Wang On Group Limited — Capital/Financing Update 2004

Oct 6, 2004

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.

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WANG ON GROUP LIMITED （宏安集團有限公司）[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

MAJOR TRANSACTION PROPOSED DISPOSAL OF PROPERTY

On 30 September 2004, WOB, a wholly owned subsidiary of the Company, entered into the Provisional Agreement pursuant to which WOB conditionally agreed to sell to the Purchaser the Property for a cash consideration of HK$73.8 million. The consideration was determined after arm’s length negotiations between the parties.

The Directors estimate that the Disposal will result in a gain of approximately HK$22.7 million. Part of the net proceeds from the Disposal will be applied for fully repaying the bank loan secured by the Property and the remaining balance will be used as the Group’s working capital.

The Disposal constitutes a major transaction for the Company pursuant to Rule 14.06(3) of the Listing Rules and is subject to approval by the Shareholders in the SGM.

A circular containing, amongst other things, further information relating to the Provisional Agreement and the Disposal and a valuation report on the Property, together with a notice convening the SGM will be despatched to the Shareholders as soon as practicable.

Trading in the shares in the Company was suspended at the request of the Company with effect from 9:30 a.m. on 4 October 2004 pending the release of this announcement. Application has been made to the Stock Exchange for a resumption of trading in the shares in the Company with effect from 9:30 a.m. on 6 October 2004.

Shareholders and the investing public should note that completion of the Provisional Agreement is conditional and they should exercise caution when dealing in the shares in the Company.

INTRODUCTION

On 30 September 2004, WOB, a wholly owned subsidiary of the Company, entered into the Provisional Agreement pursuant to which WOB conditionally agreed to sell to the Purchaser the Property for a cash consideration of HK$73.8 million.

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THE PROVISIONAL AGREEMENT

Date of execution : 30 September 2004

• Vendor : WOB, a wholly owned subsidiary of the Company

• Purchaser : Modern Win (Hong Kong) Limited. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Purchaser and its ultimate beneficial owner are not connected with the Company, the director, chief executive or substantial shareholder of the Company or any of its subsidiaries or an associate of any of them.

According to the Directors’ understanding, the Purchaser is an investment holding company.

• Asset subject to the Disposal : the whole block located at No. 32 Argyle Street, Kowloon, Hong Kong in which (i) the First Floor of the Property will be subject to and with the benefit of the existing tenancy on completion of the Disposal and (ii) vacant possession of the Ground Floor, the Second Floor and the Third Floor of the Property will be delivered to the Purchaser on completion of the Disposal

• Consideration : HK$73.8 million, which was determined after arm’s length negotiations between the parties and was agreed on normal commercial terms between the parties. In arriving at the consideration, the Directors have taken into account the prevailing market conditions and prices of similar properties located in the nearby area.

Pursuant to the Provisional Agreement, the consideration for the Disposal shall be paid in the following manner:

• (i) a sum of HK$1,000,000 shall be paid upon signing of the Provisional Agreement;

• (ii) a sum of HK$2,690,000 shall be paid on or before 11 October 2004;

• (iii) a sum of HK$3,690,000 shall be paid on or before 27 October 2004; and

• (iv) the balance of HK$66,420,000 shall be paid upon completion of the Disposal.

At the date of this announcement, the sum of HK$1,000,000 as described in (i) above has already been paid by the Purchaser.

Pursuant to the Provisional Agreement, the parties shall enter into a formal sale and purchase agreement in respect of the Disposal on 27 October 2004.

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Condition Precedent:

Completion of the Disposal is conditional upon the approval of the agreement in relation to the Disposal and the Disposal by the Shareholders in the SGM, which shall be held on or before 30 November 2004.

Completion:

Completion shall take place on or before 31 January 2005.

In the event that the agreement in relation to the Disposal and the Disposal are not approved by the Shareholders in the SGM, the terms of the Provisional Agreement shall be void and of no effect and the Company shall refund all amounts paid by the Purchaser without interest.

INFORMATION ON PROPERTY

The Property was acquired by the Group on 2 February 2004 at a consideration of HK$48 million and the total cost of acquisition of the Property amounted to approximately HK$50.1 million. Details of the Property are summarised below:

• Address : the entire block of a 4-storey pre-war commercial and residential building located at No. 32 Argyle Street, Kowloon, Hong Kong

• Floor area : the Property occupies a site area of approximately 981.5 square feet. The Property has a total saleable floor area of approximately 2,964 square feet and the breakdown is as follows:

Floor	Saleable area
	(square feet)
G/F	654
1/F	770
2/F	770
3/F	770
Total	2,964
Plus
Yard on G/F	185
Roof	670

As at the date of this announcement, the Ground Floor and the First Floor of the Property are occupied for commercial purposes, and the Second Floor and the Third Floor of the Property are vacant.

The audited net book value of the Property as at 31 March 2004 is HK$53 million. The revenue attributable to the Property from the date of acquisition of the Property to 31 March 2004 was approximately HK$0.4 million, which represented the rental income generated from leasing out the Property. The expenses attributable to the leasing of the Property during the aforesaid period were not significant.

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Based on the total cost of acquisition of the Property, the Directors estimate that the Group will record a gain of approximately HK$22.7 million arising from the Disposal after taking into account the relevant expenses in relation to the Disposal. Such gain, which is subject to further adjustment and review by the Company’s auditors, will be recognized in the profit and loss account of the Group for the year ending 31 March 2005.

REASONS FOR THE DISPOSAL

The Property was acquired by the Group on 2 February 2004 at a consideration of HK$48 million for investment purpose. Having regard to the consideration for the Disposal of HK$73.8 million and the expected gain arising from the Disposal of approximately HK$22.7 million, the Directors consider that the terms of the Disposal are fair and reasonable and the Disposal is in the interest of the Company and the Shareholders as a whole.

USE OF PROCEEDS

Part of the net proceeds from the Disposal will be applied for fully repaying the bank loan secured by the Property and the remaining balance will be used as the Group’s working capital. As at the date of this announcement, the aggregate amount of the bank loan secured by the Property was approximately HK$25.5 million and the interest accrued thereto was approximately HK$0.1 million.

GENERAL

The Group is principally engaged in the management and sub-licensing of Chinese wet markets, shopping centres and car parks, retail business, property development and property investment. It also has interests in the pharmaceutical business through its investments in Wai Yuen Tong Medicine Holdings Limited, a company listed on the Stock Exchange.

The Disposal constitutes a major transaction of the Company pursuant to Rule 14.06(3) of the Listing Rules and is therefore subject to approval by the Shareholders in the SGM. So far as is known to the Directors, no Shareholder has a material interest in the Disposal and accordingly no Shareholder is required to abstain from voting at the SGM to approve the agreement in relation to the Disposal and the Disposal.

A circular containing, amongst other things, further information relating to the Provisional Agreement and the Disposal and a valuation report on the Property, together with a notice convening the SGM will be despatched to the Shareholders as soon as practicable.

Trading in the shares in the Company was suspended at the request of the Company with effect from 9:30 a.m. on 4 October 2004 pending the release of this announcement. Application has been made to the Stock Exchange for a resumption of trading in the shares in the Company with effect from 9:30 a.m. on 6 October 2004.

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Shareholders and the investing public should note that completion of the Provisional Agreement is conditional and they should exercise caution when dealing in the shares in the Company.

As at the date of this announcement, the Board comprises three executive Directors, namely Mr. Tang Ching Ho, Ms. Yau Yuk Yin and Mr. Chan Chun Hong, Thomas, and four independent non-executive Directors, namely Dr. Lee Peng Fei, Allen, Mr. Wong Chun, Justein, Dr. Siu Yim Kwan, Sidney and Mr. Siu Kam Chau.

DEFINITIONS

In this announcement, the following terms have the following meanings:

“associate”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Wang On Group Limited, a company incorporated in Bermuda and the
	shares of which are listed on the Stock Exchange
“Directors”	the directors of the Company
“Disposal”	the disposal of the Property pursuant to the terms of the Provisional
	Agreement
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s Republic
	of China
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Property”	the entirety of one block of 4-storey pre-war commercial and residential
	building situated at No. 32 Argyle Street, Kowloon, Hong Kong
“Provisional Agreement”	the provisional sale and purchase agreement entered into by WOB on 30
	September 2004 in respect of the Disposal
“Purchaser”	Modern Win (Hong Kong) Limited. To the best of the Directors’
	knowledge, information and belief having made all reasonable enquiry,
	Modern Win (Hong Kong) Limited and its ultimate beneficial owner are
	not connected with the Company, the director, chief executive or
	substantial shareholder of the Company or any of its subsidiaries or an
	associate of any of them
“SGM”	the special general meeting of the Company to be convened to approve
	the agreement in relation to the Disposal and the Disposal

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“Shareholders” holders of the shares of HK$0.10 each in the issued share capital of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “WOB” WOB Investments Limited, a wholly owned subsidiary of the Company “HK$” Hong Kong dollars, the lawful currency of Hong Kong

By Order of the Board Wang On Group Limited Tang Ching Ho Chairman and Managing Director

Hong Kong, 5 October 2004

• For identification purpose only

“Please also refer to the published version of this announcement in The Standard”

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