Wang On Group Limited — Proxy Solicitation & Information Statement 2004

Feb 12, 2004

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 transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser.

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 （宏安集團有限公司） * (incorporated in Bermuda with limited liability) (the “Company”)

GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES

A notice convening a special general meeting of the shareholders of the Company to be held at 37th Floor, Citibank Tower, Citibank Plaza, 3 Garden Road, Central, Hong Kong on 1st March 2004 at 9:30 a.m. is set out on pages 9 to 11 of this circular. Whether or not you intend to be present at the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and deposit with the Company’s Hong Kong branch share registrar, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting, should you so wish.

12th February, 2004

* For identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – Explanatory statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Notice of the SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

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DEFINITIONS

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

• “Board” board of Directors

• “Code” the Hong Kong Codes on Takeovers and Mergers and Share Repurchases

• “Companies Act” the Companies Act 1981 of Bermuda (as amended)

• “Company” 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

• “Directors “ the directors of the Company

• “Group” the Company and its subsidiaries

• “Latest Practicable Date” 9th February 2004, 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

• “Repurchase Mandate” a general and unconditional mandate to the Directors to exercise all the powers of the Company to repurchase Shares, being the mandate referred to in resolution numbered (2) in the notice convening the SGM

• “SGM” the special general meeting of the Company to be held on 1st March 2004 at 37th Floor, Citibank Tower, Citibank Plaza, 3 Garden Road, Central, Hong Kong, the notice of which is set out on pages 9 to 11 of this circular, or any adjournment thereof

• “Share(s)” ordinary share(s) of HK$0.10 each in the capital of the Company

• “Share Options” the options to subscribe for Shares granted under the Share Option Schemes

• “Share Option Schemes”

• the share option scheme adopted by the Company on 6th February 1995 which was subsequently terminated on 3rd May 2002 and the share option scheme adopted by the Company on 3rd May 2002

• “Shareholders”

holders of the Shares

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DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited “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 （宏安集團有限公司） *

(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 HM11 Bermuda

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 Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong 12th February, 2004

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

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES

INTRODUCTION

The purpose of this circular is to give you information regarding resolutions to be proposed at the SGM relating to the following matters:-

1. General mandate to issue new Shares; and

2. General mandate to repurchase Shares.

3. For identification purpose only

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LETTER FROM THE BOARD

GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES

At the annual general meeting of the Company held on 10th July 2003, a general mandate (the “Existing General Mandate”) was granted to the Directors to exercise all the powers of the Company 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 power up to a maximum of 20% of the issued share capital of the Company immediately after the passing of the relevant resolution.

Pursuant to the Existing General Mandate, a total of 23,600,000 Shares were allotted and issued on 9th February 2004 pursuant to the placing and top-up subscription of Shares as announced by the Company on 27th January 2004 and as a result, the Existing General Mandate has been nearly fully utilised.

In order to maintain the flexibility of the Company, it is accordingly proposed that at the SGM, ordinary resolutions will be proposed to seek the approval of the Shareholders to grant to the Directors general mandates to:

• (i) allot, issue and deal with additional Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the relevant resolution and to allot and issue further Shares purchased by the Company pursuant to the Repurchase Mandate referred to in (ii) below; and

• (ii) repurchase Shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the relevant resolution.

An explanatory statement as required by the Listing Rules to be sent to Shareholders in connection with the Repurchase Mandate is set out in the Appendix to this circular.

SGM

Set out on pages 9 to 11 of this circular is a notice convening the SGM to be held on 1st March 2004 at 9:30 a.m. at 37th Floor, Citibank Tower, Citibank Plaza, 3 Garden Road, Central, Hong Kong.

You will find enclosed a form of proxy for use at the SGM. Whether or not you intend to be present at the meeting, you are requested to complete and return the form of proxy to the Company’s Hong Kong branch share registrar, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

RECOMMENDATIONS

The Directors believe that the proposed resolutions relating to the granting of the general mandates to issue new Shares and to repurchase Shares 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 aforesaid resolutions to be proposed at the SGM.

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LETTER FROM THE BOARD

RESPONSIBILITY STATEMENT

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

Yours faithfully, Tang Ching Ho Chairman and Managing Director

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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$14,332,036.60 comprising 143,320,366 Shares. In addition, as at the Latest Practicable Date there were outstanding Share Options carrying the rights to subscribe up to an aggregate of 12,428,000 Shares. If such Share Options are exercised in full on or prior to the date of the passing of the resolution in respect of the Repurchase Mandate, a further 12,428,000 Shares will be in issue.

Subject to the passing of the relevant ordinary resolution as set out in the notice of the SGM on pages 9 to 11 of this circular and assuming that no further Shares are issued or purchased by the Company, the Directors will be authorised to purchase up to 14,332,036 Shares pursuant to the Repurchase Mandate. Assuming that all outstanding Share Options carrying the rights to subscribe up to an aggregate of 12,428,000 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 or purchased by the Company, the total number of Shares in issue will be 155,748,366 and the Directors will be authorised to purchase up to 15,574,836 Shares.

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 to repurchase Shares in the event that it is granted by the Shareholders at the SGM.

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EXPLANATORY STATEMENT

APPENDIX

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 is granted by the Shareholders at the SGM.

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 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, the chairman and executive Director of the Company, and parties acting in concert with him were interested or deemed to be interested in approximately 19.34% of the existing issued share capital of the Company. In the event that the Directors should exercise the power to repurchase Shares under the Repurchase Mandate in full, the shareholding of Mr. Tang Ching Ho, the chairman and executive Director of the Company, and parties acting in concert with him will be increased to approximately 21.49% 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 purchases made under the Repurchase Mandate.

The Directors have no present intention to exercise the power to repurchase Shares to the extent that the aggregate amount of the share capital of the Company in public hands would be reduced to less than 25%.

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EXPLANATORY STATEMENT

APPENDIX

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$
2003
February	0.63		0.485
March	0.55		0.43
April	0.49		0.425
May	0.72		0.45
June	0.76		0.57
July	0.81		0.58
August	0.88		0.66
September	1.21		0.76
October	1.02		0.93
November	1.05		0.84
December	1.15		0.82
2004
January	1.75		1.00

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NOTICE OF THE SGM

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WANG ON GROUP LIMITED （宏安集團有限公司） *

(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 1st March 2004 at 37th Floor, Citibank Tower, Citibank Plaza, 3 Garden Road, Central, Hong Kong for the purpose of considering and, if thought fit, passing the following resolutions, which will be proposed as Ordinary Resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT

• (a) the general mandate granted to the directors of the Company (the “Directors”) to exercise the powers of the Company to allot, issue and otherwise deal with the shares in the capital of the Company (the “Shares”) as approved by the shareholders of the Company at the annual general meeting of the Company held on 10th July 2003, to the extent not already exercised be and is hereby revoked (but without prejudice to any valid exercise of such general mandate prior to the passing of this Resolution);

• (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 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;

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

• (d) the aggregate nominal amount of the 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 defined below); or (ii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on Shares in accordance with the bye-laws of the Company in force from time to time; or (iii) the exercise of rights of conversion or subscription under the terms of any convertible notes issued by the Company or any securities which are convertible into Shares; or (iv) the exercise of any option under the share option scheme or similar arrangement of the Company for the time being adopted for the grant or issue to directors and/or employees of the Company and/or any of its subsidiaries of Shares or rights to acquire Shares, shall not exceed the aggregate of: (aa) 20 per cent. of the aggregate nominal amount of the issued share capital of the

* For identification purpose only

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NOTICE OF THE SGM

Company in issue at the date of the passing of this Resolution and (bb) if the Directors are so authorised by a separate ordinary resolution of the shareholders of the Company, the nominal amount of share capital of the Company purchased by the Company subsequent to the passing of this Resolution up to a maximum equivalent to 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution and the said approval shall be limited accordingly; 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 Bermuda law or the Company’s bye-laws to be held; or

• (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 on the register of members on a fixed record date in proportion to their then holdings of such Shares (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 recognised regulatory body or any stock exchange in any territory outside Hong Kong).”

2. “ THAT:

• (a) the general mandate granted to the directors of the Company (the “Directors”) to exercise the powers of the Company to purchase shares in the capital of the Company as approved by the shareholders of the Company at the annual general meeting of the Company held on 10th July 2003, to the extent not already exercised be and is hereby revoked (but without prejudice to any valid exercise of such general mandate prior to the passing of this Resolution);

• (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 (the “Shares”) be and is hereby generally and unconditionally approved;

• (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 at the date of the passing of this Resolution, and the said approval shall be limited accordingly; and

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NOTICE OF THE SGM

• (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 Bermuda law or the Company’s bye-laws to be held; or

• (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.”

3. “ THAT conditional upon the passing of the ordinary resolutions numbered (1) and (2) set out in the notice convening this meeting (the “Notice”), the aggregate nominal amount of shares which are purchased by the Company pursuant to and in accordance with the said ordinary resolution numbered (2) shall be added to the aggregate nominal amount of the shares 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 of the Company pursuant to and in accordance with the ordinary resolution numbered (1) set out in the Notice.”

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

Hong Kong, 12th February, 2004

Head office and principal place of business:

5th Floor

Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay 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 proxy need not be a member of the Company.

• (2) A form of proxy for use at the meeting is enclosed herewith. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing. If the appointer is a corporation, the form of proxy must be under its common seal or under the hand of an officer or attorney duly authorised on its behalf.

• (3) To be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of attorney, must be deposited at the Company’s Hong Kong branch share registrar, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

• (4) Completion and return of the form of proxy shall not preclude members from attending and voting in person at the meeting or at any adjourned meeting (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

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