WH Group Limited — Proxy Solicitation & Information Statement 2002

Oct 29, 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 all your shares in Premium Land Limited, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale 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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PREMIUM LAND LIMITED

(Incorporated in Bermuda with limited liability)

DISCLOSEABLE TRANSACTION

RELATING TO AN ACQUISITION OF AN INTEREST IN GOLD UNITED INTERNATIONAL INDUSTRIES LIMITED AND PROPOSED ISSUE OF CONSIDERATION SHARES

28 October 2002

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Information of Gold United . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information of the PRC Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reason for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Effect of Acquisitions on
Earnings/Assets and Liabilities of the Group . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Shareholding Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Implication under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

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DEFINITIONS

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

“Acquisition”	the Acquisition of the 51% of the entire interests in Gold
	United by the Company on the terms and conditions as
	stated in the Acquisition Agreement
“Acquisition Agreement”	a conditional sale and purchase agreement signed on 4
	October 2002 between the Vendor and the Company as
	purchaser relating to the acquisition of a 51% equity interest
	in Gold United
“Announcement”	the announcement issued by the Company on 9 October
	2002 in relation to the Acquisition
“associates”	has the meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors
“Business Day”	A day, other than Saturday, Sunday and public holiday, on
	which licensed banks in Hong Kong are open for business
	throughout their normal business hours
“Cash”	HK$30,000,000 being the sum to be payable by the
	Company to the Vendor as part of the consideration under
	the Acquisition Agreement
“Company”	Premium Land Limited, a company incorporated in
	Bermuda, the securities of which are listed on the Hong
	Kong Stock Exchange
“Completion”	completion of the Acquisition in accordance with the terms
	and conditions of the Acquisition Agreement
“Conditions”	the conditions precedent of the Acquisition Agreement as
	set out therein
“Consideration Shares”	an aggregate of 240,000,000 Shares at the price of
	HK$0.265 per Share to be issued and allotted to the Vendor
	as part of the consideration under the Acquisition Agreement
“Directors”	the directors of the Company
“General Mandate”	the general mandate to allot, issue and deal with Shares
	granted to the Directors by a resolution of the Shareholders
	passed at the Company’s annual general meeting held on
	30 August 2002
“Gold United”	Gold United International Industries Limited, a limited
	company incorporated in Hong Kong

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DEFINITIONS

“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	Hong Kong Special Administrative Region of the PRC
“Latest Practicable Date”	24 October 2002, being the latest practicable date for
	ascertaining certain information referred to in this circular
	prior to the printing of this circular
“Listing Rules”	The Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Placing”	Placing of the 292,210,000 new Shares to not fewer than
	six placees (which are required to be independent individual,
	corporate and/or institutional investors) who are independent
	of and not connected with the Company, or the directors,
	chief executive or substantial shareholders of the Company,
	any of their subsidiaries or any of their respective associates
	(as defined in the Listing Rules) pursuant to the placing
	agreement entered into between Kingston Securities Limited
	and the Company on 7 October 2002
“PRC”	People’s Republic of China
“PRC Subsidiary”	杭州囱運交通開發有限公司, a Sino-foreign equity joint
	venture established in the PRC and an 80% subsidiary of
	Gold United
“RMB”	Renminbi, the lawful currency of the PRC
“SDI Ordinance”	the Securities (Disclosure of Interests) Ordinance (Cap. 396
	of the Laws of Hong Kong)
“Share(s)”	Ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Shareholders”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	Li Jinfang, who is not a connected person (as defined by
	the Listing Rules) of the Company

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LETTER FROM THE BOARD OF DIRECTORS

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PREMIUM LAND LIMITED

(Incorporated in Bermuda with limited liability)

Directors:

Mr. Dong Bo Frederic Mr. Lau Man Tak Mr. Kan Kwok Shu * Mr. Shum Ka Hei ***

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

• Independent Non-executive Directors

Principal place of business in Hong Kong: Suite 2804-5 Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

28 October 2002

To the Shareholders and Warrantholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

RELATING TO AN ACQUISITION OF AN INTEREST IN GOLD UNITED INTERNATIONAL INDUSTRIES LIMITED AND PROPOSED ISSUE OF CONSIDERATION SHARES

INTRODUCTION

On 9 October 2002, the Directors announced that the Company has entered into the Acquisition Agreement with the Vendor, an independent third party not connected with the directors, substantial shareholders and chief executives of the Company and/or its subsidiaries or any of their respective associates. Under the Agreement, the Company agreed to purchase and the Vendor agreed to sell a total of 5,100 shares in Gold United of HK$1.00 each, representing 51% of its entire issued share capital. Gold United owns 80% interest of the PRC Subsidiary. The approved business scope of the PRC Subsidiary is the operation of a 20.5 kilometer section of a first-class highway from the northern end of Fuchunjiang No. 1 Bridge at the Yuanpu Road junction in Fuyang, Zhejiang Province, the PRC.

The consideration for the Acquisition is HK$93.6 million, which is to be settled by a combination of (i) the allotment and issue by the Company to the Vendor of the Consideration Shares; and (ii) payment of the Cash on Completion.

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LETTER FROM THE BOARD OF DIRECTORS

The Consideration Shares to be allotted and issued represent approximately 7.4%, 6.9% and 6.4% of the existing issued share capital of the Company, the enlarged issued share capital of the Company after Completion but before the completion of the Placing and the enlarged issued share capital of the Company after Completion and the completion of the Placing respectively.

The Acquisition constitutes a discloseable transaction for the Company pursuant to the Listing Rules.

THE ACQUISITION AGREEMENT

Date: 4th October 2002 Parties: Purchaser: the Company Vendor: Li Jinfang

Each of the Vendor and Gold United and their respective associates is an independent third party not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates.

The Acquisition

Under the Acquisition Agreement, the Company agreed to purchase and the Vendor agreed to sell the 51% of the entire interest in Gold United at a consideration of HK$93.6 million to be settled by a combination of (i) the allotment and issue by the Company to the Vendor the Consideration Shares; and (ii) payment of the Cash. Based on the unaudited management accounts of the Gold United as at 31 August 2002, the unaudited net asset value of Gold United amounts to approximately HK$134,725,994. Gold United was newly incorporated on 17 April 2002. As at 31 December 2000, 31 December 2001 and 31 August 2002, the unaudited net asset value of the PRC Subsidiary amounts to approximately RMB37 million, RMB37 million and RMB124 million respectively. The Company does not have the intention to acquire the remaining 49% of Gold United as at the date hereof.

Consideration

Consideration: HK$93,600,000

Subject to the Conditions being fulfilled, the consideration under the Acquisition Agreement will be settled by:

• (a) the allotment and issue by the Company to the Vendor the Consideration Shares, which represent approximately 7.4%, 6.9% and 6.4% of the existing issued share capital of the Company, the enlarged issued share capital of the Company after Completion but before the completion of Placing and the enlarged share capital of the Company after Completion and the completion of the Placing respectively; and

• (b) the payment of the Cash by the Company to the Vendor.

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LETTER FROM THE BOARD OF DIRECTORS

The consideration is reached by the parties to the Acquisition Agreement after an arms length negotiation with reference to the net asset value of Gold United and the prospects of the highway operated by the PRC Subsidiary. The unaudited net asset value of Gold United amounts to approximately HK$134,725,994 as at 31 August 2002. Based on a PRC feasibility report provided by the Vendor, the Directors further believed that the daily traffic flow of the highway operated by the PRC Subsidiary would be used by a minimum of approximately 5,000 vehicles. The said highway has not yet commended operation. The business licence of the PRC Subsidiary was granted for 20 years from 1999. Taking into account that 51% of the net asset value of Gold United amounts to approximately HK$69 million and that the prospects of the highway operated by the PRC Subsidiary estimated by the Directors based on the said PRC feasibility report, the Directors consider the consideration of the Acquisition to be fair and reasonable.

An aggregate of 240,000,000 Shares (representing approximately 7.4% of the existing issued share capital of the Company, 6.9% of the enlarged issued share capital of the Company after Completion but before the completion of the Placing and 6.4% of the enlarged issued share capital of the Company after Completion and the completion of the Placing) at the price of HK$0.265 per Share will be issued and allotted to the Vendor as part of the consideration under the Acquisition Agreement. The Consideration Shares will be issued pursuant to the General Mandate.

Cash

As part of the consideration for the Acquisition Agreement, HK$30,000,000 would be payable by the Company to the Vendor. The Cash would be sourced from the net proceeds from the Placing. In the event that the Placing shall be terminated, the Cash would be sourced from the general working capital of the Company.

Consideration Shares

The Consideration Shares shall be issued and allotted and the Cash shall be payable upon Completion. The issue price of the Consideration Shares is proposed to be at a price of HK$0.265, represents:– (i) approximately 1.9% premium of the closing price of HK$0.26 on the date of the Agreement; (ii) approximately 12.8% premium over the average closing price of the Shares for the last ten trading days from the date of the Announcement, being HK$0.235; (iii) approximately 1.9% premium of the closing price of HK$0.26 on the Latest Practicable Date; and (iv) approximately 2.3% premium on the average closing price of the Shares for the last ten trading days from the Latest Practicable Date, being HK$0.259.

Based on the closing price of the Shares of HK$0.26 as at the date of the Agreement, the market value of the Consideration Shares is estimated to be HK$62,400,000, which represents 46.3% of the unaudited net asset value of Gold United based on the unaudited management accounts of Gold United as at 31 August 2002.

Conditions of the Acquisition Agreement

The Acquisition Agreement is conditional upon, amongst other things:

• (a) the warranties made by the Vendor under the Acquisition Agreement remaining true and accurate from its signing until Completion;

• (b) the conducting of due diligence of not less than 30 days on Gold United to the full satisfaction of the Purchaser;

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LETTER FROM THE BOARD OF DIRECTORS

• (c) the Listing Committee of the Stock Exchange approving the listing of, and the permission to deal in, the Consideration Shares; and

• (d) the Bermuda Monetary Authority approving the issuance of and the transfer of the Consideration Shares.

Completion

Completion will take place on or before the seventh Business Day upon the satisfaction of the Conditions. The Completion will lapse if the Conditions are not satisfied on 3 November 2002 or any other later date as agreed by the parties.

Upon Completion, the board of directors of Gold United will comprise five persons, of which three directors will be nominated by the Company and two directors will be nominated by the Vendor. The chairman of the board of Gold United will be nominated by the Company and the managing director will be nominated by the Vendor.

In addition, the parties to the Acquisition Agreement have agreed to procure that the board of directors of the PRC Subsidiary will comprise six persons of which four directors will be nominated by Gold United.

INFORMATION OF GOLD UNITED

Gold United is a company incorporated in Hong Kong on 17 April 2002 with limited liability and has an authorized share capital HK$10,000 divided into 10,000 shares of HK$1.00 each, all of which 10,000 shares has been issued and is fully paid or credited as fully paid. The shares of Gold United are owned legally and beneficially as to 8,000 shares by the Vendor and 2,000 by Mei Bing Fang, both of whom are independent third parties not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates. Since the incorporation of Gold United, it has not conducted any business except the acquisition of the 80% interest in the PRC Subsidiary in Hangzhou in August 2002. Upon Completion, the Vendor and Mei Bing Fang will hold 29% and 20% interest in Gold United respectively.

INFORMATION OF THE PRC SUBSIDIARY

The PRC Subsidiary is a sino-foreign equity joint venture established in the PRC on 22 October 1999 for a period of 20 years. The registered capital of the PRC Subsidiary is RMB37.45 million which has been fully paid. The approved total investment of the PRC Subsidiary is RMB107 million. Gold United holds 80% interest of the PRC Subsidiary and the remaining 20% interest is owned by浙江省富陽富春灣公路開發有限公司 (unofficial translation: Zhejiang Province, Fuyang Fu Chun Wan Highway Development Company Limited), a PRC company, in which it and its respective associates are independent third parties not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates. The approved business scope of the PRC Subsidiary is the operation of a 20.5 kilometer section of a first-class highway from the northern end of Fuchunjiang No. 1 Bridge at the Yuanpu Road junction in Fuyang, Zhejiang Province, the PRC. As at the date hereof, the first-class highway has not yet commenced operation. As at 31 December 2000, 31 December 2001 and 31 August 2002, the unaudited net asset value of the PRC Subsidiary amounted to approximately RMB37 million, RMB37 million and RMB124 million respectively. Since the highway operated by the

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LETTER FROM THE BOARD OF DIRECTORS

PRC Subsidiary was still under development and had not yet commenced operation, no revenue was generated during the last two financial years with all major costs capitalized. The capitalized development costs of the PRC Subsidiary up to 31 August 2002 was approximately RMB136.65 million. Since there was no significant profit or loss and that expenses were nominal, the PRC Subsidiary does not have any unaudited profit and loss account prepared for the years ended 31 December 2000 and 31 December 2001. Also, the PRC Subsidiary was not required to be audited under the current PRC regulations as the said highway has not yet commenced operation.

REASONS FOR THE ACQUISITION

The Group principally engaged in property investment, development and related businesses in Hong Kong and the PRC. Gold United holds 80% interest of the PRC Subsidiary of which the principal business is the operation of a first-class highway in Fuyang, Zhejiang Province, the PRC. The Directors believe that the acquisition of a 51% interest in Gold United will give the Group the opportunity to better develop its business in the PRC property market and broaden the Group’s presence in the PRC and that the acquisition will contribute positively to the future growth of the Group. The Group does not intend to change its principal business.

EFFECT OF ACQUISITION ON EARNINGS/ASSETS AND LIABILITIES OF THE GROUP

The unaudited net asset value of Gold United was approximately HK$134.73 million as at 31 August 2002 and 51% attributable interest thereof was approximately HK$68.71 million. Compared with the consideration of HK$93.6 million, goodwill of approximately HK$24.89 million will arise immediately after Completion. The goodwill so arose will have negative impact on the net assets value of the Group. Since the PRC Subsidiary was granted a business license with a 20year operation time limit, the Directors consider it appropriate to amortize the goodwill over 20 years and therefore the amortization of goodwill each year will be approximately HK$1.24 million. Since the said highway operated by the PRC Subsidiary has not yet commenced operation and that no financial projection was made, the Directors take the view that it is not appropriate to estimate the effect of the Acquisition on the earning of the Group at this stage.

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LETTER FROM THE BOARD OF DIRECTORS 1

SHAREHOLDING STRUCTURE

Based on the Agreement, the effect on the shareholding structure of the Company will be as follows:

United Jumbo Limited_(Note 1) Great Huge Investment Limited(Note 2)_ Vendor New placees Public Total	Existing 27.04% (875,960,350 Shares) 11.57% (374,900,000 Shares) 0% (0 Shares) 0% (0 Shares) 61.39% (1,988,375,620 Shares) 100% (3,239,235,970 Shares)	Immediately upon the Completion but before the completion of the Placing 25.18% (875,960,350 Shares) 10.78% (374,900,000 Shares) 6.9% (240,000,000 Shares) 0% (0 Shares) 57.14% (1,988,375,620 Shares) 100% (3,479,235,970 Shares)	Immediately after the completion of the Placing 23.23% (875,960,350 Shares) 9.94% (374,900,000 Shares) 6.36% (240,000,000 Shares) 7.75% (292,210,000 Shares) 52.72% (1,988,375,620 Shares)
			100% (3,771,445,970 Shares)

Note 1: United Jumbo Limited is a company incorporated in British Virgin Islands and is wholly-owned by Mr. Dong Bo, Frederic, an executive director of the Company.

Note 2: Great Huge Investment Limited is a company incorporated in British Virgin Islands and is whollyowned by Mr. Chen Long.

IMPLICATION UNDER LISTING RULES

The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. Application will be made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares to be issued under the Acquisition.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular.

For order of the Board Premium Land Limited Dong Bo, Frederic Director

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GENERAL INFORMATION

APPENDIX

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, statements of fact expressed herein are true, accurate and not misleading, statements of opinion expressed herein have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement herein misleading.

DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors and the Company’s chief executive or any of its associated corporation (within the meaning of the SDI Ordinance) which were required to be notified to the Company and Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which they were deemed or taken to have under Section 31 of or Part I of the Schedule to the SDI Ordinance), the Model Code for Securities Transactions by Directors of Listed Companies or which were required in the register required to be kept under Section 29 of the SDI Ordinance were as follows:

(i) Interests in Share Options

As at the Latest practicable Date, the following Directors had outstanding options to subscribe for the respective number of Shares pursuant to the share option scheme of the Company adopted on 24 April 2002:

			No. of Shares
	Option		issuable	Subscription
Name	grant date	Option period	under options	Price per Share
Dong Bo, Frederic	2 May 2002	2 May 2002 –	16,770,000	HK$0.298
		1 November 2004
Lau Man Tak	2 May 2002	2 May 2002 –	26,990,000	HK$0.298
		1 November 2004

(ii) Service Contracts

None of the Directors has any existing or proposed service contract with the Group, excluding contracts expiring or determinable within one year without payment of compensation (other than statutory compensation).

SUBSTANTIAL SHAREHOLDERS

At as the Latest Practicable Date, the following persons (other than a Director or chief executive of the Company) are directly or indirectly interested in 10% or more of the issued share

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GENERAL INFORMATION

APPENDIX

capital of the Company as recorded in the register required to be kept under Section 16(1) of the SDI Ordinance:

rdinance:
			Percentage of issued
			share capital as at
Name of shareholder	Number of Shares held		Latest Practicable Date
United Jumbo Limited_(Note 1)_		875,960,350	27.04%
Great Huge Investment Limited_(Note 2)_		374,900,000	11.57%

Note 1: United Jumbo Limited is a company incorporated in British Virgin Islands and is wholly-owned by Mr. Dong Bo, Frederic, an executive director of the Company.

• Note 2: Great Huge Investment Limited is a company incorporated in British Virgin Islands and is whollyowned by Mr. Chen Long.

Save as disclosed above, and so far as the Directors are aware as at the Latest Practicable Date, there was no person who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

SHARE CAPITAL

As at the Latest Practicable Date, the share capital of the Company is as follows:

Authorised 15,000,000,000 Shares Issued, fully-paid or credited as fully paid: 3,239,235,970 Shares in issue before Completion 240,000,000 Consideration Shares issued and allotted 3,479,235,970	HK$ 150,000,000
	32,392,360 2,400,000
	34,792,360

LITIGATION

No member of the Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

MISCELLANEOUS

• (a) The secretary of the Company is Mr. Lau Man Tak, an associate member of the Hong Kong Society of Accountants.

• (b) The principal share registrar of the Company is Butterfield Fund Services (Bermuda) Ltd. and the branch share registrar is Secretaries Limited.

• (c) The English text of this circular shall prevail over the Chinese text.

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