Wang On Group Limited — Share Issue/Capital Change 2002

Aug 29, 2002

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

WANG ON GROUP LIMITED

(Incorporated in Bermuda with limited liability)

PROPOSED CAPITAL REORGANISATION

The Directors announce that they intend to put forward a proposal to the Shareholders to effect a capital reorganisation involving (i) a share consolidation on the basis that every 150 issued and unissued Shares of HK$0.01 each will be consolidated into one Consolidated Share of HK$1.50 each; (ii) the reduction of the nominal value of each of the Consolidated Shares then in issue from HK$1.50 to HK$0.10 by cancelling paid-up capital to the extent of HK$1.40 on each such Consolidated Share; (iii) the subdivision of each unissued Consolidated Share into 15 New Shares of HK$0.10 each; and (iv) the crediting of an amount of approximately HK$110,267,412 which will arise from 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.

The Directors propose that the New Shares will be traded in board lots of 2,000 New Shares each.

A circular containing details of the Capital Reorganisation, together with a notice convening the SGM, will be despatched to the Shareholders as soon as practicable.

CAPITAL REORGANISATION

The Directors intend to put forward a proposal to the Shareholders to effect the Capital Reorganisation involving:

(i) a share consolidation on the basis that every 150 issued and unissued Shares of HK$0.01 each will be consolidated into one Consolidated Share of HK$1.50 each;

(ii) the nominal value of each of the Consolidated Shares then in issue will be reduced from HK$1.50 to HK$0.10 by cancelling paid-up capital to the extent of HK$1.40 on each such Consolidated Share;

(iii) the subdivision of each unissued Consolidated Share of HK$1.50 each into 15 New Shares of HK$0.10 each; and

(iv) the crediting of an amount of approximately HK$110,267,412 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 date of this announcement, the authorised share capital of the Company is HK$200,000,000 divided into 20,000,000,000 Shares of HK$0.01 each, of which 11,814,365,596 Shares have been issued and are fully paid.

Based on such issued share capital and subject to 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 78,762,437 New Shares will be issued and credited as fully paid, representing an issued share capital of HK$7,876,243.70 and of which 1,921,237,563 New Shares representing a share capital of HK$192,123,756.30 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 Shares. 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.

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

In order to facilitate the trading of odd lots of new shares as a result of the Capital Reorganisation, the Company will appoint a broker to provide matching services to those shareholders who wish to top-up or sell their holding of odd lots of new shares. Details of the arrangements for odd lots trading will be set out in a circular to be despatched to the shareholders.

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 date of this announcement, the 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 the pricing for any issue of New Shares in future if and when the Directors consider appropriate. The consolidation of the issued Shares will also reduce the transaction cost for trading in the New Shares.

As such, the Directors consider that the Capital Reorganisation is in the interest of the Company and the Shareholders.

EFFECT OF CAPITAL REORGANISATION

On the basis of 78,762,437 Consolidated Shares which are expected to be in issue following the Share Consolidation becoming effective, it is proposed that the amount of approximately HK$110,267,412 that will arise as a result of the Capital Reduction will be credited to the contributed surplus account of the Company. The Directors have no present intention as to the application of the such amount. 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 in the Company, 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	78,762,437
Issued share capital	HK$118,143,655.96	HK$7,876,243.70
Number of unissued shares	8,185,634,404	1,921,237,563
Unissued share capital	HK$81,856,344.04	HK$192,123,756.30

CONDITIONS TO THE CAPITAL REORGANISATION

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

1. the passing of relevant resolutions by the Shareholders at the SGM to approve the Capital Reorganisation;

2. 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

3. the publication of a notice in relation to the Capital Reorganisation in accordance with the Companies Act.

An announcement will be made upon the despatch of the circular to inform the Shareholders of the effective date of the Capital Reorganisation, the trading arrangements and the procedures for free exchange of certificates for the New Shares.

The Directors consider that the Capital Reorganisation is in the interest of the Company and the Shareholders. The Capital Reorganisation will become effective on the Business Day following the passing at the SGM of the relevant resolutions approving the Capital Reorganisation.

CERTIFICATES FOR NEW SHARES

Arrangements will be made so that subject to the Capital Reorganisation becoming effective, Shareholders may submit their existing certificates for Shares in exchange for certificates for New Shares free of charge during a certain period after the Capital Reorganisation has become effective. After the expiry of such period, certificates for Shares will be accepted for exchange only on payment of a fee. Existing certificates for Shares will cease to be good for delivery but will continue to be good evidence of legal title to New Shares. Details of such exchange arrangements will be set out in a circular to be despatched to the Shareholders.

ADJUSTMENTS IN RELATION TO THE SHARE OPTIONS AND WARRANTS

Under the terms and conditions of the Warrants, the subscription price under the Warrants shall from time to time adjusted in accordance with the provisions thereunder. Details of the adjustments will be set out in a circular to be despatched to the Shareholders.

Under the terms and conditions of the Old Share Option Scheme, the number of Share Options and the exercise price of each Share Option shall be adjusted in accordance with the provisions thereunder.

APPLICATION FOR LISTING

The Company will apply to the Listing Committee of the Stock Exchange for the 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.

GENERAL

A circular containing further information on the proposed Capital Reorganisation and a notice convening the SGM will be despatched to the Shareholders.

TERMS USED IN THIS ANNOUNCEMENT

"Capital Reduction"	the proposed reduction of the par value of each issued Consolidated Share from HK$1.50 to HK$0.10 by cancelling paid-up capital to the extent of HK$1.40 on each issued Consolidated Share
"Business Day"	a day (other than a Saturday) on which banks in Hong Kong are generally open for business
"Capital Reorganisation"	the Share Consolidation, the Capital Reduction and the Subdivision
"Company"	Wang On Group Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange
"Companies Act"	the Companies Act 1981 of Bermuda
"Consolidated Shares(s)"	new share(s) of HK$1.50 each in the share capital of the Company upon the Share Consolidation becoming effective but prior to the Capital Reduction and Subdivision
"Directors"	directors of the Company
"Group"	the Company and its subsidiaries
"Hong Kong"	Hong Kong Special Administrative Region of the People's Republic of China
"Listing Rules"	Rules Governing the Listing of Securities on the Stock Exchange
"New Share(s)"	share(s) of HK$0.10 each in the share capital of the Company in issue upon the Capital Reorganisation 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
"SGM"	special general meeting of the Company to be convened to consider and, if thought fit, approve the Capital Reorganisation
"Share(s)"	existing shares of HK$0.01 each in the share capital of the Company
"Share Consolidation"	the proposed consolidation of the Shares on the basis of every 150 issued and unissued Shares into one Consolidated Share of HK$1.50 each
"Share Options"	262,800,000 options to subscribe for shares of the Company granted under the Old Share Option Scheme
"Shareholder(s)"	holder(s) of the Shares
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Subdivision"	the subdivision of each unissued Consolidated Share into 15 New Shares of HK$0.10 each
"Warrant(s)"	2,000,000,000 unlisted warrants issued by the Company on 3 July 2002, each entitling the warranholder 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

By Order of the Board

Wang On Group Limited

Tang Ching Ho

Chairman

Hong Kong, 29 August, 2002

Please also refer to the published version of this announcement in The Standard dated 30 August 2002.