RNS Number:4567D
London Asia Capital PLC
29 September 2004
For release 29 September 2004
London Asia Capital plc
Interim Results - Six months to 30 June 2004
London Asia Capital ("London Asia" or the "Company"), the AIM listed merchant
banking group focused on China, announces Interim Results for the six months to
30 June 2004, featuring profits, dividends and near doubled net assets.
London Asia focuses on the key growth sectors of Energy & Environment, IT,
Financial Services and Media.
Jack Wigglesworth, Chairman, said: "I am delighted to announce a profit and a
considerable strengthening of London Asia's financial position, as we continue
to expand our activities in China."
Financial Highlights
* Operating profit of #394k (loss #86k, six months to 30 November 2003);
* Dividend of #530k from Chinese investments;
* Net assets almost doubled to #8.2m;
* Cash up from #2.2m to #2.8m;
* Long term investments up from #3m to #4.9m;
* Successful fund raisings of over #2.3m;
* Investments of c. #2m in seven companies in China, Malaysia and Singapore;
Other Highlights
* Twin strategy in China:
- Invest in profitable, growth businesses for dividends, management fees
and investment realisation
- Advise Chinese companies, including own investments
* Increased team and network in China; recent opening of New York office
* Access to +7,000 businesses in China (via business parks and Chinese
venture capitalists)
* Focus outside main cities of Shanghai, Beijing and Guangzhou to find
attractively priced investments
* Chinese Stock Market undergoing reform, making it more accessible and
market driven
* Chinese economy continues to grow strongly
Regarding the Outlook
Mr. Wigglesworth said: "Our key focus at present is on maximising the revenue
opportunities that can be generated from our investments to date and the
infrastructure we have built up within and outside China. We are working closely
with China Financial Services management and advisors to assist in its listing.
In the second half we will receive management fees from some of the companies
in our portfolio; we have a number of advisory mandates where we are receiving
fees; and we have a number of opportunities in the fund management sector. We
are very excited about the opportunities for the Company."
Enquiries:
London Asia Capital plc
Simon Littlewood, Chief Executive Tel: 020 7332 2219
Paul McManus, Binns & Co PR Ltd Tel: 020 7153 1485
Mob: 07980 541 893
London Asia Capital plc
Interim Statement for the
six months ended
30th June 2004
Chairman's Statement
Results
I am delighted to announce a profit for the six months to 30th June 2004 and a
considerable strengthening of London Asia's financial position, as we continue
to expand our activities in China.
Highlights include:
* dividend of #530,000 from one of our Chinese investments;
* net assets nearly doubled in the period to #8.2 million;
* cash at bank risen from #2.2 million to #2.8 million;
* long term investments risen from #3.0 million to #4.8 million.
As an investment company, we show our investments at original cost rather than
actual value, and profits generated by these investments are not consolidated.
We account, however, for dividends received and management fees, which we are
starting to charge.
Financing and investments
During the period we raised over #2.3 million, via a placing in February 2004
and the exercise of 10.1 million warrants attached to shares placed in October
2003. The remaining 12.9 million warrants expire at the end of October 2004.
The first months of the current financial year were marked by considerable
investment activities extending our holdings in our strategic investment sectors
of Energy & Environment, IT, Financial Services and Media. During the period we
have made the following investments, amounting to approximately #2 million at
cost:
* 570,000 in Century Data, a Chinese environmental business which monitors
pollution levels in China via China Mobile's GPRS system. This company
has expanded considerably from its initial base in Hebei Province since our
investment, and is now looking to expand its operations across several
provinces in China to take advantage of recent legislation passed by the
Chinese government to reduce some of the damage caused to the environment
by its rapid industrialisation;
* #269,000 in Tianfeng, a Chinese SMS technology business focusing on the
Chinese corporate market. This company continues to expand its customer
base and range of services within China, where the mobile is a more common
means of communication for business people than the Internet or fixed line
phones and faxes;
* #375,000 in Capitalink, a venture capital group with a number of
investments in the Chinese power, resource and environmental sectors. This
sector is seeing rapid growth as a result of the continuing switch from an
agricultural to industrial economy in China and increased urbanisation - in
July we announced that Asia Water, one of Capitalink's portfolio companies,
had won a large long term contract in China. We are working with
Capitalink's existing investments to assist them in restructuring and
raising additional finance, which has the potential to generate significant
fee income and additional investment opportunities for the Company going
forward;
* #602,000 in EAsset Management, a Malaysian investment banking boutique with
existing funds under management and a corporate finance business focused on
listing businesses on the Malaysian Stock Market;
* #70,000 in MyEG, a Malaysian based e-government services business, part of
the Governments Multi Media Super Corridor project;
* #55,000 in a Chinese power saving business, which is currently applying for
listing in Singapore;
* #19,000 to maintain our 30% stake in London Asia Capital Singapore, which
carried out a rights issue in the period to provide funds for investment
in companies looking to IPO in Singapore.
Our aim is to continue to build our portfolio of investments, which puts us in a
strong position to make substantial gains from 2006 onwards when we believe
there will be the opportunity to list some of our investments within 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. We
anticipate achieving higher valuations listing our investments in China rather
than elsewhere once this reform process is completed and investors in China and
overseas have confidence in the market.
In addition to the investments made in the period, we held the following
investments at 30th June 2004:
Company Sector Hold Invested
#'000
China Financial Services Financial services 48% 2,274
Biaoqi Media Group Media 51% 322
TCIB Financial services 25% 107
Idiom Ltd (Puca) IT (SMS) 16% 230
Europasia Education plc Education 6% 128
China Financial Services (formerly Beijing Success)
Beijing Success, the operating subsidiary, continues to see strong growth, with
unaudited profits after tax for the six months to 30th June 2004 of over #0.6
million, up over 30% on 2003. The listing procedure is well underway managed by
Mr Peng Mun Foo, recently appointed Finance Director, who is updating the draft
prospectus to incorporate the results to 30th June 2004. Depending on market
conditions, we anticipate that the listing will be finalised towards the end of
this year or early in 2005, depending on market conditions.
Biaoqi Media Group("Biaoqi")
Biaoqi consists of three investments, two in advertising businesses and one in a
film, TV production and publishing business, Biaoqi Culture. Biaoqi Oriental
Radio, the radio adverting business acquired in late 2003, continues to do well.
Biaoqi Culture is currently working on a large project for Chinese TV, the
profits from which will feed through in the second half of the year when the
program is completed.
TCIB
TCIB provides corporate finance advice to companies within China, with a focus
on advising businesses on listing in the UK and Singapore. TCIB has to date
signed up three clients seeking to go to IPO, and has a number of other
potential clients where TCIB is finalising the terms of their appointment with a
view to listing them next year.
Puca
Irish based business which provides SMS marketing packages and solutions to
corporate and governmental clients such as Vodafone, Guinness, Coke, Irish
Television, Nestle, Mars. Puca is currently seeking to tie up with partners
across Europe and Asia to leverage its expertise and client contacts.
Europasia Education ("EPE")
AIM listed EPE successfully completed a private placement in June, in which
London Asia participated, the proceeds of which went to acquire a profitable
English language school based in Bournemouth, UK. London Asia is assisting EPE
in identifying suitable acquisitions in China.
China Strategy
We have a twin strategy in China:
* Invest in profitable, growth businesses from which we can take dividends,
management fees and ultimately realise our investment via sale or
IPO;
* Advise Chinese companies, including our own investments, on raising funds
or listing outside China, or selling themselves to overseas investors.
We have built up a team and network of offices in China to give us access to
investment opportunities and enable us to be near the companies we invest in and
advise. During the period we have increased the number of staff we employ both
within China, and in our Singapore and London offices, which are responsible for
managing the exit from our investments and assisting companies go to IPO. We
recently opened an office in New York, headed by an experienced Wall Street
investment banker, to enable us to tap into the largest financial market in the
world.
In addition to our own team, we have extended our existing relationships and
coverage in China through alliances with Chinese Government economic zones and
business parks, and Chinese venture capitalists. This gives us access to over
7,000 businesses in China.
There have been various concerns expressed about the overheating of the Chinese
economy and the Chinese Government's attempts to slow the growth in the economy.
We focus on the following industry sectors, which we believe are less affected
by the Government's measures and continue to see strong growth due to the
opening up of the Chinese economy to private enterprise and the rise of consumer
demand within China:
* Media, IT and telecom - China is the largest mobile market in the world by
user numbers, and the media sector is developing rapidly as Western brands
attempt to tap into the Chinese consumer market
* Financial services - 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
* Environment, energy, water and waste - China's rapid growth over the last
25 years has created large power shortages and substantial damage to the
environment. China is the second largest user of oil after the USA, and
there are a number of power projects under construction. To counteract the
damage caused by rapid industrialisation, the Chinese Government has passed
a number of laws to try to prevent further damage to the environment and
improve air and water quality, and develop renewable energy resources.
We are 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. This enables us to continue to find attractively priced good quality
investment opportunities and avoid the overheating in some sectors of the
Chinese economy.
China's Economy
China's economy continues to grow strongly, and foreign investment into China
continues to increase, with China overtaking the USA in 2003 to become the
largest recipient of foreign direct investment according to figures released by
the UN and OECD, with Foreign Direct Investment into China up 19% in the first
eight months of 2004 to US$44 billion, with contracted investment up 39% to
US$93 billion for the same period, and 28,748 new foreign invested ventures
approved by the Chinese Ministry of Commerce.
IMF figures show China's GDP per head in 2003 exceeded US$1,000 for the first
time - placing it only 110th out of 179 countries for GDP per capita, showing
the huge growth that is still required in China to bring it up to comparable
levels of wealth with the West.
China resisted pressure to revalue its currency upwards and has maintained the
link to the US Dollar, which with sterling's continued strength against the
dollar means the exchange rate remains favourable for UK based investors in
China. Any upwards revaluation of the Chinese currency would mean an increase
in the value of our investments in Sterling.
Outlook
Our key focus at present is on maximising the revenue opportunities that can be
generated from our investments to date and the infrastructure we have built up
within and outside China.
* We have our first dividend from our portfolio companies, and in the second
half of the year we will receive management fees from some of the companies
in our portfolio.
* We have a number of advisory mandates where we are receiving fees for
assisting businesses in raising finance or going to IPO. This is a side of
the business we intend to continue to expand, as it generates cash and
profits without significant additional investment.
* We have a number of opportunities in the fund management sector. We see
considerably more opportunities to invest in China than we are able to fund
from our own resources. Managing a fund will enable us to fund those
deals, generating additional fee income and opportunities for capital
gains.
We are very excited about the opportunities for the company.
I would like to take this opportunity to thank all the staff for their hard work
and our shareholders for their continued support of the company.
Jack Wigglesworth
Chairman
29th September 2004
London Asia Capital plc
Unaudited profit and loss account
For the six months ended 30 June 2004
Six months ended Six months ended Period ended
30 June 30 November 2003 31 December 2003
2004 (Unaudited) (Audited)
(Unaudited) #'000 #'000
#'000
Operating profit/(loss) 394 (86) (131)
Net interest payable 24 (27) (29)
Retained profit(loss) for the financial 418 (113) (160)
period
Basic earnings/(loss) per ordinary share 0.59p (0.41p) (0.50p)
Diluted earnings/(loss) per ordinary share 0.44p (0.41p) (0.50p)
All amounts are derived from continuing operations.
There were no recognised gains or losses not dealt through the profit and loss
account.
London Asia Capital plc
Unaudited Balance Sheet
As at 30 June 2004
30 June 30 November 2003 31 December
2004 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000 #'000 #'000 #'000
Fixed assets
Tangible assets 6 2 3
Investments 4,924 2,959 2,974
Current assets
Debtors 733 104 77
Investments 246 138 138
Cash at bank and in hand 2,786 2,278 2,234
3,765 2,520 2,449
Creditors: amounts falling due within one (43) (2,183) (783)
year
Net current assets 3,722 337 1,666
Total assets less current liabilities 8,652 3,298 4,643
Creditors: amounts falling due after more (474) (447) (459)
than one year
Total assets less liabilities 8,178 2,851 4,184
Capital and reserves
Called up share capital 4,057 2,337 2,736
Share premium account 10,070 6,834 7,815
Profit and loss account (5,949) (6,320) (6,367)
Equity shareholders' funds 8,178 2,851 4,184
London Asia Capital plc
Unaudited cash flow statement
For the six months ended 30 June 2004
Six months ended Six months ended Period ended
30 June 30 November 2003 31 December 2003
2004
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000 #'000 #'000 #'000
Net cash inflow/(outflow) from operating (992) 1,954 538
activities
Returns on investment
Net interest paid 24 (27) (29)
Net cash outflow from returns on 24 (27) (29)
investments
Capital expenditure
Payment to acquire tangible assets (3) (2) (4)
Purchase of investments (466) - (10)
Net cash (outflow)/inflow from capital (469) (2) (14)
expenditure
Acquisitions and disposals
Payment to acquire subsidiary (314) (2,175) (789)
undertakings and investment in associates
Net cash outflow before management of (1,751) (250) (294)
liquid resources and financing
Management of liquid resources
Current asset investments (108) 156 156
Bank deposits - (1,000) -
Net cash (outflow)/inflow from management (108) (844) 156
of liquid resources
Financing
Proceeds from issue of shares 2,406 2,293 2,282
Net proceeds from convertible loan stock 5 211 222
Repayment of bank loan - (230) (230)
Net cash inflow from financing 2,411 2,274 2,274
Increase/(decrease) in cash 552 1,180 2,136
Reconciliation of movements in shareholders' funds
30 June 30 November 2003 31 December 2003
2004
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Profit/(loss) for the period 418 (113) (160)
Issue of ordinary share capital 3,576 2,296 3,676
Net addition to shareholders' funds 3,994 2,183 3,516
Opening shareholders' funds 4,184 668 668
Closing shareholders' funds 8,178 2,851 4,184
London Asia Capital plc
Notes to the interim results
1. Basis of preparation
The results for the six months ended 30 June 2004 are unaudited and have
not been reviewed by the Auditors. They have been prepared on accounting
bases and policies that are consistent with those used in the preparation
of the financial statements of the company for the period ended 31 December
2003.
The financial statements contained in this report do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985. The results for the period ended 31 December 2003 were reported on by
the auditors and received an unqualified audit report. Full accounts for
the period ended 31 December 2003 have been delivered to the Registrar of
Companies.
2. Significant accounting policies
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 lower of cost and net realisable value.
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(3) 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. Furthermore, due to
restrictions faced by the company in relation to its subsidiary
undertakings, income derived from these investments is accounted for on a
received basis.
Associated undertakings and participating interests
The company has not treated certain investments in which it holds more than
20% of the shares as associated undertakings as the directors consider that
the company does not have the required significant influence over the
operations of these undertakings.
3. Earnings per share
The calculation of the basic earnings per share is based on the profit
after tax of #418,000 on 70,901,779 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.
The calculation of diluted earnings per share is based on basic earnings
per share adjusted to allow for the issue of ordinary shares on the assumed
conversion of all options, warrants and convertible debt resulting in
101,773,426 ordinary shares.
4. Dividend
The directors do not recommend the payment of an interim dividend.
5. Taxation
No taxation is expected to arise due to tax losses brought forward.
6. Interim Results
Copies of the Interim Results are available on the company's web site,
www.londonasia.com, or from the Company's registered office, 11 Central
House, High Street, Ongar, Essex, CM5 9AA. Send an email to
accounts@londonasia.com if you would like a copy of the accounts posted to
you.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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