Walnut Capital Limited — Capital/Financing Update 2005

Feb 8, 2005

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)

(Stock Code: 905)

(1) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL;

(2) PROPOSED SHARE CONSOLIDATION AND CHANGE IN BOARD LOT SIZE;

(3) PROPOSED OPEN OFFER OF NEW SHARES ON THE BASIS OF ONE OFFER SHARE FOR EVERY NEW SHARE HELD ON RECORD DATE; AND RESUMPTION OF TRADING

FINANCIAL ADVISER TO THE COMPANY

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KINGSTON CORPORATE FINANCE LIMITED

UNDERWRITERS KINGSTON SECURITIES LIMITED ORIENT SECURITIES LIMITED

(1) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

The Company proposes to increase the authorised share capital of the Company from HK$2,000,000 divided into 200,000,000 shares of HK$0.01 each to HK$10,000,000 divided into 1,000,000,000 shares of HK$0.01 each by the creation of an additional 800,000,000 unissued shares of HK$0.01 each.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

(2) PROPOSED SHARE CONSOLIDATION AND CHANGE IN BOARD LOT SIZE

The Board proposes to effect the Share Consolidation by consolidating every five existing ordinary shares of HK$0.01 par value each into two new ordinary shares of HK$0.025 par value each and to change the board lot size for trading in the ordinary shares in the capital of the Company from 2,000 Shares to 20,000 New Shares.

(3) PROPOSED OPEN OFFER OF NEW SHARES ON THE BASIS OF ONE OFFER SHARE FOR EVERY NEW SHARE HELD ON RECORD DATE

The Company proposes to raise HK$5.2 million before expenses, by issuing Offer Shares at a price of HK$0.065 per Offer Share by way of the Open Offer, payable in full on application, on the basis of one Offer Share for every New Share held on the Record Date.

The Open Offer will not be available to the Excluded Shareholders. To qualify for the Open Offer, all transfers of Shares must be lodged for registration with the Registrar by 4:00 p.m. on Monday, 14 March 2005. The register of members is expected to be closed from Tuesday, 15 March 2005 to Thursday, 17 March 2005 (both dates inclusive) to determine the entitlements to the Open Offer. The Open Offer is conditional upon, among other things, the completion of the proposed increase in authorised share capital of the Company and the Share Consolidation.

Mr. Lee has undertaken to take up all its entitlements under the Open Offer, being 16,395,200 Offer Shares.

The estimated net proceeds from the Open Offer will be approximately HK$4.5 million and will be used for future investment purposes which will be invested in accordance with the Company’s investment policy of investing in listed and unlisted companies in Hong Kong and the PRC to achieve medium term capital appreciation.

WARNING OF RISKS OF DEALING IN SHARES

The Open Offer is conditional upon the Underwriting Agreement having become unconditional and the Underwriters not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the subparagraph headed “Termination of the Underwriting Agreement” in the paragraph

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

headed “Underwriting Agreement” in the section headed “Proposed Open Offer of New Shares on the basis of one Offer Share for every New Share held on Record Date” below). Accordingly, the Open Offer may or may not proceed. Shareholders and potential investors should therefore exercise caution when dealings in the Shares, and if they are in any doubt about their position, they should consult their professional advisers. Shareholders should note that the Shares will be dealt with on an ex-entitlements basis commencing from Friday, 11 March 2005 and that dealings in such Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled. Any Shareholder or other person dealings in such Shares up to the date on which all conditions to which the Open Offer is subject are fulfilled (which is expected to be Tuesday, 12 April 2005) will accordingly bear the risk that the Open Offer cannot become unconditional and may not proceed. Any Shareholder or other person contemplating selling or purchasing Shares who is in any doubt about his/her/its position is recommended to consult his/her/its own professional adviser. GENERAL

The EGM will be held to consider and, if thought fit, passing the resolutions to approve the proposed increase in authorised share capital of Company, the proposed Share Consolidation and the proposed Open Offer. An independent board committee will be established to make recommendations to the Shareholders in relation to the proposed Open Offer and an independent financial adviser will be appointed to advise the independent board committee and the Shareholders in relation to the proposed Open Offer. A circular containing, among other things, details of the proposed increase in authorised share capital of Company, the proposed Share Consolidation and the proposed Open Offer, the recommendation of the independent board committee to the Shareholders and a letter of advice from the independent financial adviser to the independent board committee and the Shareholders in relation to the proposed Open Offer and the notice of EGM, will be despatched to the Shareholders as soon as possible.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in Shares on the Stock Exchange was suspended from 9:30 a.m. on Monday, 31 January 2005 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in Shares on the Stock Exchange with effect from 9:30 a.m. on Tuesday, 8 February 2005.

(1) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

As at the date of this announcement, the authorised share capital of the Company was HK$2,000,000 divided into 200,000,000 Shares, all of which had been issued and fully paid or credited as fully paid. In order to accommodate future expansion and growth of the Group, the Directors propose to increase the authorised share capital of the Company from HK$2,000,000 divided into 200,000,000 Shares to HK$10,000,000 divided into 1,000,000,000 Shares by the creation of an additional 800,000,000 unissued Shares.

The increase in the authorised share capital of the Company is conditional upon the passing of an ordinary resolution by the Shareholders at the EGM.

(2) PROPOSED SHARE CONSOLIDATION AND CHANGE IN BOARD LOT SIZE

The Directors propose to effect the Share Consolidation by consolidating every five existing ordinary shares of HK$0.01 par value each into two new ordinary shares of HK$0.025 par value each and to change the board lot size for trading in the ordinary shares in the capital of the Company from 2,000 Shares to 20,000 New Shares.

The proposed increase in authorised share capital and the proposed Share Consolidation are not inter-conditional on each other. The following table shows the total authorised capital of the Company after the Share Consolidation, but before the completion of the Open Offer, in the event that the increase in authorised share capital is/is not approved by the Shareholders at the EGM:

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

	Assuming the increase in authorised	Assuming the increase in authorised	Assuming the increase in authorised	Assuming the increase in authorised
	share capital	is not approved	share capital is approved
	by the Shareholders at the EGM		by the Shareholders at the EGM
		(Nominal value		(Nominal value
	Number of	at HK$0.025	Number of	at HK$0.025
	New Shares	per New Share)	New Shares	per New Share)
		HK$		HK$
Total authorised	80,000,000	2,000,000	400,000,000	10,000,000
Total issued	80,000,000	2,000,000	80,000,000	2,000,000
Total unissued	–	–	320,000,000	8,000,000

Any fractional New Shares arising as a result of the Share Consolidation will be aggregated and sold for the benefit of the Company. The issued New Shares will rank pari passu in all respects with each other and there will be no change in the relative rights of the Shareholders. The Share Consolidation is subject to (i) approval by the Shareholders at the EGM; and (ii) the granting of the listing of, and permission to deal in, the New Shares.

The Company will make an application to the Stock Exchange for the listing of, and permission to deal in, the New Shares.

Reasons for Share Consolidation and change in board lot size

The Directors believe that the Share Consolidation is in the best interests of the Company and the Shareholders as a whole as the Share Consolidation together with the increase in board lot size could reduce the number of board lots in the market and, as a result, the transaction costs incurred by the Shareholders and potential investors of the Company based on the number of board lots of the New Shares would be lower.

The Share Consolidation will not, of itself, alter the underlying assets, business operations, management or financial position of the Company and its subsidiaries except for the payment of related expenses.

Change in board lot size and trading arrangement

Currently, the Shares are traded in board lots of 2,000 Shares each. The Board proposes that the board lot size for trading on the Stock Exchange be changed from 2,000 Shares

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

to 20,000 New Shares upon the Share Consolidation becoming effective.

In order to facilitate the trading of odd lot of the New Shares arising from the Share Consolidation and change in board lot size, the Company will procure an agent to arrange for the sale and purchase of odd lots on behalf of the Shareholders.

Details of such arrangements will be disclosed in the circular of the Company to be despatched to the Shareholders.

Shareholders should note that successful matching of the sale and purchase of odd lots of the New Shares is not guaranteed.

Exchange of share certificates

Upon the Share Consolidation becoming effective, Shareholders may submit the existing share certificates in exchange for the new share certificates for the New Shares free of charge to the office of the Company’s branch share registrar in Hong Kong, Secretaries Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, during its business hours from Friday, 18 March 2005 to Friday, 29 April 2005 (both dates inclusive). Thereafter, certificates for the Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as from time to time be allowed by the Stock Exchange) for each share certificate, calculated on the basis of the number of share certificate(s) submitted for exchange or the number of share certificate(s) issued, whichever is more. Nevertheless, existing certificates for the Shares will continue to be good evidence of legal title and will continue to be valid for trading, settlement and registration purposes.

(3) PROPOSED OPEN OFFER OF NEW SHARES ON THE BASIS OF ONE OFFER SHARE FOR EVERY NEW SHARE HELD ON RECORD DATE

Issue statistics

Basis of the Open Offer

: One Offer Share for every New Share held on the Record Date

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Number of Shares in issue as : 200,000,000 Shares at the date of this announcement Number of New Shares in issue : 80,000,000 New Shares immediately upon the completion of Share Consolidation Number of Offer Shares : 80,000,000 Offer Shares Number of New Shares in issue : 160,000,000 New Shares immediately upon completion of the Open Offer Number of Offer Shares undertaken : 16,395,200 Offer Shares to be taken up by Mr. Lee Number of Offer Shares : Pursuant to the Underwriting Agreement, the underwritten by the Underwriters Underwriters have conditionally agreed to underwrite the Underwritten Shares, being 63,604,800 Offer Shares, subject to and upon the terms and conditions of the Underwriting Agreement. Each of the Underwriters is not a connected person (as defined in the Listing Rules) of the Company and is an independent third party not connected with the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

The Company has no derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares.

Pursuant to the Underwriting Agreement, the Company has undertaken that it shall not from the date of the Underwriting Agreement until after the latest time for the Underwriting Agreement becoming unconditional (which is expected on Tuesday, 12 April 2005), issue any Shares or issue or grant any share options or other securities convertible into, exchangeable for or which carry rights to acquire Shares (other than the Offer Shares).

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Qualifying Shareholders

The Company will send (i) the Prospectus Documents to the Qualifying Shareholders; and (ii) the Prospectus, for information only, to the Excluded Shareholders. To qualify for the Open Offer, Shareholders must, at the close of business on the Record Date be registered on the register of members of the Company and not being an Excluded Shareholder.

In order to be registered as members of the Company on the Record Date, Shareholders must lodge any transfer of Shares (with the relevant Share certificates) for registration with the Registrar by 4:00 p.m. on Monday, 14 March 2005.

The branch share registrar of the Company in Hong Kong is:

Secretaries Limited

Ground Floor, Bank of East Asia Harbour View Centre 56 Gloucester Road, Wanchai, Hong Kong

The invitation to apply for the Offer Shares will not be transferable and there will be no trading in nil-paid entitlements on the Stock Exchange and the Qualifying Shareholders will not be entitled to subscribe for any Offer Shares in excess of their respective entitlements. The Director consider that as the additional administrative work is saved by not offering the Shareholders to trade in nil-paid entitlements on the Stock Exchange or to subscribe for any Offer Shares in excess of the Qualifying Shareholders’ respective entitlements, after evaluating on the cost and benefit, the aforesaid arrangements shall be in the best interest of the Company and the Shareholders as a whole.

Closure of register of members

The register of members of the Company will be closed from Tuesday, 15 March 2005 to Thursday, 17 March 2005 (both dates inclusive) to determine the eligibility of Shareholders to the Open Offer. No transfer of Shares will be registered during this period.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Subscription Price

HK$0.065 per Offer Share, payable in full on application. The Subscription Price represents:

• (i) a discount of approximately 52.9% to the closing price of HK$0.138 per New Share (assuming the Share Consolidation has become effective) as quoted on the Stock Exchange on 28 January 2005, being the last trading day before the suspension of trading in the Shares pending the publication of this announcement;

• (ii) a discount of approximately 35.6% to the theoretical ex-entitlement price of approximately HK$0.101 per New Share (assuming the Share Consolidation has become effective) based on the aforesaid closing price per New Share; and

• (iii) a discount of approximately 54.5% to the average closing price of HK$0.143 per New Share (assuming the Share Consolidation has become effective) as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including 28 January 2005.

The Subscription Price has been determined based on arm’s length negotiations between the Company and the Underwriters, with reference to the prevailing market prices of the Shares as well as the subscription prices offered in certain recent open offers with discounts of over 50% to the relevant closing prices of the relevant shares. The Board considers that the terms of the Open Offer are fair and reasonable and the discount of the Subscription Price as compared to the recent market prices would encourage Shareholders to participate in the Open Offer and accordingly the future growth of the Group. The Open Offer is conditional on the completion of the proposed increase in authorised share capital of the Company and the Share Consolidation and the Subscription Price was determined based on the assumption of the completion of the Share Consolidation.

Status of the Offer Shares

The Offer Shares, when allotted and issued, will rank pari passu in all respects with the New Shares in issue on the date of allotment and issue of the Offer Shares. Holders of the Offer Shares will be entitled to receive all future dividends and distributions which are declared, made or paid in respect thereof on or after the date of allotment and issue of such Offer Shares.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Certificates for the Offer Shares

Subject to fulfillment of the conditions of the Open Offer, share certificates for the Offer Shares are expected to be posted on or before Friday, 15 April 2005 to those Qualifying Shareholders who have validly applied and paid for the Offer Shares at their own risks.

Rights of Excluded Shareholders

The Prospectus Documents are not expected to be registered under the applicable securities legislation of any jurisdiction other than Hong Kong. The Company will comply with Rule 13.36(2) of the Listing Rules and make enquiries regarding the feasibility of extending the Open Offer to Excluded Shareholders and the details of the Excluded Shareholders will be disclosed in the Prospectus. If, based on legal opinions provided by the legal advisers to the Company, the Directors consider that, in compliance with Rule 13.36(2) of the Listing Rules, it is necessary or expedient not to extend the Open Offer to the Excluded Shareholders on account either of the legal restrictions under the laws of the place of his registered address or the requirements of the relevant regulatory body or stock exchange in that place, the Open Offer will not be available to the Excluded Shareholders.

The Company will send the Prospectus to the Excluded Shareholders for their information only. The Company will not send the Application Forms to the Excluded Shareholders. The Excluded Shareholders will be entitled to vote at the EGM to consider and, if thought fit, passing the resolutions approving, among others, the Open Offer.

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 Offer Shares. Dealings in the Offer Shares will be subject to the payment of stamp duty in Hong Kong.

Underwriting Agreement

Pursuant to the Underwriting Agreement, the Underwriters has agreed to underwrite the Underwritten Shares, being 63,604,800 Offer Shares.

The Underwriters are not connected persons (as defined in the Listing Rules) of the Company and are independent of and not connected with any of the directors, chief

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

executive or substantial shareholders of the Company, its subsidiaries or any of their respective associates. The Company will pay to the Underwriters an underwriting commission in the aggregate amount of about HK$82,600 which is calculated at 2.0% of the aggregate Subscription Price of the number of Offer Shares to be underwritten by the Underwriters.

Termination of the Underwriting Agreement

The Underwriters may terminate the Underwriting Agreement by notice in writing to the Company if, prior to 4:00 p.m. on the second business day after the latest date for acceptance of the Offer Shares, or such later time as may be agreed between the Company, the Substantial Shareholder and the Underwriters, any of the following grounds of termination happens:

• (1) in the reasonable opinion of Kingston (for and on behalf of the Underwriters), the success of the Open Offer would be materially and adversely affected by:

• (a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the reasonable opinion of Kingston (for and on behalf of the Underwriters), materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or

• (b) the occurrence of any local, national or international event or change, whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement, of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of Kingston (for and on behalf of the Underwriters) materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or

• (2) any adverse change in market conditions (including, without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction of trading in securities) occurs which, in the

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

reasonable opinion of Kingston (for and on behalf of the Underwriters), is likely to materially or adversely affect the success of the Open Offer or otherwise makes it inexpedient or inadvisable to proceed with the Open Offer; or

• (3) there is any change in the circumstance of the Company or any member of the Group which, in the reasonable opinion of Kingston (for and on behalf of the Underwriters), will adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any member of the Group or the destruction of any material asset of the Group; or

• (4) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than five consecutive business days, excluding any suspension in connection with the clearance of this announcement, the associated circular and the proxy form for use at the EGM or the Prospectus Documents or other announcements or circulars in connection with the proposed increase in authorised share capital of the Company, the Share Consolidation and the Open Offer.

If Kingston (for and on behalf of the Underwriters) terminates the Underwriting Agreement, the Open Offer will not proceed.

Conditions of the Underwriting Agreement

The Underwriting Agreement is conditional upon, among other things,:

• (i) the passing by Shareholders at the EGM of resolutions to approve the increase in authorised share capital of the Company, the Share Consolidation and the Open Offer;

• (ii) the delivery to the Stock Exchange for authorisation and the registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents in compliance with the Listing Rules and the Companies Ordinance not later than the Prospectus Posting Date;

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

• (iii) the posting of the Prospectus Documents to the Qualifying Shareholders on or before the Prospectus Posting Date; and

• (iv) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in, the Offer Shares by no later than the Prospectus Posting Date.

If the conditions to the Underwriting Agreement are not fulfilled on the dates as specified in the Underwriting Agreement (or such later date or dates as Kingston (for and on behalf of the Underwriters) may agree with the Company and the Substantial Shareholder in accordance with its terms), the Underwriting Agreement shall terminate and the obligations and liabilities of the parties thereto shall cease and determine save for any antecedent breaches of the terms thereof. The Open Offer is subject to the Underwriting Agreement having become unconditional and not being terminated in accordance with its terms.

WARNING OF RISKS OF DEALINGS IN SHARES

If Kingston (for and on behalf of the Underwriters) terminates the Underwriting Agreement, or if the conditions of the Underwriting Agreement have not been fulfilled in accordance with the terms thereof, the Open Offer will not proceed. Shareholders and potential investors should therefore exercise caution when dealings in the Shares, and if they are in any doubt about their position, they should consult their professional advisers.

Shareholders should note that the Shares will be dealt with on an ex-entitlement basis commencing from Friday, 11 March 2005 and that dealings in such Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled. Any Shareholder or other person dealings in such Shares up to the date on which all conditions to which the Open Offer is subject are fulfilled (which is expected to be Tuesday, 12 April 2005), will accordingly bear the risk that the Open Offer cannot become unconditional and may not proceed. Any Shareholder or other person contemplating selling or purchasing Shares who is in any doubt about his/her/its position is recommended to consult his/her/its own professional adviser.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Shareholding structure of the Company

The following is the shareholding structure of the Company immediately before and after completion of the Open Offer assuming the Share Consolidation has become effective:

Mr. Lee Kingston Orient Public Other public Shareholders Total	Immediately before completion of the Open Offer New Shares Percentage (approximately) 16,395,200 20.49% 0 0.00% 0 0.00% 63,604,800 79.51% 80,000,000 100.00%	Immediately Immediately after completion of the Open Offer (assuming all Qualifying Shareholders take up their respective entitlements under the Open Offer) New Shares Percentage (approximately) 32,790,400 20.49% 0 0.00% 0 0.00% 127,209,600 79.51% 160,000,000 100.00%	after completion of the Open Offer (assuming no Qualifying Shareholders takes up his/her /its entitlement under the Open Offer except for Mr. Lee) New Shares Percentage (approximately) 32,790,400 20.49% 31,802,400 19.88% 31,802,400 19.88% 63,604,800 39.75% 160,000,000 100.00%	after completion of the Open Offer (assuming no Qualifying Shareholders takes up his/her /its entitlement under the Open Offer except for Mr. Lee) New Shares Percentage (approximately) 32,790,400 20.49% 31,802,400 19.88% 31,802,400 19.88% 63,604,800 39.75% 160,000,000 100.00%
				100.00%

Reasons for the Open Offer and use of proceeds

The Group is an investment company listed pursuant to Chapter 21 of the Listing Rules and is principally engaged in investment in listed and unlisted companies in Hong Kong and in the PRC.

The estimated net proceeds from the Open Offer will be approximately HK$4.5 million and will be used for future investment purposes which will be invested in accordance with the Company’s investment policy of investing in listed and unlisted companies in Hong Kong and the PRC to achieve medium term capital appreciation. At present, no particular investment targets have been identified by the Company. Should any investment be made, the Company will comply with the Listing Rules.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

The Board considers that the Open Offer provides a good opportunity for the Group to strengthen its capital base and to enhance its financial position under the current favourable market sentiment. In addition, since the Open Offer will allow the Qualifying Shareholders to maintain their respective pro rata shareholdings in the Company, the Board considers that it is in the interests of the Company and the Shareholders as a whole to raise capital through the Open Offer.

The estimated expenses of the Open Offer are about HK$0.7 million, which comprise professional fees payable to the financial advisers and lawyers and certain printing and advertisement fee, and will be borne by the Company.

Fund raising activities of the Company during the 12 months ended the date of announcement

There has not been any rights issue or open offer of Shares in the last 24 months immediately before the date of this announcement. The following table summaries the capital raising activities of the Group for the 12 months immediately before the date of this announcement:

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Actual use of proceeds as at the date of this announcement

Date of Net proceeds Intended use as at the date of announcement Event (approximately) of proceeds this announcement 19 July 2004 Subscription of HK$2.5 million Investment in Approximately 27,200,000 new Shares accordance HK$0.5 million at a subscription price with the Company’s for the investment of HK$0.10 per Share investment policy in accordance of investing in listed with the Company’s and unlisted investment policy companies and approximately in Hong Kong HK$2.0 million and the PRC was designated for the future investment. The aforesaid investment of HK$0.5 million did not constitute a notifiable transaction of the Company

11 March 2004 Placing of 28,800,000 HK$3.38 million General working capital As intended use Shares at a pricing price of HK$0.124 per Share

EXPECTED TIMETABLE

Despatch of the circular to the Shareholders relating

to the increase in authorised share capital of the Company, the Share Consolidation and the Open Offer, containing, among other things, the

notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 28 February 2005

Last day of dealings in Shares on cum-entitlement basis . . . . . . . . . Thursday, 10 March 2005

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

First day of dealings in Shares on ex-entitlement basis . . . . . . . . . . . . .Friday, 11 March 2005 Latest time for lodging transfers of Shares in order to be entitled to the Open Offer . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Monday, 14 March 2005 Latest time for lodging forms of proxy for the purpose of the EGM (not less than 48 hours before the time for the EGM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.00 a.m. on Tuesday, 15 March 2005 Register of members closes (both dates inclusive) . . . . . . . . . . . . . . . Tuesday, 15 March 2005 to Thursday, 17 March 2005 Time and date of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.00 a.m. on Thursday, 17 March 2005 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 17 March 2005 Expected date on which the increase in authorised share capital becomes effective . . . . . . . . . . . . . . . . . . .Friday, 18 March 2005 Expected date on which Share Consolidation becomes effective . . . . . . . . . . . . . . . . . . . . . . . .Friday, 18 March 2005 Free exchange of existing Share certificates for new share certificates commences . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 18 March 2005 Existing counter for trading in existing shares in board lots of 2,000 Shares temporarily closes . . . . 9:30 a.m. on Friday, 18 March 2005 Temporary counter for trading in New Shares in board lots of 800 New Shares (in the form of existing share certificates) opens . . . . 9:30 a.m. on Friday, 18 March 2005 Register of members reopens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 18 March 2005 Despatch of the Prospectus Documents . . . . . . . . . . . . . . . . . . . . . . . . Monday, 21 March 2005

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

Existing counter for trading in New Shares in board lots of 20,000 New Shares (in form of new share certificates) reopens . . . . . . . 9:30 a.m. on Wednesday, 6 April 2005

Parallel trading of New Shares (in the form of existing Shares and new share certificates) commences . . . . . . . . . . . . . . . . . . . . . .Wednesday, 6 April 2005 First day of availability of odd lot facility . . . . . . . . . . . . . . . . . . . . . .Wednesday, 6 April 2005

Latest time for lodging application for Offer Shares and payment . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 8 April 2005 Latest time for the Open Offer to become unconditional . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 12 April 2005 Announcement of results of the Open Offer . . . . . . . . . . . . . . . . . . . . Thursday, 14 April 2005 Share certificates for Offer Shares to be posted . . . . . . . . . . . . . . . . . . . .Friday, 15 April 2005 Dealing in Offer Shares commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 18 April 2005 Last day of availability of odd lot facility . . . . . . . . . . . . . . . . . . . . Wednesday, 27 April 2005 Temporary counter for trading in New Shares in board lots of 800 New Shares (in the form of existing share certificates) ends . . . . . . . . . . . . . Wednesday, 27 April 2005

Parallel trading of New Shares

(in the form of existing Shares and new share certificates) ends . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 27 April 2005 Free exchange of existing Share certificates for New Share certificates ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 29 April 2005

Free exchange of existing Share certificates

Dates stated in this announcement for events in the timetable are for indicative/purpose only and may be extended or varied. Any changes to the anticipated timetable for the increase in authorised share capital, Share Consolidation and the Open Offer will be announced as appropriate.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

GENERAL

The EGM will be held to consider and, if thought fit, passing the resolutions to approve, among other things, the proposed increase in authorised share capital of Company, the proposed Share Consolidation and the proposed Open Offer.

Since the proposed Open Offer would increase the issued share capital of the Company by more than 50%, the Open Offer must be made conditional on approval (with voting to be taken by way of poll) by the Shareholders at the EGM in accordance with the Listing Rules.

Under the Listing Rules, any controlling Shareholders and their associates or, where there are no controlling shareholders, directors (excluding independent non-executive directors of the Company), the chief executive of the Company and their respective associates shall abstain from voting in favour of the resolution relating to the Open Offer.

Since there are no controlling Shareholders and none of directors or chief executive of the Company or their respective associates has any shareholding interests of the Company, no Shareholder is required to abstain from voting in favour of the resolution relating to the Open Offer.

An independent board committee will be established to make recommendations to the Shareholders and an independent financial adviser will be appointed to advise the independent board committee and the Shareholders in relation to the proposed Open Offer.

A circular containing, among other things, details of the proposed increase in authorised share capital of Company, the proposed Share Consolidation and the proposed Open Offer, the recommendations of the independent board committee to Shareholders and a letter of advice from the independent financial adviser to the independent board committee and the Shareholders in relation to the proposed Open Offer and the notice of the EGM, will be despatched to the Shareholders as soon as possible.

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in Shares on the Stock Exchange was suspended from 9:30 a.m. on Monday, 31 January 2005 pending the release of this announcement. Application has been made by the Company to the Stock Exchange for resumption of trading in Shares on the Stock Exchange with effect from 9:30 a.m. on Tuesday, 8 February 2005.

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

DEFINITIONS

“Application Form(s)” the application form(s) for use by the Qualifying Shareholders to apply for the Offer Shares “associates” has the meaning ascribed thereto in the Listing Rules “Board” the board of Directors

“Companies Law” the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands

• “Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

“Company” Haywood Investment Limited, a company incorporated in the Cayman Islands under the Companies Law, the issued Shares of which are listed on the Stock Exchange “Director(s)” the director(s) of the Company, including the independent nonexecutive directors of the Company

• “EGM” the extraordinary general meeting of the Company to be convened to approve, among others, the increase in authorised share capital of the Company, the Share Consolidation and the Open Offer

• “Excluded Shareholders” the Shareholder(s) whose name(s) appear on the register of members of the Company on the Record Date and whose address is/are in a place(s) outside Hong Kong where, the Directors, based on legal opinions provided by legal advisers of the Company, consider it necessary or expedient to exclude any such Shareholder on account either of the legal restrictions under the laws of the place of his/her/its registered address or the requirements of the relevant regulatory body or stock exchange in that place

“Group”

the Company and its subsidiaries

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Kingston”	Kingston Securities Limited, a licensed corporation to carry out
	type 1 regulated activity (dealing in securities) under the
	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mr. Lee” or	Mr. Lee Wing On Samuel, the substantial Shareholder
“Substantial Shareholder”
“New Share(s)”	share(s) of HK$0.025 each in the share capital of the Company
	upon the increase in authorised share capital of the Company
	and Share Consolidation becoming effective
“Offer Shares”	80,000,000 New Shares proposed to be offered to the Qualifying
	Shareholders for subscription pursuant to the Open Offer
“Open Offer”	the proposed issue of the Offer Shares by way of open offer to
	the Qualifying Shareholders on the terms to be set out in the
	Prospectus Documents and the terms of which summarised herein
“Orient”	Orient Securities Limited, a licensed corporation to carry out
	types 1, 4, 6, 7 and 9 regulated activities (dealing in securities,
	advising on securities and corporate finance, providing automated
	trading services and asset management) under the Securities
	and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“PRC”	the People’s Republic of China
“Prospectus”	the Open Offer prospectus
“Prospectus Documents”	the Prospectus and the Application Form

21

HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

“Prospectus Posting Date”	21 March 2005 or such later date as may be agreed between the
	Company, the Substantial Shareholder and Kingston (for and
	on behalf of the Underwriters) for the despatch of the Prospectus
	Documents
“Qualifying Shareholders”	the Shareholder(s) other than Excluded Shareholders whose
	names appear on the register of members of the Company as at
	the close of business on the Record Date and not being the
	Excluded Shareholder(s)
“Record Date”	17 March 2005, being the date by reference to which entitlements
	to the Open Offer will be determined
“Registrar”	Secretaries Limited of Ground Floor, Bank of East Asia Harbour
	View Centre, 56 Gloucester Road, Wanchai, Hong Kong, the
	Company’s branch share registrar in Hong Kong
“Share Consolidation”	the proposed consolidation of every five Shares into two New
	Shares
“Shares”	shares of HK$0.01 each in the share capital of the Company
	prior to completion of the Share Consolidation
“Shareholder(s)”	holder(s) of Shares or, after the Share Consolidation becoming
	effective, holder(s) of New Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	the subscription price of HK$0.065 per Offer Share pursuant to
	the Open Offer
“Underwriters”	Kingston and Orient
“Underwriting Agreement”	the underwriting agreement dated 28 January 2005 as amended
	by a supplemental underwriting agreement dated 4 February
	2005 entered into among the Company, the Substantial
	Shareholder and the Underwriters in relation to the Open Offer

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005

• “Underwritten Shares” 63,604,800 Offer Shares underwritten by the Underwriters, of which 31,802,400 Offer Shares were underwritten by Kingston and 31,802,400 Offer Shares were underwritten by Orient, pursuant to the Underwriting Agreement

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“%”

per cent.

By order of the Board Phang Yul Cher Yeow Director

Hong Kong, 7 February 2005

As at the date of this announcement, the Board comprise Mr. Wong Fong Kim, Mr. Tai Ah Lam, Michael, Mr. Phang Yul Cher Yeow and Mr. Tham Ming Yong as executive Directors; Dr Wong Yun Kuen, Edward, Mr. Hsieh Dominick, Mr. Chang Kin Man and Mr. Wong Wing Hang, Henry as independent non-executive Directors.

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

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HAYWOOD INVESTMENTS LIMITED – Announcement Hong Kong, 7 February 2005