RNS Number:1388X
London Asia Capital PLC
31 March 2004
LONDON ASIA CAPITAL PLC
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2003
London Asia Capital ("LAC"), the AIM-listed investment banking group focused on
Greater China, announces its audited results for the seven months to December 31
2003, following the change of its year end.
Highlights:
* Net Assert Value ("NAV") up six-fold to #4.14m (2002: #668,000)
* Cash at bankup from #98,000 to #2.2m
* Bank debt repaid
* Non core investments sold for cash
* Dividend policy implemented by Chinese investment
* IPO of first Chinese investment underway
* Strong new partners in China
* IBM andChina Mobile as business partners in latest investments
* Three investments made post period end
* Market Cap now #14m (2003: #460,000)
* Institutional shareholdings now nearly 50 per cent
LAC Chairman, Jack Wigglesworth, said:"These results reflect the substantial
expansion in activities which has taken place in the period, with a considerable
strengthening of the company's financial position:
"As an investment company, we show our investments at original cost rather than
actual value. No account is taken of the profits (in aggregate #1.3 million)
these investments generated, of which the company is entitled to 51 per cent.
"We believe that the base we have established in China will begin to show
substantial returns in 2004. There are no shortage of opportunities for the
company. The key to our success will be to ensure that we focus on the
opportunities which produce the best return for shareholders"
Chief Executive, Simon Littlewood, said: "2004 will be the year in which we
turn our hard work and investments to date into profits. We aim to make London
Asia the leading channel for Europeans looking to invest in the Greater China
market".
-ends-
For further information:
Simon Littlewood, Chief Executive
London Asia Capital 020 7332 2219
Paul Quade
CityRoad Communications 020 7334 0243
LONDON ASIA CAPITAL PLC
CHAIRMAN'S STATEMENT
Results
I am pleased to announce the Group's results for the seven months to 31st
December 2003, following our change of year end. These results reflect the
substantial expansion in activities which has taken place in the period, with a
considerable strengthening of the company's financial position:
* net assets risen six fold, from #668,000 to #4,184,000;
* cash at bank risen from #98,000 to over #2.2 million;
* long term investments risen from #0.8 million to #3.0 million;
* bank debt repaid.
As at 31st December 2003, we had invested #2.5 million in our five Chinese
investments, of which #0.7 million was in cash and the remainder via the issue
of shares. As an investment company, we show our investments at original cost
rather than actual value, and no account is taken of the profits (in aggregate
#1.3 million) these investments generated, of which the company is entitled to
51%.
Tight control continues to be kept on UK overheads. Despite the increase in
investment activity, operating costs have been reduced to a level where they
could be covered by dividends received from the profits of our investee
companies.
Cash Position
During the period, the company raised #2.4 million via a placing with
institutional investors which took place in October 2003. Since the period end,
the Company has raised a further #2.4 million via the exercise of 10.1 million
warrants attached to the shares placed in October 2003 and an institutional
placing in February 2004.
We invested #0.7 million in the exercise of our option to increase our stake in
Beijing Success. Since the period end, we have invested #65,000 in MyEG, a
Malaysian based e-government services business, and #268,000 in Tianfeng, a
Chinese SMS technology business.
Our strategy is to invest in businesses via a mixture of cash and shares, with
the mix depending on the working capital needs of the investee company to
achieve its growth strategy.
Investment Activity
The Chief Executive's statement contains a detailed analysis of our current
investment portfolio. During the period, the Company acquired a 51% stake in
Biaoqi Oriental Advert to supplement its existing media businesses, and
increasedits stake in Beijing Success from 25% to 51%.
The Chinese currency is linked to the US Dollar, and has therefore dropped
considerably in value relative to the pound. The current exchange rate of 15
RMB to the # represents a 25% fall compared to the exchange rate of 12 RMB to
the # in May 2002, and a 15% fall in the last six months from the level of 13RMB
to the # in September 2003. This presents a good opportunity to UK based
investors such as ourselves to acquire Chinese assets now while the exchange
rate is favourable, which would increase in value in Sterling terms were the
Chinese currency to appreciate.
To take advantage of the current currency position, we have recently increased
our investment activity, using the funds we raised via the two institutional
placings. Since the period end we have made three further investments,
totalling #0.9 million:
* Biaoqi Century Data - Chinese GPRS business in partnership with China
Mobile;
* Tianfeng - Chinese SMS service provider, in partnership with IBM;
* MyEG - Malaysian e-government services business, part of the
Governments Multi Media Super Corridor project.
Beijing Success, the financial software business in which we have a 51% stake,
is the first of our Chinese investments which we are seeking to list. Following
a review of the relative valuations we would be likely to achieve for our stake
on stock markets in Europe and Asia, we have taken the decision to list Beijing
Success in Singapore. To that end, advisers have already been appointed and the
listing process begun, with a view to trading commencing later this year.
Based on the current valuations of comparable companies on the Singapore Stock
Exchange, we should be able to achieve a healthy profit on our investment, which
will be reflected in the 2004 accounts.
The year saw the realisation for cash of several investments made by the old
management, which no longer fit with the Company's new investment strategy. In
September we announced the disposal of the whole of our stake in Kelkoo for cash
of #165,000. We have post period end disposed of our holdings for cash in Mean
Fiddler, Intelliplus and Pure Communications.
China Strategy
Our focus is on investingin profitable businesses in the Greater China region,
with strong management teams, which are capable of being developed to a point
where they can be sold on or listed on a stock market within two years of
investment. Our aim is to have a portfolioof up to thirty investments in the
next two years, which not only reduces the risk of individual investments not
performing, but puts us in a strong position to make substantial gains in 2006
when we believe there will be the opportunity to list some of our investments on
the Chinese Stock Market.
The strength of our strategy lies in the team in China that we have built up
over the last few years, and the partnerships we have developed with leading
companies and organizations in China. Through them, we have access to deal flow
which would not be available to most Western investors, and the ability to
perform due diligence and monitor the performance of investee companies post
investment. Our presence in cities such as Jinan, Yantai and Wuhan, gives us
access to deal flow beyond the reach of most Western investors, who tend to
focus on opportunities in the more developed cities of Shanghai, Beijing and
Guangzhou where we have already seen prices paid by investors rise considerably
relative to opportunities outside those cities.
One of the benefits of our strategy of focusing on profitable businesses is that
we are not dependent on selling investments to pay the Company's overheads, as
we can take some of the profits via dividends and management charges. This
enables us to sell investments when the timing is right and the best return can
be achieved.
As noted above, we have successfully exited from the majority of the historical
investments, and are in the process of listing Beijing Success. We continue to
explore a range of options for realizing our investments, including reversal
into already listed comparable businesses in Asia and Europe, and sale to
investors and businesses seeking to gain access to the Chinese markets. Our
ultimate aim is to list our investments on stock markets within China, where we
believe we will be able to achieve higher valuations than listing outside China.
The Chinese Stock Market is undergoing a period of considerable reform to make
it more accessible to non state owned businesses and more market driven, and the
Shenzhen Stock Market, one of two Stock Exchanges in China, has recently begun
to accept new listings after a sustained period without any new listings.
The financial services market in China is relatively undeveloped, and still
subject to legal constraints and restrictions on non Chinese businesses taking
majority holdings. As part of China's commitments to the World Trade
Organisation, many of these restrictions on non Chinese businesses becoming
involved in China's financial services industry are being relaxed. London Asia
is currently looking at a number of opportunities in the financial services
sector in China, in particular the possibility of investing in a fund management
business to tap into the high savings rates within China.
China's Economy
China continues to see substantial growth and progress in its economy.
Statistics on the recent performance of China are impressive
* It is now the sixth largest economy in the world;
* Bank lending in 2003 rose by nearly 20%;
* China Mobile, our partner in Century Data, is the largest wireless
provider in the world by subscriber numbers. China has 287 million mobile
users;
* At the end of 2003, China had 421 million fixed and mobile telephone lines,
representing 35% of the population. Every village and town in China now
has access to telephone services, with China having the second largest
telephone network in the world;
* There are 1,143 international and domestic airways operating in China;
* In 2003 total investment in transportation projects in China was #26
billion, with a further 70,000 km of road buildingplanned for 2004;
* In 2003 alone 41 power plant projects were approved with a capacity of
31 million kW, and 30,000 km of power grid approved in the past three years
with a carrying capacity of 120 million kva.
* Beijing alone isbuilding 4 new underground railways in preparation for
the Olympics in 2008.
China continues to welcome overseas investors, who are providing capital and
expertise to develop China's economy and thereby increasing the living standards
of thepeople in China:
* In 2003, there were 41,081 newly registered foreign investment enterprises
in China, an increase of 20% over the previous year, with registered
capital of US$115 billion, an increase of 39% over 2002;
* Over 400 R&D centres have been set up by multinational companies in
China to date;
* Foreign investment enterprises in 2003 accounted for 54% of China's
total exports by value;
* Foreign investment enterprises account for over 20% of China's total
tax collected;
* There are over 23 million Chinese citizens working directly in foreign
investment enterprises, representing nearly 10% of the labour force in urban
areas.
London Asia is not alone in spotting the huge opportunities in China, though
Europeans have been slower than other countries. In 2003 EU businesses
established 2,074 new foreign owned enterprises in China, with registered
capital of US$5.85 billion, representing just 5% of foreign investment in China
in 2003. The UK is the main EU investor in China, in 2003 establishing 438 new
companies in China, a 38% increase on the previous year, with registered capital
of US$1.2 billion. The total number of UK enterprises in China as at December
2003 was3,856, with paid up capital of US$11.4 billion
There has been much debate recently in the press as to whether there is an
overheating of the Chinese economy and over-investment in some sectors, for
example car manufacturing, and concern expressed as to the effect on the Chinese
economy of an upwards revaluation of the Chinese currency which would make
China's exports more expensive.
We believe that our focus on investing in businesses which are aimed at the
Chinese consumer market, rather than manufacturers dependent on the export
market, reduces the impact on us of a currency revaluation, and as noted earlier
would have the effect of increasing the value of our investments in sterling
terms. We are also increasingly focusing on areas outside the main cities of
Shanghai, Beijing, and Guangzhou, in line with the Chinese government's policy
of spreading investment away from the more developed coastal cities to inland
cities.
Partners and regional offices
It is difficult tooperate in Greater China without strong local partners and a
presence on the ground. We have recently announced several significant
alliances to add to our existing network in China.
In March 2004 we announced an alliance with Wuhan Eastlake Technology Zone ("
WENDZ"). WENDZ is a technology park in Hubei Province, which currently hosts
over 6,000 businesses, with a particular emphasis on optoelectronics and
telecommunications. Wuhan is the capital of Hubei province and has a current
population of over 7 million, making it one of the six largest cities in China.
Under the alliance, WENDZ will be responsible for providing London Asia with
details of companies within the business park seeking strategic investors or
looking to list on a Stock Market outside China. Wuhan is one of the main
central cities and poised to benefit from the Chinese Government's policy of
encouraging investment into the Western regions of China in order to balance the
investment already made in the coastalcities. We are currently looking at two
potential investments in Wuhan.
In January 2004 we announced the signing of a strategic alliance with Chinese
business park Yantai Wolong Economic Zone ("Wolong"). Wolong hosts
approximately 120 companies, over 66% of which are privately owned Chinese
enterprises. Covering over 5 square kilometres, ultimately the park is seeking
to house over a thousand enterprises. Yantai is a port city, with a population
of 6.35 million. The alliance is along similar lines to that signed with WENDZ.
In December 2003 we signed a strategic alliance with Heda Group ("Heda"), a
leading Chinese venture capital group which has expertise in the utilities
sector. Heda has made a number of investments in the power, water and
environmental sectors across China, including a power plant and a company with a
software solution for the power industry. Heda has fifteen staff, who are
working alongside London Asia staff to identify investment opportunities in
which the companies will co-invest. We are currently performing due diligence
on the first potential investment introduced by Heda.
London Asia has associate offices in Singapore and Hong Kong to identify
potential investments and assist as required with processing transactions and
listings in their territory. In early March we announced the expansion of LAC
Singapore's operations, with additional capital injected and new team members
appointed. LAC Singapore is currently assisting with the listing of Beijing
Success in Singapore and has made its first investment in a placing by a
Singapore listed software company.
In April 2003, London Asia took a 25% stake in TCIB, an investment banking group
based in China with offices in Beijing, Xi'an and Jinan. TCIB's other principal
shareholder is Prutention, a Shanxi Province based venture capital and
investment group which is the representative of the Chinese Venture Capital
Association for Shanxi Province. TCIB has carried out due diligence on a number
of potential investments on behalf of London Asia, and is currently advising a
Chinese company on the possibility of listing on the London Stock Exchange.
Outlook
Despite the fact that China is already the sixth largest economy, many investors
and businessmen in the UK remain to be convinced of the benefits of doing
business in China. UK exports to China in 2003 were only #1.9 billion,
representing just 0.7% of total UK exports, and the UK's recorded investment in
Chinain 2003 represented just 1% of the total foreign investment in China in
2003.
We are delighted with the interest shown in the Company by our new and existing
shareholders. A year ago we had a share price of 2.3p, 20 million shares in
issue, no institutional shareholders, and a market cap of less than #1/2
million. Today we have a market cap of nearly #14 million, with nearly half the
Company's shares held by institutional investors, with a further 23% held by the
management of the companies in which we have invested in China. We believe that
the base we have established in China to date will begin to show substantial
returns this year and look forward to that being reflected in our share price
going forward, as investors wake up to the potential in China and gain a better
understanding of the risks and rewards.
There are no shortages of opportunities for the Company. The key to our success
will be to ensure that we focus on the opportunities which produce the best
returns for shareholders, and that we have the appropriate personnel and
financial resources in place to make the most of the opportunities.
Jack Wigglesworth
Chairman
31st March 2004
LONDON ASIA CAPITAL PLC
CHIEF EXECUTIVE'S STATEMENT
I am delighted to report on the substantial progress that has been made by the
Company:
* we completed two institutional fund raisings, at increasing prices;
* we continued to build and strengthen the brand of our Chinese media
group, Biaoqi;
* the London Asia brand is becoming increasing established and recognized
within China, particularly following our high profile investments in
Biaoqi Century Data and Tianfeng, where partners include China Mobile
and IBM;
* we extended our existing relationships and coverage in China through
alliances with Chinese Government economic zones and business parks, and
Chinese venture capitalists;
* we brought in additional staff who can help take the Company forward.
Investment Strategy
We continue our focus of investing in profitable businesses in the Greater China
market, and disposing of non core investments. Investments are made via a
mixture of shares and cash, so that the management of the companies we invest in
end up as London Asia shareholders. The Company's investment strategy to date
in Greater China has been to develop brands within industry sectors, using
trusted managementto run the acquisitions, with the ultimate aim of listing
those brands as separate businesses.
In the first quarter of 2004, we have added three new investments, each within
our industry focus of:
* Media, IT and telecom
* Financial services
* Environment, energy, water and waste
Media, IT and Telecom
In this sector, we have made a series of investments under the Biaoqi brand,
with acquisitions funded by a mixture of cash and shares, covering the
following:
* Filmproduction and publishing - Biaoqi Culture & Publication Co Ltd
("Biaoqi Culture"). Despite the loss of several large projects as a result
of the impact of SARS in China in the early part of 2003, which the company
estimates cost it over #100,000 of profits and had a severe impact on the
whole sector, Culture achieved pre tax profits of RMB1.56 million
(#112,000). Biaoqi Culture is well known in China, in September 2003
winning the award for the Best Documentary inthe Ninth Ornamental Pillar
Awards issued by the Chinese Government. Victor Ng is on the Board to
represent London Asia.
* Radio advertising - Biaoqi Oriental Advertising Ltd ("Biaoqi Oriental").
London Asia acquired a 51% stake in December 2003 via an issue of 330,000
ordinary shares, equal to #69,000. Biaoqi Oriental sells advertising space
on Beijing's traffic radio station, one of the most listened to radio
stations in Beijing due to Beijing's estimated 11 hour rush hour caused by
over 2 million cars in Beijing. Victor Ng is on the Board representing
London Asia. In the period to 31st December 2003, the business made sales
of #740,000 and a post tax profit of #105,000.
* Television advertising - Beijing Biaoqi Advert Company Ltd ("Biaoqi
Advert"). Biaoqi Advert produces adverts for Chinese TV stations. It is
believed to be one of the top privately-run advertising production companies
in China, holding a coveted TV advertising and movie production licence.
Victor Ng is on the Board to represent London Asia's interest.
We have added three investments in this sector since the period end, two of
which have been branded Biaoqi.
* SMS service provider - Biaoqi Tianfeng, a Chinese SMS service business
which provides secure SMS for the Chinese corporate market. The business
operates in partnership with IBM, who provide the hardware. London Asia
invested #265,000 in cash for a 40% stake. Simon Littlewood and Victor Ng
have been appointed to the Board to represent London Asia's interest.
* GPRS based environmental monitoring service - Biaoqi Century Data, a Chinese
GPRS business which operates in partnership with China Mobile to provide
an environmental monitoring service tracking the level of pollution
generated by factories and industry in China. Our investment was via the
issue of 3 million shares at 19p a share, equal to #570,000
Both of these businesses operate across China and have the potential to
ultimately list within China. It also brings us working alongside top quality
partners China Mobile, the largest wireless provider in the world by number of
subscribers, IBM, and the National Environmental Protection Agency.
The third investment made in March 2004 is MyEG, a Malaysian e-government
business which is part of Malaysia's Multi-Media Super Corridor project. MyEG
intends to float on the Malaysian Stock Market later this year, and use the
proceeds to expand its range of services both within Malaysia and into China.
London Asia took a 2.5% stake for #65,000. We are currently working with a
number of businesses within China which could be suitable acquisition targets
for MyEG post it's IPO.
We have a historical investment in Idiom, trading under the brand Puca. Based
in Dublin, Puca has developed a range of software and managed infrastructure
solutions designed to help organisations to capitalize on wireless data
technologies, such as SMS and MMS messaging. It partners with carriers, media
organisations, enterprises and public sector organizations in developing and
managing SMS applications and marketing programmes which operate on wireless
devices including cell phones, pagers and PDAs. Puca has also developed
proprietary software applications including solutions for mobile coupons,
loyalty and incentive campaigns, competitions, ringtones, picture messages and a
variety of interactive mobile SMS and MMS applications. Founded in 2000, Puca's
customers have included Vodafone, Coca Cola, McDonalds and Cadbury. Puca's
strong business growth was recognised by the 2003 Deloitte Technology Fast 50
programme, which ranked Puca as the 6th fastest growing Irish technology
company. Following a successful placing in late 2003, supported by Enterprise
Ireland, London Asia's stake has been reduced to 15.5%. The company is trading
profitably, and our investment is held at the valuation priceused in the latest
fund raising.
Financial Services
We currently have five investments in the financial services sector:
* Beijing Success Technology Company Ltd ("Beijing Success") - financial
analysis software & services
* Temima China Investment Bank ("TCIB") - corporate finance and investment
services within China
* London Asia Capital (S) Pte ("LAC Singapore") - corporate finance and
investment services in S.E Asia
* London Asia Capital Hong Kong ("LAC HK") - consulting and corporate
finance in Hong Kong and Taiwan.
* Dynamis plc - business exchange platform
The financial services market in China is relatively undeveloped, and we believe
there are substantial opportunities within thesector as a result of China's
entry into the World Trade Organisation, which has put in place a timetable for
China to open up it's financial services market to overseas competitors.
As well as extending our investments in the sector, we are looking at ways of
gaining our own authorization to provide a range of services to the Chinese
market, such as fund management, using the resources and contacts of our
existing investments, supplemented by the various partners we work with in
China, suchas Heda Group.
Beijing Success
London Asia's largest investment by cost, we are currently working with the
Beijing Success management team to gain a listing for the business on the
Singapore Stock Exchange, with initial documentation being prepared with a view
to a listing later in the year. During the period we exercised our option to
take our stake from 25% to 51%, with a total cost to date of #2.3 million, of
which #0.7 million was in cash and the remainder in shares, valuing the whole
business at only #4.46 million. Simon Littlewood and Victor Ng sit on the
Beijing Success Board to represent London Asia's interest.
Founded in January 1999, Beijing Success provides securities analysis tools and
related data services in China. Since January 2002, Beijing Success has
developed a series of analysis products and services, from basic to highly
sophisticated tailored products. Customers include private investors,
securities companies, institutional investors, listed companies, advisory
companies, data service companies, training institutes and media companies. Its
products are sold in twenty of the major cities in China. Beijing Success
announced in September 2003 that it has reached agreement with China-Morning
Information News Group ("MIN"), a popular securities media group, to provide
training courses for people interested in investing in the securities and
futures markets in China. MIN is one of the largest Chinese financial
publishers, with its newspaper,Information Morning, having an estimated
subscription of over 20 million people each month.
Beijing Success achieved turnover of RMB18.1 million (#1.3 million) in 2003, up
48% on the previous year, and post tax profit of RMB16.0 million (#1.1 million),
up 53% on the previous year in RMB, though the sterling figures show only a 41%
gain as a result of the fall in the Chinese currency during the year.
TCIB
TCIB is a China based corporate finance and investment group, in which London
Asia acquired a 25% stake in April 2003 via shares. TCIB is a joint venture
with Xian Prutention Investment Development Company Ltd ("Prutention"), a well
known Chinese investment group. Prutention is the representative in Xi'an for
the China Venture Investment Committee, a Chinese Government venture capital
organisation. Xi'an is the home of the Terracotta Warriors.
TCIB has taken on a number of key staff. Following the alliance with WENDZ,
Kent Wang is now covering operations at our new Wuhan office. Jasmine Tseng has
taken over running the Jinan office, and Xiang Jun Qu is responsible for
operations in Xi'an. The Beijing office is run by Sherry Xie, who joins us from
Guinness Mahon's China operations. Yen Po Wang, who I have known for several
years, is in overall charge of TCIB operations. Following London Asia's
investment, Victor Ng was appointed Deputy Chairman and Simon Littlewood a
director.
TCIB carries out corporate finance and investment banking activities within
China, and identifies investment opportunities and carries out due diligence for
London Asia. TCIB has identified its first potential UK IPO candidate, and due
diligence has begun on it with a view to listing it in London in the summer.
LAC Singapore
With the strong appetite shown by Singaporean investors for China related
investments, LAC Singapore has taken on a number of new staff, with Mr S.T Yeo
and Mr Peter Kwok joining the management team. In early March London Asia
increased its investment in the business by a further #19,000. LAC Singapore is
assisting in the Success listing and identifying a number of potential
investments in S.E Asia such as our recent investment in MyEG.
LAC HK
Hong Kong operations are headed by Mr C.K Cho. LAC HK is currently assisting a
UK listed company on devising investment products to attract funds from Hong
Kong, Taiwanese and Chinese investors.
Dynamis plc
A UK company that operates the business exchange platforms businessesforsale.com
and franchisesforsale.com for buyers and sellers of businesses and franchises.
The company is trading profitably, has cash reserves, and is in a good position
to capitalise on its position. A historical investment, it is valued at #28,000
for 3.6% of the Company.
Environment, energy, water and waste
Following our alliance with Heda in December 2003, we are currently reviewing a
number of Chinese utility and environmental companies for potential investment.
China's energy requirements have grown rapidly to support its booming economy,
which has resulted in an increase in carbon emissions and in the need for China
to have an environmentally friendly energy solution. These trends support
London Asia's interest in the sectorgoing forward.
Personnel
We welcomed a number of new staff during the period at TCIB, LAC Singapore and
LAC HK. London Asia's future success depends on the quality of it's staff, who
are responsible for identifying the investments, performing due diligence on
them and monitoring the progress of and assisting our investee companies post
investment. To date our staff have been paid salaries below market rates, and
we aim to continue this policy to ensure that as much of our cash resources as
possible are focused on investing. However, in order to attract and retain the
quality of staff that the Company needs, we need to be able to offer a package
which enables staff to share some of the upside from their work, especially as
they are in most cases taking pay cuts to join us. It is therefore proposed to
set up a share option scheme for employees and consultants working for the
company.
Dividend Policy
A resolution is being proposed at the AGM to enable the Company to reduce its
share capital through the transfer of part of the surplus from the Company's
Share Premium account to the Profit and Loss Reserve. This would assist the
Company in paying dividends out of future profits sooner than would otherwise be
the case. Subject to the passing of the resolution, the Company may make an
application to the High Court to effect the share capital reduction.
Outlook For 2004
Whilst 2003 was the year in which we implemented the China focused business plan
and built up the foundations and networks for our expansion, 2004 will be the
year in which we turn our hard work and investments to date into profits. We
have already increased the pace of investment to take advantage of the current
low Chinese exchange rate, and to invest the money raised in October 2003 and
February 2004. We aim to make London Asia the leading channel for Europeans
looking to invest in the Greater China market.
Simon Littlewood
Chief Executive
31st March 2004
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31 DECEMBER 2003
Period ended Year ended
31 December 31 May
2003 2003
#'000 #'000
Loss on sale of investments (8) (11)
Other operating income 47 38
Administrative expenses (170) (214)
------ ------
Operating loss (131) (187)
Interest receivable 2 1
Interest paid (31) (24)
Amounts written off
investments - (5)
------ ------
Loss on ordinary activities
before taxation (160) (215)
Taxation - -
------ ------
Retained loss for the
financial period (160) (215)
====== ======
Loss per share Pence Pence
Basic and diluted (0.50) (1.45)
====== ======
Continuing operations
All amounts are derived from continuing operations.
Total recognised gains and losses
There were no recognised gains or losses not dealt with through the profit and
loss account.
LONDON ASIA CAPITAL PLC
BALANCE SHEET AS AT 31 DECEMBER 2003
31 December 2003 31 May 2003
#'000 #'000 #'000 #'000
Fixed assets
Tangible assets 3 -
Investments 2,974 781
------ ------
2,977 781
Current assets
Debtors 77 72
Investments 138 302
Cash at bank and in hand 2,234 98
------ -----
2,449 472
Creditors: amounts falling due within one year (783) (172)
------ -----
Net current assets 1,666 300
----- ------
Total assets less current liabilities 4,643 1,081
Creditors: amounts falling due after more than one year (459) (413)
----- ------
4,184 668
===== ======
Capital and reserves
Called up share capital 2,736 1,117
Share premium account 7,815 5,758
Profit and loss account (6,367) (6,207)
----- ------
Equity shareholders' funds 4,184 668
===== ======
Jack Wigglesworth Simon Littlewood
Chairman Chief executive
LONDON ASIA CAPITAL PLC
CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2003
31 December 2003 31 May 2003
#'000 #'000 #'000 #'000
Net cash inflow/ (outflow) from operating activities 538 (128)
Returns on investments and servicing of finance
Interest received 2 1
Interest paid (31) (24)
------ -----
Net cash outflow from returns on investments
and servicing of finance (29) (23)
Taxation paid - -
Financial investment and capital expenditure
Payment to acquire tangible assets (4) -
Payments to acquire investments (10) (109)
Receipts from sales of investments - 19
------ -----
Net cash outflow from financial investment and capital (14) (90)
expenditure
Acquisitions and disposals
Purchase of subsidiary undertaking (789) (34)
----- -----
Net cash outflow for acquisitions and disposal (789) (34)
----- -----
Net cash outflow before management of liquid resources and
financing (294) (275)
Management of liquid resources
Current asset investments 156 131
---- -----
Cash inflow from management of liquid resources 156 131
Financing
Issue of ordinary share capital 2,282 11
Convertible loan stock received net of costs 222 225
Repayment of bank loan (230) (60)
----- -----
Net cash inflow from financing 2,274 176
----- ------
Increase in cash in the year 2,136 32
===== ======
LONDON ASIA CAPITAL PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2003
1. Accounting policies
The principal accounting policies adopted by the company are as follows:-
a) Convention
The financial statements have been prepared under the historical
cost convention and in accordance with applicable accounting
standards.
b) Investments
Fixed asset investments
Fixed asset investments are stated at cost less provision for
diminution in value.
Current asset investments
Current asset investments comprise marketable and quoted
investments held for resale and are stated at the lower of cost and
net realisable value.
c) Deferred taxation
Deferred tax is provided in full in respect of taxation deferred
by timing differences between the treatment of certain items for
taxation and accounting purposes. Deferred tax assets are
recognised only tothe extent that the directors consider that it
is more likely than not that there will be suitable taxable profits
from which the future reversal of the underlying timing differences
can be deducted. The company has not adopted a policy of
discounting deferred tax assets and liabilities.
d) Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation.
Depreciation is provided at rates calculated to write off the cost
less estimated residual value of each asset over its expected
useful life, as follows:
Office equipment - 25% straight line
Fixtures, fittings and equipment - 25% straight line
e) Group accounts
The financial statements present information about the company as
an individual undertaking and not about its group. The company has
taken advantage of the exemptions provided by Section 229 of the
Companies Act 1985 not to prepare group accounts on the basis that
severe long term restrictions are in place which hinder the
exercise of the company's rights over the assets and management
of its subsidiary undertakings that, in the case of certain of the
subsidiary undertakings, these companies are not material to the
company's financial statements.
f) Associated undertakings
The company has taken advantage of the exemption in Financial
Reporting Standard No.9 : Associates and Joint Ventures from the
requirement to equity account for its investments in associated
undertakings. The directors consider that the company's principal
activity is that of an investment holding company and therefore to
account for its share of the net assets and liabilities of these
associates would not be meaningful.
2. Taxation
There is no charge to UK corporation tax due to tax losses brought
forward from previous years subject to agreement with the Inland
Revenue. Accumulated tax losses have not been recognised as a
deferred tax asset.
3. Loss per share
The calculation of basic loss per share is based on the loss after tax
of #160,000 (2003: #215,000) and on 31,810,916 (2003: 14,838,345)
ordinary shares being the weighted average number of ordinary shares
in issue during the period. The convertible loan stock, options and
warrants were anti-dilutive in respect of the period.
4. Reconciliation of operating loss to net cash outflow from operating
activities
31 December 2003 31 May 2003
#'000 #'000
Operating loss (131) (187)
Amortisation of finance cost 6 6
Depreciation 1 -
Loss on disposal of investments 8 11
Increase in debtors (5) (24)
Increase in creditors 659 66
------ ------
Net cash inflow/(outflow) from operating activities 538 (128)
====== ======
5. Analysis of net debts
1 June 2003 Cash flow Other non-cash changes 31 Dec 2003
#'000 #'000 #'000 #'000
Net cash:
Cash at bank and in hand 98 2,136 - 2,234
----- ----- ----- -----
98 2,136 - 2,234
----- ----- ----- -----
Liquid resources:
Current asset investment 302 (156) (8) 138
----- ----- ----- -----
302 (156) (8) 138
----- ----- ----- -----
Debt:
Bank loan (230) 230 - -
Convertible loan stock (231) (222) (6) (459)
----- ----- ----- -----
(461) 8 (6) (459)
----- ----- ----- -----
Net cash/(debt) (61) 1,988 (14) 1,913
===== ===== ===== =====
6. Reconciliation of net cash flow to movement in net fund/(debt)
31 December 2003 31 May 2003
#'000 #'000
Increase in cash in the year 2,136 32
Cash inflow from movement in liquid resources(156) (131)
Cash outflow/(inflow) from movement in debt 8 (165)
----- -----
Change in net funds/debt resulting from cash flows 1,988 (264)
Non cash movements in liquid resources (8) 433
Non cash movements in debt (6) (6)
----- -----
Movement in net debt in the period 1,974 163
Opening net debt (6) (224)
----- -----
Closing net fund/(debt) 1,913 (61)
===== =====
7. Financial information
The financial information herein does not constitute statutory accounts
as defined in section 240 of the Companies Act 1985.
The financial information has been extracted from the group's 2003
statutory financial statements upon which the auditors reported on
31 March 2004. Their opinion is unqualified and does not include any
statement under section 237 of the Companies Act 1985
8. Copies of the report and accounts
Copies of the report and accounts will be posted to shareholders and
are available from the Company's registered office, 11 Central House,
High Street, Ongar, Essex CM5 9AA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKKKKCBKDANN
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