MOG Digitech Holdings Limited — Earnings Release 2001

Apr 2, 2002

SHANGHAI INTERNATIONAL SHANGHAI GROWTH INVESTMENT LIMITED

(Incorporated in the Cayman Islands with limited liability)

ANNOUNCEMENT OF ANNUAL RESULTS

FOR THE YEAR ENDED 31ST DECEMBER, 2001

FINANCIAL RESULTS

The Board of Directors (the "Board") of Shanghai International Shanghai Growth Investment Limited (the "Company") announces that the audited annual results of the Company for the year ended 31st December, 2001 are as below:

PROFIT AND LOSS ACCOUNT

2001 2000
US$ US$
Investment Income 7,625,637 3,097,500
Loss on sale of investments in securities (6,269,480 ) (4,250,540 )
Reversal of impairment loss previously
recognised in respect of an unlisted
investment 720,000 -
Impairment loss recognised in respect
of unlisted investments (470,909 ) -
Provision for properties held for resale (233,060 ) -
Other revenue 127,961 68,400
1,500,149 (1,084,640 )
Operating expenses
Investment Manager's fee 1,275,049 1,545,497
Administrative expenses
Directors' remuneration 30,635 43,969
Other administrative expenses 581,646 722,508
1,887,330 2,311,974
LOSS BEFORE TAXATION (387,181 ) (3,396,614 )
Taxation - -
NET LOSS FOR THE YEAR (387,181 ) (3,396,614 )
Dividends 8,905,000 29,695,500
LOSS PER SHARE - BASIC (4.3) cents (37.8) cents
NET ASSET VALUE PER SHARE $6.83 $7.12

SEGMENT INFORMATION

During the year, the Company was principally engaged in investments in companies which are China-related. Accordingly, no analysis of segment information by principal activity and geographical area is presented.

OTHER TRANSFERS TO/FROM RESERVES

2001 2000
US$ US$
Balance of capital reserve
as at 1st January (5,368,339 ) (3,048,443 )
Net unrealised (loss) gain on
revaluation of investments in
listed securities during the year (2,240,730 ) 1,930,644
Unrealised gain on revaluation of
an unlisted investment 2,700,000 -
Transfers to capital reserve:
- Losses on investments in securities
and properties held for sale (6,502,540 ) (4,250,540 )
- Impairment loss recognised in
respect of unlisted investments (470,909 ) -
- Reversal of impairment loss
previously recognised in respect
of an unlisted investment 720,000 -
Balance carried forward (11,162,518 ) (5,368,339 )

TAXATION

No provision for Hong Kong Profits Tax has been made in the financial statements as the Company has no assessable profits for both years.

LOSS PER SHARE - BASIC

The calculation of basic loss per share is based on the net loss for the year of US$387,181 (2000: US$3,396,614) and on the 8,905,000 (2000: weighted average number of 8,985,012) ordinary shares in issue during the year.

No diluted earnings per share has been presented as the Company has no dilutive potential ordinary shares in issue during the year.

NET ASSET VALUE PER SHARE

The calculation of net asset value per share is based on the net asset value of the Company as at 31st December, 2001 of US$60,806,189 (2000 restated: US$63,405,600) and on the 8,905,000 (2000: 8,905,000) ordinary shares in issue as at 31st December, 2001.

DIVIDEND

In accordance with SSAP 9 (revised) "Events after the balance sheet date", dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date, but are disclosed in the notes to the financial statements. This change in accounting policy has been applied retrospectively, resulting in a prior year adjustment. Proposed final dividends of US$2,768,100 and US$ 2,671,500 have been reversed and recognised in the years ended 31st December, 2000 and 2001 respectively.

The Board recommends the following dividend distributions for the year ended 31st December, 2001:

2001 2000
US$ US$
Proposed final dividend of US$0.40
(2000: US$0.30) per share 3,562,000 2,671,500
Special dividend of US$0.60
(2000: US$3.00) per share paid
from share premium account 5,343,000 27,024,000
8,905,000 29,695,500

The Company paid the final dividend for 2000 amounting to US$2,671,500 on 14th June, 2001.

The Board recommends a final dividend for 2001 of US$0.40 per share, representing approximately 12.3% return on the current market price. The Board wishes to assure shareholders that it attaches high importance to maintaining a stable and reasonable dividend policy. Although the overall 2001 results showed a loss, the dividend is adequately covered by investment income less expenses. In future years, the Board will endeavour to maintain a similar level of dividend barring any unforeseen circumstances.

The Board also recommends a special dividend of US$0.60 per share, to be distributed simultaneously with the 2001 final dividend. Both dividend distributions will be paid on or before 10th June, 2002, subject to the approval from shareholders at the Annual General Meeting to be held on 24th May, 2002.

CLOSING OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 17th May, 2002 to 24th May, 2002, both days inclusive, during which period no transfer of shares can be registered. In order to qualify for the above dividend, all transfers accompanied by the relevant share certificates must be lodged with the Registrars of the Company, Secretaries Limited, for registration not later than 4:00p.m., 16th May, 2002.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SHARES

During the year, the Company did not purchase, sell or redeem any of its own shares.

CORPORATE GOVERNANCE

The Company has complied throughout the year ended 31st December, 2001 with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities ("Listing Rules") on the Stock Exchange of Hong Kong Limited ("Stock Exchange"), including the establishment of an Audit Committee since July 1999.

REVIEW OF RESULTS

The Company recorded a net loss of USD387,181 for the financial year ended 31st December, 2001, compared with a net loss of USD3,396,614 in 2000. During the year, the Company's interest income and dividend income from unlisted and listed investments amounted to USD7,625,637. Such revenue was, however, set off by a USD6,269,480 realised loss on disposal of listed securities during the tumultuous period.

The Company's listed portfolio was able to turn around in the first half of the year, primarily attributable to the rally in China-related shares fuelled by the massive influx of liquidity from the mainland to the Hong Kong market and the huge valuation gap between the H shares and the A shares. In June and July, the People's Republic of China's ("PRC") government stated its view on capital outflow from China to invest in the Hong Kong market, and triggered an avalanche in the A-share, B-share markets, with spilled over effect in dramatic deterioration in the H-share markets as well. The panic selling prompted the Company to reduce the weighting of H-shares to protect the portfolio value and trimmed the portfolio's equity weighting substantially and increased its cash level proportionately. That reduction in equity shielded the Company from the subsequent sell-off bloodbath when the world markets were shocked by the 9.11 incident.

The global economic slump occurred after the Japanese and US economies trended downwards during the year. That was exacerbated by the negative impact brought about by the 9.11 incident. Against the backdrop of those negative sentiments, the Company's unlisted investments registered an encouraging return during the year, attributable partly to the robust domestic consumption inside China, which to a certain degree is insulated from the contraction in outside market, and partly to a perceived level playing field by foreign investors upon its accession to the WTO. In addition, active participation and close monitoring of invested projects by Shanghai International Asset Management (HK) Co., Ltd., the Company's investment manager helped to safeguard the interests of those investments. The Company maintained prudence in selecting new direct investment projects. Out of close to a hundred new proposals screened and appraised during the year, and after careful assessments and due diligence conducted, the Company invested in two new projects: Semiconductor Manufacturing International Corporation and Harbin Brewery Group Limited with investment amounts of US$6 million and HK$14 million respectively.

As at 31st December, 2001, the Company's net asset value ("NAV") was US$6.83, a 4.07% drop as compared with the restated NAV of US$7.12 in 2000. The Company's share price at the end of December 2001 was US$3.25 (2000: US$3.475), reflecting a 52% discount to NAV.

OUTLOOK FOR 2002

The Board has been encouraged by the more than doubling of investment income in 2001. The majority of this income was derived from one highly successful investment. However, the Board considers that significant contributions from the Company's steadily maturing unlisted investment portfolio may be reasonably anticipated on a regular basis. Increasing financial and management resources are being devoted to unlisted investments, where attractive opportunities were identified in 2001, while listed investments are being de-emphasised. The Board believes that investors will welcome the Company's greater commitment to its unlisted investments portfolio as an appropriate response to the growing prosperity of the PRC market. This factor, combined with a stable dividend policy, should help to create an improved investment climate for the Company's shares and narrow the gap between share price and net asset value.

PUBLICATION OF RESULTS ON THE STOCK EXCHANGE WEBSITE

The Company's annual report containing all the information required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules will be published on the website of the Stock Exchange within 21 days from the date of this announcement.

By Order of the Board

Shanghai International

Shanghai Growth Investment Limited

Wu Choi Sun William

Executive Director

Hong Kong, 2nd April, 2002

Please also refer to the publish version of this announcement in the Hong Kong iMail.