Wang On Group Limited — Proxy Solicitation & Information Statement 2002

Sep 11, 2002

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 with the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [56 x 41] intentionally omitted <==

WANG ON GROUP LIMITED

(incorporated in Bermuda with limited liability)

PROPOSED CAPITAL REORGANISATION AND GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES

A notice convening a special general meeting of Wang On Group Limited to be held at 260105, Asia Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong on 4 October, 2002 at 9:30 a.m. is set out on pages 15 to 19 of this circular. Whether or not you intend to attend and vote at the meeting, you are required to complete the enclosed form of proxy in accordance with the instructions printed thereon and return to the Company’s branch share registrar in Hong Kong, Tengis Limited, at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meeting thereof, should you so wish.

11 September, 2002

CONTENTS

	Page
Expected Timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix – Explanatory statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15

– i –

2002

EXPECTED TIMETABLE

Latest time for lodging proxy forms for the

Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., Wednesday, 2 October

Date of the Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., Friday, 4 October

Effective date of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 7 October

Original counter for trading in board lots

of 2,000 Existing Shares temporarily closes . . . . . . . . . . . . . . . 9:30 a.m., Monday, 7 October

Temporary counter for trading in board lots of 20 New Shares (in the form of existing

GREEN share certificates) opens . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., Monday, 7 October

First day for free exchange of existing GREEN share certificates for BLUE new share certificates

for New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 7 October

First day for the matching service for the selling and

buying of odd lots of New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 22 October

Original counter for trading in board lots of 2,000 New Shares (in the form of BLUE new share certificates

for New Shares) reopens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m., Tuesday, 22 October

Parallel trading in New Shares (in the form of BLUE

new certificates for New Shares and existing GREEN share

certificates for Existing Shares) commences . . . . . . . . . . . . . . 9:30 a.m., Tuesday, 22 October Temporary counter for trading in board lots of 20 New Shares (in the form of existing

GREEN share certificates) closes . . . . . . . . . . . . . . . . . . . . . 4:00 p.m., Tuesday, 12 November

Last day for the matching service for the selling

and buying of odd lots of New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 12 November Parallel trading in New Shares (in the form of BLUE new certificates for New Shares and existing GREEN share certificates for Existing Shares) ends . . . . . . . . . . . . . . . . . . 4:00 p.m., Tuesday, 12 November Last day for free exchange of existing GREEN share certificates for BLUE new share certificates

for New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 19 November

– ii –

DEFINITIONS

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

• “Board” board of Directors

• “Business Day” a day (other than a Saturday) on which banks in Hong Kong are generally open for business

• “Capital Reduction”

• the proposed reduction of the par value of each issued Consolidated Share from HK$1.00 to HK$0.10 by cancelling paid-up capital to the extent of HK$0.90 on each issued Consolidated Share

• “Capital Reorganisation” the Share Consolidation, the Capital Reduction and the Subdivision

• “CCASS”

• the Central Clearing and Settlement System established and operated by HKSCC

• “Code”

• the Hong Kong Codes on Takeovers and Mergers and Share Repurchases

• “Companies Act”

the Companies Act 1981 of Bermuda

• “Company”

• Wang On Group Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Stock Exchange

• “Consolidated Share(s)”

• the new share(s) of HK$1.00 each in the share capital of the Company upon the Share Consolidation becoming effective but prior to the Capital Reduction and the Subdivision

• “Directors “

the directors of the Company

• “Existing Share(s)”

• the existing issued and/or unissued ordinary share(s) of HK$0.01 each in the share capital of the Company

• “General Mandate”

• the general mandate to be granted to the Directors to allot, issue and deal with the shares of the Company as described in this circular

• “Group”

the Company and its subsidiaries

– 1 –

DEFINITIONS

• “HKSCC”

Hong Kong Securities Clearing Company Limited

• “Hong Kong”

• the Hong Kong Special Administrative Region of the People’s Republic of China

• “Latest Practicable Date” 9 September, 2002, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

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

• “New Share(s)” the ordinary share(s) of HK$0.10 each in the share capital of the Company upon the Capital Reorganisation and becoming effective

• “Old Share Option Scheme” an old share option scheme adopted by the Company on 6 February, 1995 which was terminated on 3 May, 2002

• “Repurchase Mandate”

• the general mandate to be granted to the Directors to repurchase New Shares as described in this circular

• “Share Consolidation”

• the consolidation of all of the Existing Shares on the basis of 100 Existing Shares into one Consolidated Share

• “Share Options”

• options to subscribe for shares of the Company granted under the Old Share Option Scheme

• “Shareholders”

• holders of the shares of the Company

• “Special General Meeting”

• the special general meeting of the Company to be held on 4 October, 2002 at 2601-05, Asia Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong at 9:30 a.m., or any adjournment thereof, notice of which is set out on pages 15 to 19 of this circular

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

• “Subdivision”

• the subdivision of each unissued Consolidated Share into 10 New Shares of HK$0.10 each

• “Warrantholders”

holders of the Warrants

– 2 –

DEFINITIONS

“Warrant(s)”	2,000,000,000 unlisted warrants issued by the Company on 3
	July, 2002, each entitling the Warrantholder to subscribe for
	one share of the Company (subject to adjustment) at the
	initially subscription price of HK$0.017 per Existing Share
	(subject to adjustment) during the period from 3 July, 2002 to
	31 July, 2003 (both dates inclusive)
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

– 3 –

LETTER FROM THE BOARD

==> picture [56 x 41] intentionally omitted <==

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 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

11 September, 2002

To the Shareholders and, for information only,

holders of the Share Options and the Warrantholders

Dear Sir or Madam,

PROPOSED CAPITAL REORGANISATION AND GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES

INTRODUCTION

On 29 August, 2002, the Board announced that it intended to put forward a proposal to the Shareholders to effect a capital reorganisation. The Board further announced on 4 September, 2002 that it proposed to revise certain terms of the said capital reorganisation proposal and the Capital Reorganisation as revised will involve the Share Consolidation, the Capital Reduction and the Subdivision.

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to give you further information on the Capital Reorganisation and the proposed grant of the General Mandate and the Repurchase Mandate and to give you the notice of the Special General Meeting at which the necessary resolutions will be proposed to consider and, if thought fit, approve the Capital Reorganisation and the grant of the General Mandate and the Repurchase Mandate.

PROPOSED CAPITAL REORGANISATION

The Board proposes to effect the Capital Reorganisation involving:

• (i) a share consolidation on the basis that every 100 issued and unissued Existing Shares of HK$0.01 each will be consolidated into one Consolidated Share of HK$1.00 each;

• (ii) the issued share capital of the Company will be reduced from HK$1.00 to HK$0.10 per issued share by canceling paid-up capital to the extent of HK$0.90 on each such Consolidated Share so that each such Consolidated Share shall thereafter be treated as one fully-paid up New Share, having a value of HK$0.10 each;

• (iii) the subdivision of each unissued Consolidated Share of HK$1.00 each into 10 New Shares of HK$0.10 each; and

• (iv) the crediting of an amount of approximately HK$106,329,290 which will arise as a result of the Capital Reduction to the contributed surplus account of the Company where it shall be dealt with in accordance with and subject to the Companies Act and the bye-laws of the Company.

As at the Latest Practicable Date, the authorised share capital of the Company is HK$200,000,000 divided into 20,000,000,000 Existing Shares, of which 11,814,365,596 Existing Shares have been issued and are fully paid.

Based on such issued share capital and subject to the approval of the Capital Reorganisation by the Shareholders, the authorised share capital of the Company, upon the Capital Reorganisation becoming effective, will be HK$200,000,000 comprising 2,000,000,000 New Shares, of which 118,143,655 New Shares, representing an issued share capital of HK$11,814,365.50, will be issued and credited as fully paid, and of which 1,881,856,345 New Shares, representing a share capital of HK$188,185,634.50 will be unissued.

The New Shares will be traded in board lots of 2,000 New Shares each, which is the same number as the present board lots of the Existing Shares.

Any fractional entitlement to the New Shares will be aggregated, sold and retained for the benefit of the Company.

– 5 –

LETTER FROM THE BOARD

Reasons for the Capital Reorganisation

The nominal value of each Existing Share is HK$0.01. For the period from 1 August, 2002 up to and including the Latest Practicable Date, the Existing Shares have been trading at HK$0.01 as quoted on the Stock Exchange. Under Bermuda law, a company may not issue shares at a discount to the nominal value of such shares. With a view to facilitating any capital raising when circumstances arise in the future, the Directors propose the Capital Reorganisation which, if implemented, will allow flexibility in pricing for any issue of New Shares in future if and when the Directors consider appropriate. The consolidation of the issued shares of the Company will also reduce the transaction cost for trading in the New Shares.

The Directors consider that the Capital Reorganisation is in the interest of the Company and the Shareholders.

Effect of the Proposed Capital Reorganisation

On the basis of 118,143,655 Consolidated Shares which are expected to be in issue following the Share Consolidation becoming effective, it is proposed that the amount of approximately HK$106,329,290 that will arise as a result of the Capital Reduction will be credited to the contributed surplus account of the Company. Implementation of the Capital Reorganisation will not, of itself, alter the underlying assets, business operations, management or financial position of the Company or the proportionate interests of the Shareholders, other than the payment of legal fees, printing and related expenses of approximately HK$0.5 million. The Directors believe that the Capital Reorganisation will not have any material adverse effect on the financial position of the Company or the Group.

Assuming no further Shares will be issued after the date of this announcement and before the effective date of the Capital Reorganisation, the effects of the Capital Reorganisation are set out as follows:

	Prior to Capital	After Capital
	Reorganisation	Reorganisation
Par value per share	HK$0.01	HK$0.10
Number of authorised shares	20,000,000,000	2,000,000,000
Authorised share capital	HK$200,000,000	HK$200,000,000
Number of issued shares	11,814,365,596	118,143,655
Issued share capital	HK$118,143,655.96	HK$11,814,365.50
Number of unissued shares	8,185,634,404	1,881,856,345
Unissued share capital	HK$81,856,344.04	HK$188,185,634.50

– 6 –

LETTER FROM THE BOARD

Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional, amongst others, the following:–

• (a) the passing of a special resolution by the Shareholders to approve the Capital Reorganisation at the Special General Meeting;

• (b) the Listing Committee of the Stock Exchange granting listing of, and permission to deal in, the New Shares to be issued upon the Capital Reorganisation taking effect and any New Shares to be issued and allotted pursuant to the exercise of the subscription rights attaching to the Share Options and the Warrants; and

• (c) the publication of a notice in relation to the Capital Reorganisation in accordance with the Companies Act.

Application for listing

Application will be made to the Listing Committee of the Stock Exchange for the grant of listing of, and permission to deal in, the New Shares to be issued upon the Capital Reorganisation taking effect and any New Shares to be issued and allotted pursuant to the exercise of the subscription rights attaching to the Share Options and the Warrants.

Subject to the granting of the listing of, and permission to deal in, the New Shares on the Stock Exchange, the New Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the New Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

As at the Latest Practicable Date, the Existing Shares were listed and dealt in on the Stock Exchange. No part of the Company’s securities are listed or dealt in on any other stock exchange, nor application for the listing of or permission to deal in, the Company’s securities on any other stock exchange is being or proposed to be sought.

General

The New Shares will rank pari passu in all respects with each other and the Capital Reorganisation will not result in any change in the relative rights of the Shareholders.

– 7 –

LETTER FROM THE BOARD

FREE EXCHANGE OF SHARE CERTIFICATES AND PARALLEL TRADING ARRANGEMENTS

Subject to the Capital Reorganisation becoming effective, the arrangements proposed for dealings in the New Shares are expected to be as follows:

• (a) with effect from 7 October, 2002, the present counter for trading in board lots of 2,000 Existing Shares will be closed temporarily and a temporary counter for trading in board lots of 20 New Shares (in the form of existing share certificates in green colour) will be set up. Existing share certificates for the Existing Shares may only be traded at this counter;

• (b) with effect from 22 October, 2002, the present counter for trading in board lots of 2,000 New Shares (in the form of new share certificates in blue colour) will be reopened. Only new share certificates for the New Shares can be traded at this counter;

• (c) during the period from 22 October, 2002 to 12 November, 2002 (both dates inclusive), there will be parallel trading in the above two counters. In order to alleviate the difficulties in trading odd lots of Existing Shares represented by existing share certificates or New Shares arising as a result of the Capital Reorganisation, the Company has procured Kingsway SW Securities Limited to provide matching services on a best efforts basis to those Shareholders who wish to top-up or sell their holding of odd lots of New Shares during the period from 22 October, 2002 to 12 November, 2002 (both dates inclusive) at the Shareholders’ expense. Holders of odd lots of the New Shares who wish to take advantage of this facility may contact Mr. Ho Sai Hang, Vitus of Kingsway SW Securities Limited at 5th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong (Tel: (852) 2283-7111) during such period. Shareholders should note that matching of odd lots is not guaranteed and they are recommended to consult their professional advisers if in doubt about the aforementioned facility; and

• (d) with effect from 13 November, 2002, trading will only be in board lots of 2,000 New Shares (in the form of new share certificates in blue colour) and the temporary counter for trading in board lots of 20 New Shares (in the form of existing share certificates in green colour) will be closed after the close of trading on 12 November, 2002.

Trading in the New Shares represented by existing share certificates will cease after the close of business on 12 November, 2002. Existing share certificates for the Existing Shares will only be valid for delivery and settlement in respect of trading for the period up to 12 November 2002 and thereafter will not be acceptable for trading purposes. However, existing

– 8 –

LETTER FROM THE BOARD

share certificates for the Existing Shares will continue to be good evidence of legal title to the New Shares on the basis of every 100 Existing Shares for one New Share and may be exchanged for new share certificates for the New Shares at any time, such Shareholder shall be entitled to tender his/her share certificate(s) for the Existing Shares in exchange for new share certificate(s) for the New Shares in board lots of 2,000 New Shares so that his/her shareholding may be accurately represented by the new share certificate(s).

New share certificates (in BLUE colour) for the New Shares will be issued in order to distinguish them from existing share certificates (in GREEN colour) for the Existing Shares.

Shareholders are urged to exchange their existing share certificates for the Existing Shares for new share certificates for the New Shares as soon as possible on or after 7 October, 2002. This will be done free of charge on or before 19 November, 2002 by delivering the existing share certificates for the Existing Shares to the Company’s branch share registrar in Hong Kong, Tengis Limited at 4th Floor, Hutchison House, 10 Harcourt Road, Hong Kong. Thereafter, existing share certificates for the Existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be stipulated in the Listing Rules from time to time) for each new certificate to be issued or each old certificate submitted, whichever number of certificates is higher. A Shareholder will be entitled to aggregate his/her Existing Shares registered in his/her name in order to obtain new share certificates in board lots of 2,000 New Shares.

It is expected that new share certificates for the New Shares will be available for collection on or about the tenth Business Day from the date of submission of the existing share certificates for the Existing Shares to the Company’s branch share registrar at the above address.

ADJUSTMENTS IN RELATION TO THE WARRANTS AND THE SHARE OPTIONS

In July, 2002, the Warrants were issued by the Company. Each Warrant entitled the Warrantholder to subscribe for one Existing Share (subject to adjustment) at an initial subscription price of HK$0.017 per Existing Share (subject to adjustment) at any time during the period from 3 July, 2002 to 31 July, 2003. Under the terms and conditions of the Warrants, the subscription price shall from time to time be adjusted in accordance with the provisions thereunder. Taking into account the relevant provisions of the Warrants, the subscription price will be adjusted from HK$0.017 per Existing Share to HK$1.7 per New Share as a result of the Capital Reorganisation.

The Company had granted Share Options carrying the rights to subscribe for 262,800,000 Existing Shares at the current exercise price of HK$0.0217 per Existing Share. The Share Options are exercisable during the period from 6 March, 2001 to 5 February, 2005, both dates inclusive. Under the terms and conditions of the Old Share Option Scheme, the exercise price of the share options will be adjusted to HK$2.17 per New Share in accordance with the provisions thereunder.

– 9 –

LETTER FROM THE BOARD

GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE NEW SHARES

At the Special General Meeting, ordinary resolutions will be proposed to seek the approval of the Shareholders to grant to the Directors, conditional upon the Capital Reorganisation becoming effective, general mandates to:

• (i) allot, issue and deal with additional New Shares not exceeding 20% of the aggregate nominal amount of share capital of the Company in issue immediately upon the Capital Reorganisation becoming effective and to allot and issue further New Shares purchased by the Company pursuant to the Repurchase Mandate referred to in (ii) below; and

• (ii) purchase New Shares of up to 10% of the aggregate nominal amount of the share capital of the Company in issue immediately upon the Capital Reorganisation becoming effective.

An explanatory statement explaining the Repurchase Mandate is set out in the Appendix to this circular in accordance with the Listing Rules.

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 material facts not contained in this circular, the omission of which would make any statement in this circular misleading.

SPECIAL GENERAL MEETING

Set out on pages 15 to 19 of this circular is a notice convening the Special General Meeting to be held on 4 October, 2002 at 9:30 a.m. at 2601-05, Asia Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong.

You will find enclosed a form of proxy for use at the Special General Meeting. Whether or not you intend to attend and vote at the Special General Meeting, you are required to complete and return the enclosed form of proxy to the Company’s branch share registrar in Hong Kong, Tengis Limited, at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the Special General Meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting thereof should you so wish.

– 10 –

LETTER FROM THE BOARD

RECOMMENDATIONS

The Directors believe that the Capital Reorganisation and the proposed grant of the General Mandate and Repurchase Mandate to the Directors, upon the Capital Reorganisation becoming effective, are in the best interests of the Company and the Shareholders as a whole and, accordingly, recommend the Shareholders to vote in favour of the all the resolutions as set out in the notice of the Special General Meeting.

Your attention is drawn to the appendix of this circular which sets out the explanatory statement in relation to the granting of the proposed Repurchase Mandate.

Yours faithfully, Tang Ching Ho Chairman and Managing Director

– 11 –

EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement as required by the Listing Rules to provide the requisite information to you for your consideration of the Repurchase Mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company was HK$118,143,655.96 comprising 11,814,365,596 Existing Shares. In addition, as at the Latest Practicable Date there were (a) outstanding Share Options entitling the holders thereof to subscribe for an aggregate of 262,800,000 Existing Shares; and (b) Warrants carrying rights to subscribe up to an aggregate of 2,000,000,000 Existing Shares. On the basis that no Warrants are exercised and no subscription rights attaching to the outstanding Share Options are exercised prior to the holding of the Special General Meeting, and the Capital Reorganisation is approved by the Shareholders at the Special General Meeting, the aggregate nominal amount of the issued share capital of the Company immediately upon the Capital Reorganisation becoming effective will be HK$11,814,365.50 comprising 118,143,655 New Shares.

Assuming no further Existing Shares are issued or repurchased prior to the Special General Meeting, and subject to the passing of the relevant ordinary resolution approving the Repurchase Mandate, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 11,814,365 New Shares, being 10 per cent. of the New Shares in issue immediately upon the Capital Reorganisation becoming effective.

2. REASON FOR REPURCHASE

The Directors believe that it is in the best interests of the Company and the Shareholders to have a general authority from the Shareholders to enable the Directors to purchase shares in the market. Such purchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets or its earnings per share or both and will only be made when the Directors believe that such purchases will benefit the Company and the Shareholders as a whole.

3. FUNDING OF REPURCHASES

In repurchasing shares in the capital of the Company, the Company must fund the repurchase entirely from the Company’s available cash flow or working capital facilities legally available for such purpose in accordance with its memorandum of association, the Listing Rules and bye-laws and the applicable laws of Bermuda.

The Directors do not propose to exercise the Repurchase Mandate to such extent as could, in the circumstances, have a material adverse effect on the working capital or the gearing level of the Company which in the opinion of the Directors is from time to time appropriate for the Company.

– 12 –

EXPLANATORY STATEMENT

APPENDIX

4. DIRECTORS, THEIR ASSOCIATES AND CONNECTED PERSONS

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates (as defined in the Listing Rules) currently intends to sell any New Shares to the Company under the Repurchase Mandate in the event that it is granted by the Shareholders at the Special General Meeting.

No connected person (as defined in the Listing Rules) has notified the Company that he/ she has a present intention to sell any New Shares to the Company nor has any such connected person undertaken not to sell any of the New Shares held by him/her to the Company, in the event that the Repurchase Mandate is granted by the Shareholders at the Special General Meeting.

The Company has not repurchased any of its shares (whether on the Stock Exchange or otherwise) in the six months preceding the date of this circular.

5. DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange that they will exercise the Repurchase Mandate in accordance with the Listing Rules and the applicable laws of Bermuda.

6. EFFECT OF THE CODE

If, on the exercise of the power to repurchase New Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 32 of the Code. As a result, a shareholder or a group of shareholders acting in concert (as defined in the Code), depending on the level of such increase, could obtain or consolidate control of the Company and may become obliged to make a mandatory offer in accordance with Rule 26 of the Code.

As at the Latest Practicable Date, Mr. Tang Ching Ho and parties acting in concert with him are interested or deemed to be interested in an aggregate of 2,353,053,119 Existing Shares, representing approximately 19.92% of the existing issued share capital of the Company. In the event that the Directors should exercise in full the power to repurchase New Shares under the proposed Repurchase Mandate, the interest of Mr. Tang Ching Ho and parties acting in concert with him in the Company will be increased to approximately 22.13% of the issued share capital of the Company.

The Directors are not aware of any consequence which may arise under the Code as a result of any repurchase made under the Repurchase Mandate proposed to be granted to the Directors at the Special General Meeting.

– 13 –

EXPLANATORY STATEMENT

APPENDIX

7. SHARE PRICES

The highest and lowest prices at which the Existing Shares have traded on the Stock Exchange in each of the last twelve months are as follows:

		Shares
	Highest		Lowest
	HK$		HK$
2001
August	0.059A		0.045A
September	0.045A		0.032A
October	0.044A		0.034A
November	0.041A		0.036A
December	0.040A		0.036A
2002
January	0.040A		0.029A
February	0.044A		0.027A
March	0.038		0.019
April	0.025		0.021
May	0.024		0.017
June	0.020		0.012
July	0.016		0.010
August	0.010		0.010
September (up to and including the Latest Practicable Date)	0.010		0.010

A = adjusted

Note: The abovementioned share prices of the Existing Shares have been adjusted as a result of a rights issue as initially announced by the Company on 16th January, 2002. The rights issue became unconditional on 20th March, 2002.

8. SHAREHOLDERS’ APPROVAL

The Listing Rules provides that all proposed repurchases of securities by a company with primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by specific approval of a particular transaction.

– 14 –

NOTICE OF THE SPECIAL GENERAL MEETING

==> picture [56 x 41] intentionally omitted <==

WANG ON GROUP LIMITED

(incorporated in Bermuda with limited liability)

NOTICE is hereby given that a special general meeting of Wang On Group Limited (the “Company”) will be held at 9:30 a.m. on 4 October, 2002 at 2601-05., Asia Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions:

SPECIAL RESOLUTION

1. “ THAT , with effect from 9:00 a.m. (Hong Kong time) on the Business Day (as defined below) following which this resolution is duly passed and conditional upon (i) the Listing Committee of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) granting the listing of, and permission to deal in, the New Shares (as defined below) to be issued arising upon the Share Consolidation (as defined below), the Capital Reduction (as defined below) and the Subdivision (as defined below) becoming unconditional and effective; and (ii) the publication of the notice in relation to the Capital Reorganisation (as defined below) in accordance with the Companies Act,

2. (a) every 100 issued and unissued ordinary shares of HK$0.01 each in the capital of the Company be consolidated (“Share Consolidation”) into one ordinary share of HK$1.00 each (“Consolidated Share”);

3. (b) the issued share capital of the Company be reduced by canceling paid-up capital to the extent of HK$0.90 on each of the Consolidated Shares then issued such that each issued Consolidated Share in the capital of the Company shall be treated as one fully-paid up ordinary share of HK$0.10 each in the capital of the Company (the “New Share”) and any liability of the holders of the New Shares to make any further contribution to the capital of the Company on each such New Share shall be treated as satisfied (the “Capital Reduction”);

4. (c) every unissued Consolidated Share in the unissued but authorized share capital of the Company be subdivided into 10 shares of HK$0.10 each (the “Subdivision”, together with the Share Consolidation and the Capital Reduction, the “Capital Reorganisation”);

5. (d) all of the New Shares in the capital of the Company upon the Share Consolidation, the Capital Reduction and the Subdivision becoming effective shall rank pari passu in all respects with each other and have the rights and privileges and be subject to the restrictions contained in the bye-laws of the Company;

– 15 –

NOTICE OF THE SPECIAL GENERAL MEETING

• (e) the amount which shall arise as a result of the Capital Reduction be credited to the contributed surplus account of the Company where the directors of the Company (the “Directors”) shall be authorised to apply such credit in accordance with the bye-laws of the Company and all applicable laws;

• (f) the Directors be and is hereby authorised generally to do all such acts, deeds and things as they shall, in their absolute discretion, deem appropriate to effect and implement any of the foregoing; and

• (g) for the purpose of this resolution, “Business Day” means a day (other than a Saturday) on which banks in Hong Kong are generally open for business.”

ORDINARY RESOLUTIONS

1. “ THAT

2. (a) the general mandate granted to the directors of the Company (“Directors”) to exercise the powers of the Company to allot, issue and deal with the shares of HK$0.01 each in the capital of the Company as approved by the shareholders of the Company at the annual general meeting held on 22 August, 2002, to the extent not already exercised, be and is hereby revoked (with prejudice to any valid exercise of such mandate prior to the passing of this Resolution);

3. (b) subject to paragraph (d) below, the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company (“Shares”) or securities convertible into Shares, or options, warrants or similar rights to subscribe for Shares, and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;

4. (c) approval in paragraph (b) above shall authorise the Directors during the Relevant Period (as defined below) to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

5. (d) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (b) above, otherwise than pursuant to:

   • (i) a Rights Issue (as hereinafter defined);

   • (ii) the exercise of rights of subscription or conversion under terms of any warrants issued by the Company or any securities which are convertible into Shares;

– 16 –

NOTICE OF THE SPECIAL GENERAL MEETING

• (iii) the exercise of any option under the share option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of Shares or rights to acquire Shares; and

• (iv) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on the Shares in accordance with the bye-laws of the Company in force from time to time,

shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue immediately upon the Share Consolidation, the Capital Reduction and the Subdivision (each as defined in Resolution No. 1 as set out in the notice convening the special general meeting dated 11 September, 2002 of which this Resolution forms part) becoming effective or if the Share Consolidation, the Capital Reduction and the Subdivision are not approved, on the date of the passing of this resolution; and

• (e) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by applicable laws or the Company’s bye-laws to be held; and

• (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.

“Rights issue” means an offer of Shares open for a period fixed by the Directors to holders of Shares or any class thereof on the register of members on a fixed record date in proportion to their then holdings of such Shares or any class thereof (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws, or the requirements of any recognized regulatory body or any stock exchange in any territory outside Hong Kong).”

– 17 –

NOTICE OF THE SPECIAL GENERAL MEETING

1. “ THAT :

2. (a) the general mandate granted to the directors of the Company (“Directors”) to exercise the powers of the Company to purchase the shares of HK$0.01 each in the capital of the Company in issue as approved by the shareholders of the Company at the annual general meeting held on 22 August, 2002, to the extent not already exercised, be and is hereby revoked (without prejudice to any valid exercise of such general mandate prior to the passing of this Resolution);

3. (b) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to purchase shares in the capital of the Company (“Shares”) be and is hereby generally and unconditionally approved;

4. (c) the aggregate nominal amount of the Shares which the Company is authorised to purchase pursuant to the approval in paragraph (b) above shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue immediately upon the Share Consolidation, the Capital Reduction and the Subdivision (each as defined in Resolution No. 1 as set out in the notice convening the special general meeting dated 11 September, 2002 of which this Resolution forms part) becoming effective or if the Share Consolidation, the Capital Reduction and the Subdivision are not approved, on the date of passing of this Resolution; and

5. (d) for the purpose of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by applicable laws or the Company’s bye-laws to be held; and

• (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”

• “ THAT conditional upon Resolutions No. 2 and 3, as set out in the notice convening the special general meeting dated 11 September, 2002 of which this Resolution forms part, becoming unconditional and effective, the aggregate nominal amount of the share capital

– 18 –

NOTICE OF THE SPECIAL GENERAL MEETING

of the Company which are purchased by the Company pursuant to and in accordance with the Resolution No. 3 shall be added to the aggregate nominal amount of the share capital of the Company that may be allotted, issued or dealt with or agreed conditionally or unconditionally to be allotted, issued or dealt with by the Directors pursuant to and in accordance with Resolution No. 2 set out in the notice.”

By Order of the Board Wang On Group Limited Chan Chun Hong, Thomas Director and Company Secretary

Hong Kong, 11 September, 2002

Head office and

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

Notes:

• (1) A member entitled to attend and vote at the above meeting is entitled to appoint one or more than one proxy to attend and to vote in his stead. A form of proxy for use at the above meeting is enclosed herewith.

• (2) To be valid, a form of proxy must be deposited at the Company’s branch share registrar in Hong Kong, Tengis Limited, at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjournment thereof.

• (3) Completion and delivery of the form of proxy will not preclude members from attending and voting at the above meeting or any adjournment thereof, in which case the form of proxy shall be deemed to be revoked.

– 19 –