which holds approximately 20.06% of the total issued share capital of Town Health, has undertaken with Wang On that it will vote in favour of the transaction at the extraordinary general meeting of Town Health.

Your attention is also drawn to the appendix to this circular.

By order of the Board Wang On Group Limited Tang Ching Ho

Chairman and Managing Director

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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 Wang On. 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 herein misleading.

2. DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests of the Directors and their associates (as defined in the Listing Rules) in the share capital of Wang On and its associated corporations (within the meaning of the SDI Ordinance) which were recorded in the register kept by Wang On pursuant to Section 29 of the SDI Ordinance were as follows:

(i) Interest in Wang On Shares

		Number of
		Wang On	% of the issued
Name of Director	Nature of interest	Shares held	share capital
Mr. Tang Ching Ho	Corporate_(Note 1)_	2,178,840	1.84%
(“Mr. Tang”)	Personal	595,658	0.50%
	Family_(Note 2)_	595,658	0.50%
	Other_(Note 3)_	20,170,372	17.07%
Ms. Yau Yuk Yin	Personal	595,658	0.50%
(“Ms. Yau”)	Family_(Note 4)_	2,774,498	2.35%
	Other_(Note 4)_	20,170,372	17.07%

Notes:

1. Mr. Tang was interested in these Wang On Shares through Caister Limited, a company which is wholly and beneficially owned by him.

2. Mr. Tang was taken to be interested under the SDI Ordinance in those Wang On Shares in which his spouse, Ms. Yau, was interested.

3. Agreements were entered into between Middlemore Limited, a company wholly and beneficially owned by Mr. Tang, and (i) Ms. Tang Mui Fong; (ii) Ms. Tang Mui Fun and (iii) Mr. Yau Yuk Tong, all being the relatives of Mr. Tang, as a result of which, and for the purpose of Sections 9 and 10 of the SDI Ordinance, Mr. Tang was taken (for purpose of the duty of disclosure only) to be interested in the Wang On Shares owned by them.

4. Ms. Yau was taken to be interested under the SDI Ordinance in those Wang On Shares in which her spouse, Mr. Tang, was interested.

– 12 –

GENERAL INFORMATION

APPENDIX

Apart from the 3,370,156 issued Wang On Shares held by Mr. Tang and Ms. Yau pursuant to Sections 4 and 8 of the SDI Ordinance, they were taken (for purpose of the duty of disclosure only) to be interested in all the Wang On Shares referred to in Note 3 above pursuant to Sections 9 and 10 of the SDI Ordinance.

(ii) Interests in share options granted under Wang On’s share option scheme

	Number of	Exercise price per
Name of Director	share options	Wang On Share	Exercise period
Mr. Tang	654,000_(Note)_	HK$2.17_(Note)_	6th March, 2001 to
			5th February, 2005
Ms. Yau	654,000_(Note)_	HK$2.17_(Note)_	6th March, 2001 to
			5th February, 2005

Note:

Each of Mr. Tang and Ms. Yau has been granted an option to subscribe for 10,900,000 shares of HK$0.01 each in the capital of Wang On at an exercise price of HK$0.13 each by Wang On under the old share option scheme of Wang On adopted on 6th February, 1995 (“Old Scheme”) before the Old Scheme was terminated and replaced by a new share scheme of Wang On adopted on 3rd May, 2002. As a result of a rights issue of Wang On completed in February 2002 and a capital reorganization of Wang On implemented in October 2002, relevant adjustments were made to the foregoing share options pursuant to the terms of the Old Scheme. Accordingly, the number of share options held by each of Mr. Tang and Ms. Yau were adjusted to 654,000 share options with an exercise price of HK$2.17 per Wang On Share.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors and chief executive of Wang On had any interest in the share capital of Wang On or any associated corporations (within the meaning of the SDI Ordinance) which were required to be notified to Wang On and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including the interests which they were deemed or taken to have under Section 31 or part I of the Schedule to the SDI Ordinance) or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules or which are required, pursuant to Section 29 of the SDI Ordinance, to be entered in the register referred to therein, or which are required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to have been notified to Wang On and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the following interests of 10% or more in the issued share capital of Wang On were recorded in the register of interests required to be kept by Wang On pursuant to Section 16(1) of the SDI Ordinance:

Name of shareholder Caister Limited Mr. Tang Ms. Yau Ms. Tang Mui Fong Mr. Yau Yuk Tong Ms. Tang Mui Fun	Number of Wang On Shares 2,178,840 595,658 595,658 4,684,245 2,980,409 12,505,718 23,540,528	Approximate % of the issued share capital 1.84% 0.50% 0.50% 3.96% 2.52% 10.59%
		19.91%

The shareholdings of Caister Limited, Ms. Tang Mui Fong, Mr. Yau Yuk Tong and Ms. Tang Mui Fun are also disclosed as corporate and other interests of Mr. Tang under the heading “Disclosure of Directors’ interests” in this appendix.

Pursuant to Sections 9 and 10 of the SDI Ordinance, Caister Limited, Mr. Tang, Ms. Yau, Ms. Tang Mui Fong, Mr. Yau Yuk Tong and Ms. Tang Mui Fun were taken (for purpose of the duty of disclosure only) to be interested in a total of 23,540,528 Wang On Shares.

Save as disclosed above, no persons had registered an interest in the share capital of Wang On that was required to be recorded under Section 16(1) of the SDI Ordinance as at the Latest Practicable Date.

As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiry by, the Directors or chief executive of Wang On, no person (not being a Director or the chief executive of Wang On) was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Wang On Group or held any options in respect of any such capital.

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GENERAL INFORMATION

APPENDIX

4. LITIGATION

In 1999, a sub-contractor claimed against a wholly-owned subsidiary of the Wang On Group (the “Subsidiary”) for recovery of approximately HK$900,000 for works performed. In turn, the Subsidiary instituted litigation against the main contractor for recovery of approximately HK$6,000,000 on works performed. The main contractor then made a counter claim against the Subsidiary for overpayment of approximately HK$4,900,000. Also, in the same year, the Subsidiary instituted litigation against another sub-contractor for an amount of approximately HK$120,000 for delay in completion of works performed. The sub-contractor made a counter claim against the Subsidiary of approximately HK$1,000,000 on works performed.

No material progress has been made since the claims were first filed in 1999. The Directors, having reviewed the claims and obtained legal advice, consider that the alleged claims from the main and sub-contractors referred to above are without grounds. Therefore, no provision had been made for the alleged claims in the financial statements.

Save as disclosed above, as at the Latest Practicable Date, no member of the Wang On Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against any member of the Wang On Group.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with Wang On or any member of the Wang On Group (excluding contracts expiring or determinable by Wang On within one year without payment of compensation other than statutory compensation).

6. GENERAL

1. The company secretary of Wang On is Ms. Lee Lai Yee, Anita. She graduated from the City University of Hong Kong with a degree in accountancy. She is also an associate of the Hong Kong Institute of Company Secretaries.

2. The English text of this document shall prevail over the Chinese text in the case of inconsistency.

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