Walnut Capital Limited — Earnings Release 2001

Apr 23, 2002

(Incorporated in the Cayman Islands with limited liability)

ANNOUNCEMENT OF 2001 FINAL RESULTS

FINAL RESULTS

The Board of Directors (the "Directors") of Haywood Investments Limited (the "Company") announces that the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31st December, 2001, together with the corresponding amounts for the year ended 31st December, 2000 are as follows:

		Year ended 31st December,
		2001		2000
	Notes	HK$'000		HK$'000
Turnover	1	369		4,460
(Loss) gain on disposal of listed investments	2	(30,381	)	615
Administrative expenses		(3,859	)	(3,655	)
Impairment loss recognised in respect of
investments in securities		(6,750	)	(15,750	)
Loss before taxation	4	(40,621	)	(14,330	)
Taxation	5	-		(18	)
Loss for the year		(40,621	)	(14,348	)
Basic loss per share	6	(40.62) cents		(14.35) cents

Notes:

1. Turnover

An analysis of the Group's turnover is as follows:
	2001		2000
	HK$'000		HK$'000
Dividend income	104		526
Interest income	265		3,934
	369		4,460

2. (Loss) gain on disposal of listed investments

The (loss) gain on disposal of listed investments arose from the disposal of investments in equity securities listed in Hong Kong. For the year ended 31st December, 2001, included in the loss on disposal is an amount of HK$26,395,000 (2000: nil) in respect of investment revaluation reserve released from the disposal of listed investments.

3. Business and geographical segments

All of the Group's turnover and contribution to operating results are attributable to investment activities .

The Group invests in listed and unlisted companies in Hong Kong and in other parts of the People's Republic of China (the "PRC"). These geographical markets are the basis on which the Group reports its primary segment information.

Segment information about these geographical markets is presented below:

	Hong Kong				PRC				Total
	2001		2000		2001		2000		2001		2000
	HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000
TURNOVER	344		952		25		3,508		369		4,460
Results
Segment results	(30,227	)	(7,753	)	(7,758	)	(3,242	)	(37,985	)	(10,995	)
Unallocated corporate
expenses									(2,636	)	(3,335	)
Loss before taxation									(40,621	)	(14,330	)
Taxation									-		(18	)
Loss for the year									(40,621	)	(14,348	)

4. Loss before taxation

Loss before taxation has been arrived at after charging depreciation for the year of HK$151,000 (2000: HK$151,000).

1. Taxation

	2001		2000
	HK$'000		HK$'000
The charge comprises:
Hong Kong Profits Tax	-		185
Overprovision in prior years	-		(167	)
	-		18

No provision for Hong Kong Profits Tax has been made in the financial statements as the Group incurred a loss for the year.

For the year ended 31st December, 2000, Hong Kong Profits Tax was calculated at the rate of 16% of the estimated assessable profit for that year.

At 31st December, 2001, a deferred tax asset of approximately HK$1,729,000 (2000: HK$1,184,000) in respect of tax losses available to offset future profits was not recognised in the financial statements as it is not certain that such benefits will be crystallised in the foreseeable future.

6. Basic loss per share

The calculation of the loss per share is based on the loss for the year of HK$40,621,000 (2000: HK$14,348,000) and on the weighted average number of 100,000,000 (2000: 100,000,000) shares in issue during the year.

DIVIDEND

The Directors do not recommend payment of a dividend for the year (2000: nil).

Results

For the year ended 31st December, 2001, the Group recorded a loss of HK$40,621,000 that was principally the result of further impairment loss recognised in respect of a convertible loan note investment and the realization of cumulative losses from the disposal of certain listed securities.

Business Review and Prospects

During the year under review, steps had been taken by the management in restructuring the Group's investment portfolio. Financial resources available from disposing certain listed securities investments had been directed to new investments in three convertible loan notes that are expected to bring favorable return to the Group. The issuers of the three convertible loan notes are respectively engaged in the business of property development in Hong Kong; biotechnological production in Mainland China; and web-based information services in the area of public relation, financial intelligence, investment and entertainment.

At 31st December, 2001, about 50% of the Group's investment portfolio was constituted by the three convertible loan notes mentioned, 40% represented by the equity interests in a building materials manufacturing plant in Mainland China, with the remaining 10%, equivalent to HK$4,638,000, being bank balances and cash. The Group had no bank borrowing and was wholly financed by shareholders' funds. At the balance sheet date, net asset value per share of the Group was HK$0.44.

In March 2002, the Company successfully raised net proceeds of approximately HK$6,600,000 through a shares placing and subscription arrangement in respect of the issue of 20,000,000 Company's new shares at a price of HK$0.35 per share. The Company's capital base has been significantly strengthened as a result and the proceeds raised are for making investments and working capital purposes.

For the current financial year, the Directors will continue to take a prudent approach in managing the Group's existing investment portfolio in view of the present uncertain investment environment in Hong Kong. Nevertheless, the Directors will remain open to any attractive investment opportunities that will add substantial value to the Group, in particular those that are Mainland-related which take advantage of China's strong economic growth.

Investment Manager

The Company has appointed Haywood Investment Management Limited to act as its investment manager to provide investment management and administrative services to the Group. The investment manager is remunerated in accordance with an investment management contract.

Purchase, sale or redemption of the Company'S Listed Shares

During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed shares.

Disclosure of Information on the Website of The Stock Exchange of Hong Kong Limited

The 2001 Annual Report of the Company containing all the information required by paragraphs 45(1) to 45(3) of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") will be published on the website of the Stock Exchange in due course.

By Order of the Board

Peter Lee Yip Wah

Secretary

Hong Kong, 22nd April, 2002

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the annual general meeting of the Company will be held at16th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong on Thursday, the 23rd day of May, 2002 at 9:30 a.m. for the following purposes:

1. To receive and consider the financial statements and the reports of the directors and auditors for the year ended 31st December, 2001.

2. To re-elect directors and to fix the remuneration of directors.

3. To re-appoint auditors and to fix their remuneration.

By Order of the Board

Peter Lee Yip Wah

Secretary

Hong Kong, 22nd April, 2002

Notes:

1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and on a poll, vote in his stead. A proxy need not be a member of the Company.

2. To be valid, the proxy form, together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the principal place of business of the Company in Hong Kong at 16th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

Please also refer to the published version of this announcement in the Hong Kong iMail Post dated 23/4/2002