Wang On Group Limited — Proxy Solicitation & Information Statement 2003

Jun 13, 2003

IMPORTANT

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)

(the “Company”)

Executive Directors: Mr. Tang Ching Ho (Chairman and Managing Director) Ms. Yau Yuk Yin (Deputy Chairman and Deputy Managing Director)

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

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

Head office and principal place of business: 5th Floor No 9, Wang Kwong Road Kowloon Bay Kowloon Hong Kong

13 June 2003

To the Shareholders and, for information only, holders of the Share Options and Warrants

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES

INTRODUCTION

The directors of the Company (the “Directors”) consider that it is in the interests of the Company and its shareholders that the Directors should continue to be granted general mandates (i) to allot, issue or otherwise deal with additional shares in the capital of the Company (the “Shares”) and to make or grant offers, agreements and options which would or might require the exercise of such powers; (ii) to repurchase Shares; and (iii) to extend the general mandate to issue Shares by adding to it the aggregate nominal amount of the share capital of the Company repurchased under the Repurchase Mandate (as defined below).

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GENERAL MANDATE TO ISSUE NEW SHARES

At the annual general meeting of the Company to be held on 10 July 2003 (the “Annual General Meeting”), an ordinary resolution set out in paragraph (A) of item 4 of the notice convening the Annual General Meeting (the “Notice”) will be proposed to grant to the Directors a general mandate to allot, issue and deal with additional Shares and to make or grant offers, agreements and options which would or might require the exercise of such powers with an aggregate nominal value not exceeding 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of the resolution.

GENERAL MANDATE TO REPURCHASE SHARES

Under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), listed companies are allowed to repurchase on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) their own issued shares.

At the Annual General Meeting, an ordinary resolution will be proposed to grant to the Directors a general mandate to exercise all powers of the Company to repurchase Shares up to a maximum of 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of the resolution (the “Repurchase Mandate”).

In accordance with the Listing Rules, this circular also serves as an explanatory statement (as hereinafter stated) to provide the shareholders of the Company (the “Shareholders”) with requisite information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the resolution set out in paragraph (B) of item 4 of the Notice to approve the granting of the Repurchase Mandate to the Directors.

EXPLANATORY STATEMENT

1. Share Capital

As at 9 June 2003, being the latest practicable date for ascertaining certain information for inclusion in this circular (the “Latest Practicable Date”), the issued share capital of the Company was HK$11,814,365.50 comprising 118,143,655 Shares. In addition, as at the Latest Practicable Date, there were outstanding share options and warrants carrying the rights to subscribe up to an aggregate of 2,628,000 and 20,000,000 Shares respectively. If such share options and warrants are exercised in full on or prior to the date of the passing of the resolution in respect of the Repurchase Mandate, a further 22,628,000 Shares will be in issue.

Subject to the passing of the relevant ordinary resolution as set out in paragraph (B) of item 4 of the Notice and assuming that no further Shares are issued and that no further Shares are purchased by the Company, the Directors will be authorised to purchase up to 11,814,365 Shares pursuant to the Repurchase Mandate. Assuming that all outstanding share options and warrants carrying the rights to subscribe up to an aggregate of 22,628,000 Shares are exercised on or before the date of the passing of the resolution in respect of the Repurchase Mandate and assuming no further Shares are issued and no further Shares are purchased by the Company, the total number of Shares in issue will be 140,771,655 and the Directors will be authorised to purchase up to 14,077,165 Shares.

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2. Reasons for Repurchases

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, 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 and bye-laws and the 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.

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 currently intends to sell Shares to the Company under the Repurchase Mandate in the event that it is granted by the shareholders at the Annual General Meeting.

No connected person, as defined in the Listing Rules, has notified the Company that he has a present intention to sell any Shares to the Company, or that he has undertaken not to sell any Shares held by him to the Company, in the event that the Repurchase Mandate to repurchase Shares is granted by the Shareholders at the Annual 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 so far as the same may be applicable.

6. Effect of the Code

If, on the exercise of the power to repurchase 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 Hong Kong Code on Takeovers and Mergers (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.

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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 23,540,528 Shares, representing approximately 19.93% of the existing issued share capital of the Company. In the event that the Directors should exercise in full the power to repurchase Shares under the proposed Repurchase Mandate, the shareholding of Mr. Tang Ching Ho and parties acting in concert with him in the Company would be increased to approximately 22.14 % 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 Annual General Meeting.

7. Share Prices

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

		Shares
	Highest		Lowest
	HK$		HK$
2002
June	2.00		1.30
July	1.60		1.00
August	1.00		1.00
September	1.00		1.00
October	0.86		0.345
November	0.67		0.52
December	0.68		0.50
2003
January	0.63		0.47
February	0.63		0.48
March	0.55		0.43
April	0.49		0.425
May	0.72		0.46

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.

RECOMMENDATIONS

The Directors consider that (i) the grant of a general mandate to allot, issue and deal with Shares; (ii) the grant of the Repurchase Mandate; and (iii) to extend the general mandate to issue Shares are each in the best interests of the Company and accordingly recommend the Shareholders to vote in favour of the resolutions set out in item 4 of the Notice which are proposed to be passed at the Annual General Meeting.

Yours faithfully, Tang Ching Ho

Chairman and Managing Director

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