Walnut Capital Limited — Capital/Financing Update 2004

Mar 11, 2004

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.

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HAYWOOD INVESTMENTS LIMITED (Incorporated in the Cayman Islands with limited liability)

PLACEMENT OF 28,800,000 NEW SHARES UNDER GENERAL MANDATE AND RESUMPTION OF TRADING Placing agent

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Koffman Securities Limited

The Directors announce that the Company has entered into the Placing Agreement with the Placing Agent to place 28,800,000 Shares on a best effort basis to more than six independent investors at the price of HK$0.124 per Placing Share. The Placing Shares amount to 20% of the existing issued share capital of the Company of 144,000,000 Shares and about 16.67% of the share capital of 172,800,000 Shares as enlarged by the Placing.

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The net proceeds from the Placing of approximately HK$3.37 million will be used for general working purposes. The Placing is conditional upon the Stock Exchange granting the listing of and permission to deal in all of the Placing Shares.

Trading in the Shares on the Stock Exchange was suspended at the request of the Company with effect from 2:30 p.m. on 10 March, 2004. Application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 12 March, 2004.

AGREEMENT FOR PLACING OF 28,800,000 NEW SHARES DATED 10 MARCH, 2004 Parties to the Placing and commission Issuer: the Company

Placing agent: Koffman Securities Limited is the placing agent (the “Placing Agent”) for the Placement. The Placing Agent is not a connected person (as defined in the Listing Rules).

Placees: more than six professional and/or retail investors, each placee being not a connected person (as defined in the Listing Rules). Commission: The Placing Agent will receive 2.5% management and placing fee on the proceeds of the Placing.

Placing Price

HK$0.124 per Placing Share. It represents a discount of about 15.1% to the closing price of HK$0.146 per Share as quoted on the Stock Exchange at the close of the morning trading session on 10 March, 2004, a discount of about 5.3% to the closing price of HK$0.131 per Share as quoted on the Stock Exchange on 9 March, 2004, being the last full trading day before the date of the Placing Agreement, and represents a premium of about 11.7% over the average of the closing prices of the Shares of HK$0.111 per Share for the ten trading

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days up to and including 9 March, 2004. The Placing Price was arrived at after arm’s length negotiation between the Company and the Placing Agent. The Directors consider that the Placing Price is fair and reasonable to attract investment funds to the Company.

After taking into account of all the related expenses of the Placing, the net placing price per Placing Share is about HK$0.117.

Number of Shares to be placed

28,800,000 Shares to be placed by the Placing Agent on a best effort basis, amount to 20% of the existing issued share capital of the Company of 144,000,000 Shares and about 16.67% of the share capital of 172,800,000 Shares as enlarged by the Placing. The Directors are not aware of the emergence of any new substantial shareholders that may result from the Placing.

Assuming completion of the Placing, the effect of the Placing on the percentage shareholding of the persons whose interests in the Company have been disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO will be as follows:

	Shareholding	Shareholding
	before the Placing	after the Placing
Lee Wing On, Samuel	28.46%	23.72%
Mega Wealth Investment Ltd	10.42%	8.68%
Ever Harvest Investment Ltd	6.94%	5.78%
Wang Chao, Julia	6.65%	5.54%

Mandate to issue new Shares

The Placing Shares will be issued pursuant to the generate mandate to allot, issue and deal with Shares granted to the Directors by resolution of the Shareholders passed at the Company’s extraordinary general meeting held on 26 May, 2003. The general mandate has not been utilised prior to entering into the Placing Agreement.

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Ranking of new Shares

The Placing Shares will rank pari passu in all respects with the existing issued Shares of the Company.

Use of proceeds

The net proceeds from the Placing of approximately HK$3.37 million after deducting professional fees and all related expenses will be applied as additional general working capital of the Group. At present, no specific purposes have been identified by the Company.

Except for the placing as announced by the Company dated 27 February, 2003, the Company has not conducted any fund-raising activity in the past 12 months. The funds of about HK$0.85 million raised in the placing as announced by the Company dated 27 February, 2003 were applied as additional working capital of the Company.

Condition of the Placing

The Placing is conditional upon the Stock Exchange granting the listing of and permission to deal in all of the Placing Shares.

Completion

Completion will take place within two business days upon the fulfillment of the condition of the Placing which is expected to be on or before 31 March, 2004.

Application for listing

Application will be made by the Company to the Stock Exchange for granting the listing of and permission to deal in the new Shares to be issued under the Placing.

Reason for the Placing

The Company is an investment holding company and its subsidiaries are principally engaged in the investments in listed and unlisted companies in Hong Kong and in other parts of the People’s Republic of China.

In view of the current market conditions, the Directors consider that the Placing represents an opportunity to raise capital for the Company while broadening its shareholders’ base. The Directors consider that an equity issue is in the interest of the Company and its

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shareholders as it will increase the financial resources of the Group to facilitate the future business development of the Group.

The Directors also consider that the terms of the Placing and the Placing Price, which are arrived at after arm’s length negotiation, are fair and reasonable and the Placing is in the interests of the Company and its shareholders as a whole.

SUSPENSION AND RESUMPTION OF TRADING IN SHARES

Trading in the Shares on the Stock Exchange was suspended at the request of the Company with effect from 2:30 p.m. on 10 March, 2004. An application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 9:30 a.m. on 12 March, 2004.

TERMS USED IN THIS ANNOUNCEMENT

“Company”

• “Completion”

• “Directors”

• “Group”

• “Listing Rules”

• “Placees”

• “Placing”

• “Placing Agent”

Haywood Investments Limited, a company incorporated in the Cayman Islands with limited liability and whose shares are listed on the Stock Exchange

• completion of the Placing directors of the Company

• the Company and its subsidiaries Rules Governing the Listing of Securities on the Stock Exchange m o r e t h a n s i x i n d e p e n d e n t professional and/or retail investors the placing of 28,800,000 new Shares Koffman Securities Limited, a deemed licensed corporation under the SFO

“Placing the conditional placing agreement Agreement” dated 10 March, 2004 entered into between the Placing Agent and the C o m p a n y f o r t h e P l a c i n g o f 28,800,000 new Shares

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“Placing Price” HK$0.124 for each Placing Share “Placing Shares” the aggregate of 28,800,000 new Shares to be placed by the Placing Agent under the Placing Agreement “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“Placing Shares”

“SFO”

“Shares” shares in the Company of HK$0.01 each

“Stock Exchange” The Stock Exchange of Hong Kong Limited

By Order of the Board HAYWOOD INVESTMENTS LIMITED Wong Fong Kim Chairman

Hong Kong, 11 March, 2004

Please also refer to the published version of this announcement in The Standard.

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