Wang On Group Limited — Capital/Financing Update 2005

Feb 17, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of 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, licensed dealer or other agent through whom the sale or the 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)

(Stock Code: 1222)

DISCLOSEABLE TRANSACTION RELATING TO ACQUISITION OF A PROPERTY

* For identification purpose only

17 February 2005

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Provisional Agreement	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Reasons for the Acquisition	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information of Yield Land	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Additional information . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX – GENERAL INFORMATION OF THE GROUP . . . . . . . . . . . . .		7

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DEFINITIONS

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

“Acquisition”	the acquisition of the Property pursuant to the terms of
	the Provisional Agreement
“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
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	15 February 2005, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information for inclusion in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Longable”	Longable Limited, a limited company incorporated in
	Hong Kong and a wholly owned subsidiary of the
	Company
“Property”	Shop 6, G/F, Grandeur Garden, Nos. 14-18 Chik Fai
	Street, Nos. 55-65 Tai Wai Road, Shatin, New Territories,
	Hong Kong
“Provisional Agreement”	the provisional sale and purchase agreement entered into
	between Longable and Yield Land on 25 January 2005 in
	respect of the Acquisition
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shareholders”	holders of the shares of HK$0.10 each in the issued share
	capital of the Company

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DEFINITIONS

“Stock	Exchange”	The Stock Exchange of Hong Kong Limited
“Yield	Land”	Yield Land Limited, a limited company incorporated in
		Hong Kong
“HK$”		Hong Kong dollars, the lawful currency of Hong Kong
“%”		per cent.

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LETTER FROM THE BOARD

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WANG ON GROUP LIMITED

( )[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 1222)

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

Independent Non-executive Directors: Dr. Lee Peng Fei, Allen, CBE, JP Mr. Wong Chun, Justein, MBE, JP Dr. Siu Yim Kwan, Sidney, S.B.St.J. Mr. Siu Kam Chau

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

Head office and principal place of business: 5th Floor Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

17 February 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION RELATING TO ACQUISITION OF A PROPERTY

INTRODUCTION

On 27 January 2005, the Directors announced that Longable, a wholly owned subsidiary of the Company, entered into the Provisional Agreement with Yield Land on 25 January 2005, pursuant to which Longable conditionally agreed to acquire from Yield Land the Property for a cash consideration of HK$16,300,000.

The Acquisition constitutes a discloseable transaction of the Company pursuant to Rule 14.06(2) of the Listing Rules. The purpose of this circular is to provide you with further information on the Acquisition.

* For identification purpose only

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LETTER FROM THE BOARD

THE PROVISIONAL AGREEMENT

Date:

25 January 2005

Purchaser: Longable

Vendor: Yield Land

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Yield Land and its ultimate beneficial owner are independent third parties not being connected persons (as defined in the Listing Rules) of the Company.

Property:

Shop 6, G/F, Grandeur Garden, Nos. 14-18 Chik Fai Street, Nos. 55-65 Tai Wai Road, Shatin, New Territories, Hong Kong. The Property has a total gross floor area of approximately 674 square feet. As at the Latest Practicable Date, the Property is occupied for commercial purposes, and will be delivered to Longable upon completion of the Acquisition subject to and with the benefit of the existing tenancy agreement in relation to the Property with a term from 1 October 2004 to 30 September 2006, at a monthly rental of HK$63,000 from 1 October 2004 to 30 September 2005 and HK$60,000 from 1 October 2005 to 30 September 2006. The tenant of the Property has the option to renew the existing tenancy agreement for one more year from 1 October 2006 to 30 September 2007 at a monthly rental of HK$60,000.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the tenant of the Property, namely Loyal Zone Corporation Limited, and its ultimate beneficial owner are independent third parties not being connected persons (as defined in the Listing Rules) of the Company.

Consideration:

HK$16,300,000, which was determined after arm’s length negotiations between the parties. In arriving at the consideration, the Directors have taken into account the prevailing market conditions and made reference to the prices of similar properties located in the nearby area.

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LETTER FROM THE BOARD

Payment of the consideration:

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

• (i) a sum of HK$500,000 shall be paid upon signing of the Provisional Agreement;

• (ii) a sum of HK$1,130,000 shall be paid on or before 1 February 2005; and

• (iii) the balance of HK$14,670,000 shall be paid upon completion of the Acquisition on or before 1 March 2005 or on or before 28 February 2005 if so requested by Yield Land.

The sum of HK$1,630,000 as described in (i) and (ii) above has already been paid by Longable.

Other term: The Property is to be sold to Longable free of encumbrances.

Pursuant to the Provisional Agreement, the parties shall enter into a formal sale and purchase agreement in respect of the Acquisition on or before 1 February 2005. As at the Latest Practicable Date, a formal sale and purchase agreement has yet been entered into by the parties. The Directors expect that such formal sale and purchase agreement will be signed on or before 28 February 2005.

REASONS FOR THE ACQUISITION

The Group is principally engaged in the management and sub-licensing of Chinese wet markets, shopping centres and car parks, as well as in property development and investment in Hong Kong. In addition, the Group also has interests in the pharmaceutical business through its investments in Wai Yuen Tong Medicine Holdings Limited, a company listed on the Stock Exchange. Given the fact that the Group has property investment business, the Directors consider that the Acquisition enables the Group to further expand its property portfolio in Hong Kong.

The consideration for the Acquisition will be funded by the Group’s internal resources. The Directors consider that the Acquisition will bring an increase in the earnings of the Group by the rental income of HK$63,000 per month up to 30 September 2005 and HK$60,000 per month from 1 October 2005 to 30 September 2006 without significant influence to the assets and liabilities of the Group.

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LETTER FROM THE BOARD

INFORMATION OF YIELD LAND

Yield Land is a limited company incorporated in Hong Kong. To the best knowledge of the Directors, Yield Land is principally engaged in trading and its ultimate beneficial owner are independent third parties not being connected persons (as defined in the Listing Rules) of the Company.

ADDITIONAL INFORMATION

Your attention is also drawn to the general information of the Group set out in the appendix to this circular.

Yours faithfully,

For and on behalf of

Wang On Group Limited Tang Ching Ho

Chairman and Managing Director

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GENERAL INFORMATION OF THE GROUP

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 herein misleading.

2. DISCLOSURE OF DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of each Director or chief executive 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) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange, were as follows:

Interests in shares

Interests in shares
			Approximate
			% of the
			issued share
	Capacity in which	Number of shares	capital of the
Name of Director	such interests are held	of the Company	Company
		(Note 1)
Mr. Tang Ching Ho	Corporate (Note 2)	2,247,227 (L)	1.56%
(“Mr. Tang”)	Personal	614,355 (L)	0.43%
	Family (Note 3)	614,354 (L)	0.43%
	Other (Note 4)	24,243,463 (L)	16.92%
Ms. Yau Yuk Yin	Personal	614,354 (L)	0.43%
(“Ms. Yau”)	Family (Note 5)	27,105,045 (L)	18.91%

Notes:

1. The letter “L” denotes a long position in shares.

2. Mr. Tang was interested in these shares through Caister Limited, a company which is wholly and beneficially owned by him.

3. Mr. Tang was taken to be interested under the SFO in those shares in which his spouse, Ms. Yau, was interested.

4. Agreements (the “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 317(l)(a) and 318 of the SFO, Mr. Tang was taken to be interested in the shares owned by them.

5. Ms. Yau was taken to be interested under the SFO in those shares in which her spouse, Mr. Tang, was interested.

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GENERAL INFORMATION OF THE GROUP

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which he was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies in the Listing Rules, to be notified to the Company and the Stock Exchange.

3. PERSONS WHO HAVE AN INTEREST OR SHORT POSITION WHICH IS DISCLOSEABLE UNDER DIVISIONS 2 AND 3 OF PART XV OF THE SFO AND SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company, the following persons (not being a Director or chief executive of the Company) had, or were deemed or taken to have interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any option in respect of such capital:

		Approximate %
		of the issued
	Number of shares	share capital
Name of Shareholder	of the Company	of the Company
	(Note 1)
Caister Limited	27,719,399 (L) (Note 2)	19.34%
Ms. Tang Mui Fong	27,719,399 (L) (Note 2)	19.34%
Mr. Yau Yuk Tong	27,719,399 (L) (Note 2)	19.34%
Ms. Tang Mui Fun	27,719,399 (L) (Note 2)	19.34%
Ms. Chan Yuk Kuen (“Ms. Chan”)	27,719,399 (L) (Note 3)	19.34%
Mr. Kwok Lap Kei, Andrew	27,719,399 (L) (Note 4)	19.34%
(“Mr. Kwok”)

Notes:

1. The letter “L” denotes a long position in shares.

2. Pursuant to the Agreements, Caister Limited, Ms. Tang Mui Fong, Mr. Yau Yuk Tong and Ms. Tang Mui Fun were taken to be interested in the 27,719,399 shares for the purpose of sections 317(l)(a) and 318 of the SFO.

3. Ms. Chan was taken to be interested under the SFO in those shares in which her spouse, Mr. Yau Yuk Tong was interested.

4. Mr. Kwok was taken to be interested under the SFO in those shares in which his spouse, Ms. Tang Mui Fun was interested.

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GENERAL INFORMATION OF THE GROUP

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the Directors knows of any person (not being a Director or chief executive of the Company) who had an interest or short position in shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or held any option in respect of such capital.

4. LITIGATION

As at the Latest Practicable Date, no member of the 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 Group.

5. SERVICE CONTRACTS

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

6. GENERAL

• (a) The registered office of the Company is at Clarendon House, 2 Church Street, 41 Cedar Avenue, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is at 5th Floor, Wai Yuen Tong Medicine Building, 9 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong.

• (c) The qualified accountant of the Company is Mr. Tang Kam Shing, Roland, CPA.

• (d) The company secretary of the Company is Mr. Chan Chun Hung, Thomas. He is a fellow member of The Chartered Association of Certified Accountants and an associate member of Hong Kong Institute of Certified Public Accountants.

• (e) The branch share registrar of the Company in Hong Kong is Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (f) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

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