Share Name Share Symbol Market Type Share ISIN Share Description
Commodity Gwth LSE:COMG London Ordinary Share GB00B0N9QD87 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 2.75p 0.00p 0.00p - - - 0.00 05:00:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
- - - - 1.57

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DateSubject
02/10/2010
07:10
loverat: And the below update is not satisfactory in my opinion. 80% of it is giving shareholders a history of the company and its 'achievements'. Why? What shareholders want to know is more detail on the way ahead - if there is one. And the management should be consulting with shareholders regardless of whether negotiations are successful or not. Have any shareholders been consulted since? In the absence of an adequate explanation shareholders may be questioning whether the education assets were sold at a reasonable price (70k)and whether this contributed to the failure. terryh suggested that the price was far higher than this with all things considered. He also mentioned (regarding London Asia Capital) that he thought Jack Wigglesworth and other directors (presumably Allnutt) did a good job at keeping Littlewood at bay. Where is the evidence for this? Without a more detailed analysis from him regarding both matters I believe shareholders in COMG and LAC will feel very let down by the ex management. A Message From The Chief Executive Officer We are writing to update shareholders on progress at Commodity Growth plc, formerly Europasia Education plc (EPE). You will recall that the current board were appointed in 2003 following a succession of losses in the company including losses in 2002 of £2.2m. The board implemented a new strategy, raising in excess of £1.5m from investors in a series of funding rounds and re positioning the company as a pioneering education investment company focused on the fast growing Chinese market where the company opened a representative office. The company purchased 100% of Management International, a vocational and business training organisation and English 2000 a leading English language school. In addition, we established "Hello English" as a joint venture which went on to develop radio based courses in China which attracted an estimated four million participants, the largest non governmental training programme in the world. These successes led to Consultancy work for the Group including with the BBC to develop English language courses and with a number of Chinese Colleges. After careful research, the company made two very important strategic investments. the first was in the Shandong International Institute for Translation which was purchased by Europasia Beijing and in which EPE had a 15% stake having invested £156,000 in cash and a much larger amount in shares. EPE Beijing was subsequently listed on PLUS market in London with a new ultimate holding company, China Education Group plc. Our investment at the time and subsequently helped to develop a second campus of 22,000 square metres of lecture rooms, libraries and student accommodation, boosting student numbers by over 3,000. The value of our investment, reflected in the PLUS listed shares rose by 160% at their height. Building on this success, the company then invested to take a 10% stake in the Dalian Business Institute. As with the previous investment, the College was assisted in the development of new courses, marketing strategies and accounting systems and with a listing onto PLUS. The number of students rose by over 1.000. EPE increased its stake by another 5%. At its height, this investment produced a return in the form of PLUS shares of 109% for EPE The loss in EPE of £2.2m in 2002 was turned into an audited profit of £1.1m for the financial year 2006. Despite these achievements, the company was not able to translate the success into a rising share price. A consolidation, press coverage and private client broker tours failed to address this. The company was unable to raise additional sums needed for the next identified investments and so a decision was taken to alter the focus in order to continue growth. Victor Ng, an EPE Director devised the new strategy. The company would remain a China focused investment business but would concentrate on commodities. A new management team of four was recruited to run the business in China. Each of the four had the background, experience and contacts in the industry needed for the strategy. Benson Day was recruited as Chief Executive Officer, the London office was closed and a new office opened in Singapore where Benson Day was based. James Holmes, stepping down as CEO, joined George Allnutt as a non executive Director. The new management team announced the first investments had been identified and due diligence was underway. In the course of the following months the company moved back from profit to loss and the quote on AIM was ended. These events led to the resignation of the management team, then the new CEO and then Victor Ng. These events have left the company in a difficult position. There is no longer an office or administrative base and there are now significant accrued interest payments due to loan note holders which will make a re-admission to the market and a fundraising difficult. The non executive directors have had to temporarily reassume executive functions in order to manage the portfolio and negotiate with the loan note holders. If these negotiations are successful, the directors plan to consult with shareholders on ways to develop the business and restore value to shareholders. James Holmes Chief Executive Officer 20 July 2009
04/9/2010
05:56
loverat: 29 June 2007 - a few months before COMG (EPE) was suspended........ Anyone know what happened to this offer for COMG's stakes in CEG and DBI? Was this another aborted transaction? "We have received an offer from AiM listed London Asia Capital plc and its associates ("LDC") to acquire up to #1.5 million worth of CEG shares and our entire holding of DBI shares. The valuation of our holdings for the purpose of the transaction is based on the average closing mid market price of the previous five trading days as quoted by PLUS at the time of the transaction, less 30%. Based on current share price and assuming the full acquisition, this would equate to sales proceeds of #2.8 million against a book cost for the investments sold of #2.1 million, generating a profit for EPE on the deal of #0.7 million. LDC will pay for its stake via the cancellation of #452,399 of EPE 10% Convertible Loan Notes and via LDC ordinary shares at a valuation per share equal to the average closing mid market price of the previous five trading days as quoted on AiM. The transaction will result in a significant reduction in liabilities for the Group, a saving of #45,240 in interest costs per annum, a profit in the accounts on the sale of the investments and the holding of more liquid LDC AiM stock rather than CEG and DBI's relatively illiquid PLUS stock which can be sold to generate funds for the new investment strategy. Given the relative illiquidity of PLUS listed stock, we have been unable to realise our holdings in DBI and CEG to date and do not anticipate that situation changing in the near future. I therefore as independent director, recommend this transaction. As Simon Littlewood and George Allnutt are interested in the share capital of LDC, the proposed disposals constitute substantial property transactions under section 320 of the Companies Act 1985, and, accordingly, are conditional on the approval of shareholders at the AGM"
22/5/2010
15:58
loverat: Picked this up from another thread: THE DEADLY ART OF STOCK MANIPULATION... In every profession, there are probably a dozen or two major rules. Knowing them is what separates the professional from the amateur. Not knowing them at all? Well, let's put it this way: How safe would you feel if you suddenly found yourself piloting (solo) a Boeing 747 as it were landing on an airstrip? Unless you are a professional pilot, you would probably be frightened out of your wits and would soil your underwear. Hold that thought as you read this essay because I will explain to you how market manipulation works. What the professionals and the securities regulators know and understand, which the rest of us do not, is this. "RULE NUMBER ONE: ALL SHARP PRICE MOVEMENTS -- WHETHER UP OR DOWN --ARE THE RESULT OF ONE OR MORE (USUALLY A GROUP OF) PROFESSIONALS MANIPULATING THE SHARE PRICE." This should explain why a mining company finds something good and" nothing happens" or the stock goes down. At the same time, for NO apparent reason, a stock suddenly takes off for the sky! On little volume! Someone is manipulating that stock, often with an unfounded rumour. In order to make these market manipulations work, the professionals assume: (a) The Public is STUPID and (b) The Public will mainly buy at the HIGH and (c) The Public will sell at the LOW. Therefore, as long as the market manipulator can run crowd control, he can be successful. Let's face it: The reason you speculate in such markets is that you are greedy AND optimistic. You believe in a better tomorrow and NEED to make money quickly. It is this sentiment which is exploited by the market manipulator. He controls YOUR greed and fear about a particular stock. If he wants you to buy, the company's prospects look like the next Microsoft. If the manipulator wants you to desert the sinking ship, he suddenly becomes very guarded in his remarks about the company, isn't around to glowingly answer questions about the company and/or GETS issued very bad news about the company. Which brings us to the next important rule. "RULE NUMBER TWO: IF THE MARKET MANIPULATOR WANTS TO DISTRIBUTE (DUMP)HIS SHARES, HE WILL START A GOOD NEWS PROMOTIONAL CAMPAIGN." Ever wonder why a particular company is made to look like the greatest thing since sliced bread? That sentiment is manufactured. Newsletter writers are hired -- either secretly or not -- to cheerlead a stock. PR firms are hired and let loose upon an unsuspecting public. Contracts to appear on radio talk shows are signed and implemented. Stockbrokers get "cheap" stock to recommend the company to their "book" (that means YOU, the client in his book). An advertising campaign is rolled out (television ads, newspaper ads, card deck mailings). The company signs up to exhibit at "investment conferences" and "gold shows" (mainly so they can get a little "podium time" to hype you on their stock and tell you how "their company is really different" and" not a stock promotion.") Funny little "hype" messages are posted on Internet newsgroups by the same cast of usual suspects. The more, the merrier. And a little "juice" can go a long way toward running up the stock price. The HYPE is on. The more clever a stock promoter, the better his knowledge of the advertising business. Little gimmicks like "positioning" are used. Example: Make a completely unknown company look warm and fuzzy and appealing to you by comparing it to a recent success story. The only reason you have been invited to this seemingly incredible banquet is that YOU are the main course. After the market manipulator has suckered you into "his investment," exchanging HIS paper for YOUR cash, the walls begin to close in on you. Why is that? "RULE NUMBER THREE: AS SOON AS THE MARKET MANIPULATOR HAS COMPLETED HIS DISTRIBUTION (DUMPING) OF SHARES, HE WILL START A BAD NEWS OR NO NEWS CAMPAIGN." Your favourite home-run stock has just stalled or retreated a bit formats high. Suddenly, there is a news VACUUM. Either NO news or BAD rumours. I discovered this with quite a few stocks. I would get LOADS of information and "hot tips." All of a sudden, my pipeline was shut-off. Some companies would even issue a news release CONDEMNING me ("We don't need 'that kind of hype' referring to me!). Cute, huh? When the company wanted fantastic hype circulated hither and yon, there would be someone there to spoon-feed me. The second the distribution phase was DONE....ooops! Sorry, no more news. Or, "I'm sorry. He's not in the office." Or, "He won't be back until Monday." The really slick market manipulators would even seed the Internet newsgroups or other journalists to plant negative stories about that company. Or start a propaganda campaign of negative rumours on all available communication vehicles. Even hiring a "contraire" or" special PR firm" to drive down the price. Even hiring someone to attack the guy who had earlier written low about the company. (This is not a game for the faint-hearted!) You'll also see the stock drifting endlessly. You may even experience a helpless feeling, as if you were floating in outer space without a lifeline. That is exactly HOW the market manipulator wants you to feel. See Rule Number Five below. He may also be doing this to avoid the severe disappointment of a "dry hole" or a "failed deal." You'll hear that oft-cried refrain, "Oh well, that's the junior minerals exploration business... very risky!" Or the oft-quoted statistic, "Nine out of 10 businesses fail each year and this IS a Venture Capital Start-up stock exchange." Don't think it wasn't contrived. If a geologist at a junior mining company wasn't optimistic and rosy in his promise of exploration success, he would be replaced by someone who was! Ditto for the high-tech deal, in a world awash with PhD's. So, how do you know when you are being taken? Look again at Rule #1.Inside that rule, a few other rules unfold which explain how a stock price is manipulated. "RULE NUMBER FOUR: ANY STOCK THAT TRADES HUGE VOLUME AT HIGHER PRICES SIGNALS THE DISTRIBUTION PHASE." When there was less volume, the price was lower. Professionals were accumulating. After the price runs, the volume increases. The professionals bought low and sold high. The amateurs bought high (and will soon enough sell low). In older books about market manipulation and stock promotion, which I've recently studied, the mark-up price referred to THREE times higher than the floor. The floor is the launch pad for the stock. For example, if one looks at the stock price and finds a steady flat line on the stock's chart of around 10p , then that range is the FLOOR. Basically, the mark-up phase can go as high as the market manipulator is capable of taking it. From my observations, a good mark-up should be able to run about five to ten times higher than the floor, with six to seven being common. The market manipulator will do everything in his power to keep you OUT OF THE STOCK until the share price has been marked up by at least two-three times, sometimes resorting to "shaking you out" until after he has accumulated enough shares. Once the mark-up has begun, the stock chart will show you one or more spikes in the volume -- all at much higher prices (marked up by the manipulator, of course). "RULE NUMBER FIVE: THE MARKET MANIPULATOR WILL ALWAYS TRY TO GET YOU TO BUY AT THE HIGHEST, AND SELL AT THE LOWEST PRICE POSSIBLE." Just as the manipulator will use every available means to invite you to "the party," he will savagely and brutally drive you away from "his stock" when he has fleeced you. The first falsehood you assume is that the stock promoter WANTS you to make a bundle by investing in his company. So begins a string of lies that run for as long as your stomach can take it. You will get the first clue that "you have been had" when the stock stalls at the higher level. Somehow, it ran out of steam and you are not sure why. Well, it ran out of steam because the market manipulator stopped running it up. It's over inflated and he can't convince more people to buy. The volume dries up while the share price seems to stall. LOOK AT THE TRADING VOLUME, NOT THE SHARE PRICE! When earlier, there may have been X amounts of shares trading each day for eight out of 12 trading days (as in the case of CONROY), now the volume has slipped to X amount shares (or so) daily. There are some buyers there, enough for the manipulator to continue dumping his paper, but only so long as he can enlist one or more individuals/services to bang his drum. He may continue feeding the promo guys a string of "promises" and" good news down the road." (Believe me, this HAS happened to me!) But, when the news finally arrives, the stock price goes THUD! This is entirely orchestrated "RULE NUMBER SIX: IF THIS IS A REAL DEAL, THEN YOU ARE LIKELY TO BE THE LAST PERSON TO BE NOTIFIED OR WILL BE DRIVEN OUT AT THE LOWER PRICES." Like Jesse Livermore wrote, "If there's some easy money lying around, no one is going to force it into your pocket." The same concept can be more clearly understood by watching the trades. When a market manipulator wants you into his stock, you will hear LOUD noises of stock promotion and hype. If you are "in the loop," you will be bombarded from many directions. Similarly, if he wants you out of the stock, then there will be orchestrated rumours being circulated, rapid-fired at you again from many directions. Just as good news may come to you in waves, so will bad news. You will see evidence of a VERY sharp drop in the share price with HUGE volume. That is you and your buddies running for the exits. If the deal is really for real, the market manipulator wants to get ALL OF YOUR SHARES or as many as he can... and at the lowest price he can. Where as before, he wanted you IN his market, so he could dump his shares to you at a higher price, NOW when he sees that this deal IS for real, he wants to pay as little as possible for those same shares... YOUR shares which he wants you to part with, as quickly as possible. The market manipulator will shake you out by DRIVING the price as lows he can. Just as in the "accumulation" stage, he wants to keep everything as quiet as possible so he can snap up as many of the shares for himself, he will NOW turn down, or even turn off, the volume so he can repeat the accumulation phase. The accumulation phase was TOP SECRET. The noise level was deadingly silent. As soon as the insiders accumulated all their shares, they let YOU in on the secret. "RULE NUMBER SEVEN: CONVERSELY, YOU WILL OFTEN BE THE LAST TO KNOWWHEN THIS DEAL SHOWS SIGNS OF FAILURE." Twenty-twenty hindsight will often show you that there was a "little stumble" in the share price, just as the "assays were delayed" or the" deal didn't go through." Manipulators were peeling off their paper to START the downslide. And ACCELERATE it. The quick slide down makes it improbable for your getting out at more than what you originally paid for the stock... and gives you a better reason for holding onto it "a little longer" in case the price rebounds. Then, the drifting stage begins and fear takes over. And unless you have nerves of steel and can afford to wait out the manipulator, you will more than likely end up selling out at a cheap price. For the insider, market maker or underwriter is obliged to buy back all of your paper in order to keep his company alive and maintain control of it. The less he has to pay for your paper, the lower his cost will be to commence his stock promotion again... at some future date. Even if his company has no prospects AT ALL, his "shell" of a company has some value (only in that others might want to use that structure so they can run their own stock promotion). So, the manipulator WILL buy back his paper. He just wants to make sure that he pays as little for those shares as possible. "RULE NUMBER EIGHT: THE MARKET MANIPULATOR WILL COMPEL YOU INTO THESTOCK SO THAT YOU DRIVE UP ITS PRICE SHARES." Placing a Market Order or Pre-Market Order is an amateur's mistake, A market manipulator (traders included here) can jack up the share price during your market order and bring you back a confirmation at some preposterous level. The Market Manipulator will use the "tape" against you. He will keep buying up his own paper to keep you reaching for a higher price. He will get in line ahead of you to buy all the shares at the current price and force you to pay MORE for those shares. He will tease you and MAKE you reach for the higher price so you "won't miss out." Miss out on what? Getting your head chopped off, that's what! One can avoid market manipulation by not buying during the huge price spikes and abnormal trading volumes, also known as chasing the stock to a higher price. "RULE NUMBER NINE: THE MARKET MANIPULATOR IS WELL AWARE OF THE MOTIONS YOU ARE EXPERIENCING DURING A RUN UP AND A COLLAPSE AND WILL PLAY YOUR EMOTIONS LIKE A PIANO." During the run up, you WILL have a rush of greed which compels you to run into the stock. During the collapse, you WILL have a fear that you will lose everything... so you will rush to exit. See how simple it is and how clear a bell it strikes? Don't think this formula isn't tattooed inside the mind of every manipulator. The market manipulator will play you on the way up and play you on the way down. If he does it very well, he will make it look like someone else's fault that you lost money! Promise to fill up your wallet? You'll rush into the stock. Scare you into losing every penny you have in that stock? You'll run away screaming with horror! And vow to NEVER, ever speculate in such stocks again. But many of you still do.... The manipulator even knows how to bring you back for yet another play. What actors! No wonder Vancouver is sometimes called "Hollywood North." "FINAL RULE: A NEW BATCH OF SUCKERS ARE BORN WITH EVERY NEW PLAY." The Financial Markets are a Cruel, Unkind and Dangerous Playing Field, one place where the newest amateurs are generally fleeced the most brutally.... usually by those who KNOW the above rules. Just as I have a duty to ensure that each of you understand how this game is played, YOU now have that same duty to guarantee that your fellow speculator understands these rules. Just as I would be a criminal for not making this data known to you, YOU would be just as criminal to keep it a secret. There will always be an unsuspecting, trusting fool whom the rabid dogs will tear to shreds, but it does NOT have to be this way. IF every subscriber made this essay broadly known to his friends, acquaintances and family, and they passed it on to their friends, word of mouth could cause many of these market manipulators to pause. IF this effort were done strenuously by many, then perhaps the financial markets could weed out the crooked manipulators and the promoters could bring us more legitimate plays. The stock markets are a financing tool. The companies BORROW money from you, when you invest or speculate in their companies. They want their share price going higher so they can finance their deal with less dilution of their shares... if they are good guys. But, how would you feel about a friend or family member who kept borrowing money from you and never repaid it? That would be theft, plain and simple. So, a market manipulator is STEALING your money.
04/5/2010
04:01
loverat: Not sure if anyone remembers a poster called Agincourt. He was a member of the RSV group too - and invested in various mining stocks etc. This is why I am not a particular fan of action groups as there are always arguments in the end. Anomalous - 29 Mar'05 - 16:41 - 4109 of 10112 Well the 16 week one is still possible, which just goes to show how much of a prat Agincourt is. He doesn't give a sh!t about other investors. He turned his back on the Room Service shareholders, so they turned their back on him. Just recently he was rubbishing my prediction that NML might reach 4p. Look where they are now. Not far off and the MMs are selling below mid-price. Besides, who would trust a poster that has multiple identities. Agincourt has numerous ADVFN pseudonyms. You have to question someone that uses more than one ID, to reflect his personality, because he's probably psychotic. He certainly exhibits a severe personality disorder and distorted sense of reality. A pity that they have care in the community, as otherwise he would have been sectioned years ago. Just watch the replies he posts in reponse and you'll see what I mean! Anomalous - 20 Aug'05 - 23:53 - 721 of 5408 >English Bigblls Just because someone has the same view as me, does not mean that they are me. Your paranoia is really showing if you believe that I am using aliases. It appears that Mclellan knows Aimtradercom from another site, so that should tell straight away that she knows he's a different person. As I have said before and will say again, I only use one pseudonym on ADVFN. I see no reason to use multiple identities, such as that well known schizo-phrenic Agincourt does. I don't have to construct other people to agree with my analysis and reasoning. Other people agree because the facts standfor themselves. How else do you explain the drop in the share price? Do you believe that trained mice are taking the diamonds away? In other words, how long have you been off your medication?!
13/4/2010
23:11
loverat: 6.3 Loan of $5 Million Written Off Our investigations have uncovered that on 7th September 2005, LAC plc sent $5 million to Nourican Adriatic d.o.o., in Zagreb, Croatia. The transfer document was signed by Mr Simon Littlewood. A signed contract confirms that the loan was to have been secured by a pledge over 25,000 shares in Industrogradnja d.d., but no signed guarantee or pledge has been traced. The purpose of the loan was to help Nourican Adriatic d.o.o. provide evidence to the Croatian Stock Exchange (Zagrebaka Burza) that cash needed for a bid to be made by two Croatian companies for Industrogradnja was available. LAC was to receive a fee of US$ 1 million for this loan. The bid for Industrogradnja was launched on 11th November 2005 at a share price of 650 Kuna at a discount to its market price of 810 Kuna. As a result, only 2,640 shares were tendered for at a total cost of $273,244. It appears that the $5 million loan provided by LAC was not used for the bid and should have been returned to LAC in January 2006, together with the $1 million fee. We can find no evidence that this sum reached LAC, nor is there documentary evidence to show that steps were taken through the courts in any country to recover this money. The transaction was managed by Mr Simon Littlewood, who has since commented that the "Croatian Mafia" has the outstanding $6 million belonging to LAC shareholders. I actually made some enquiries a while back about his but drew a blank. In the absence of any RNS it would help if Mr Littlewood had been more specific as to which section of the 'Croatian Mafia' held £6 Million of shareholders funds.
13/4/2010
22:19
loverat: Perhaps I can ask him for his comments regarding this lot..... From the London Asia Capital directors: 6. CAUSES FOR CONCERN 6.1 Bank Accounts In September 2008, almost all LAC's funds were in the bank accounts of its foreign subsidiaries and associated companies, under the control of Mr Simon Littlewood and his wife, Josée Lai. Mr Simon Littlewood resigned as a director of LAC on 25th July 2007 and so it was not proper for him to continue to control - to the exclusion of all other main board directors - the Company's cash and investments. Mr Simon Littlewood failed to tell LAC directors of the locations of many LAC subsidiaries and associated company bank accounts and subsequently volunteered the minimum of information. For example, the LAC directors believed that there were no bank accounts in Singapore, although LAC's wholly-owned Singapore subsidiary, London Asia Capital (Singapore) PTE Ltd, had bank accounts with DBS Bank, Fortis and UOB. Your Board persuaded HSBC in Hong Kong and DBS Bank in Singapore to suspend local bank accounts and were able to send £500,000 back to the UK, thereby putting LAC in funds so that the Company could afford to run day-to-day activities and commence the forensic investigation necessary for the preparation of the accounts for 2007 and beyond. 6.2 Undocumented Transactions With control of the bank accounts, it became apparent that large sums of money had entered, left and moved around LAC in a way that was not supported by proper contracts, invoices or proper business practice. Sums due to one company had improperly been paid to others; in particular, funds due to wholly-owned subsidiaries of LAC were paid into companies in which LAC was only an 80% or even 40% shareholder. Many of the investments, particularly those in China, were held in a way that made it impossible to prove title. Some shares, which were the property of LAC or its subsidiaries, were held by private companies in China, with no adequate contract or other safeguard for the shareholders of LAC. 6.3 Loan of $5 Million Written Off Our investigations have uncovered that on 7th September 2005, LAC plc sent $5 million to Nourican Adriatic d.o.o., in Zagreb, Croatia. The transfer document was signed by Mr Simon Littlewood. A signed contract confirms that the loan was to have been secured by a pledge over 25,000 shares in Industrogradnja d.d., but no signed guarantee or pledge has been traced. The purpose of the loan was to help Nourican Adriatic d.o.o. provide evidence to the Croatian Stock Exchange (Zagrebaka Burza) that cash needed for a bid to be made by two Croatian companies for Industrogradnja was available. LAC was to receive a fee of US$ 1 million for this loan. The bid for Industrogradnja was launched on 11th November 2005 at a share price of 650 Kuna at a discount to its market price of 810 Kuna. As a result, only 2,640 shares were tendered for at a total cost of $273,244. It appears that the $5 million loan provided by LAC was not used for the bid and should have been returned to LAC in January 2006, together with the $1 million fee. We can find no evidence that this sum reached LAC, nor is there documentary evidence to show that steps were taken through the courts in any country to recover this money. The transaction was managed by Mr Simon Littlewood, who has since commented that the "Croatian Mafia" has the outstanding $6 million belonging to LAC shareholders. 6.4 Share Swap Companies In May and June 2007, LAC announced to the London Stock Exchange that it had issued in total 98 million fully-paid new shares (valued at approximately £10 million) to shareholders in four newly-formed companies, three in Hong Kong and one in Singapore, in return for a 40% interest in those companies ("Share Swap companies"). In each of the four Share Swap companies third-party investors held the remaining 60% interest. In aggregate, these third-party investors paid little more than £20,000 (twenty thousand pounds) for their investment, which effectively gave them collectively a 30% shareholding in LAC. In breach of the Companies Act, no valuation of the Share Swap companies was obtained prior to their acquisition by LAC in May and June 2007. Details of these share issues and of the acquisitions were described in the audited accounts for the year to 31st December 2006, and in company regulatory announcements to the London Stock Exchange. Applications were made for the shares to be dealt on AIM and a further review of the acquisitions was made in the 2007 interim results. These interim results showed that these valueless companies were purported to have increased the LAC Net Asset Value by £10.9 million, equivalent to almost 25% of LAC net asset value. It was stated in the 2007 interim results that these Share Swap companies had a "combined capital value of over £27 million." The audited accounts of those companies demonstrate little or no value. At all relevant times these transactions were managed by Mr Simon Littlewood. We succeeded in having the 98 million shares in LAC, referred to above, gifted back to LAC plc and cancelled at a Board Meeting held on 22nd May 2009, resulting in the number of shares in issue dropping from 327 million to 229 million, to the benefit of shareholders and increasing pro forma Net Asset Value from 7.5p to 10.7p per share. LAC is pursuing claims for up to £16 million against the four 60% shareholders in each of these Share Swap companies for the consideration they failed to pay on their shares. While it is unlikely that these claims will be met in full, we are confident that there will be a significant net financial benefit to shareholders in LAC. 6.5 Aborted Acquisitions Not Announced In May and June 2007 announcements were made to the London Stock Exchange of acquisitions by the above Share Swap companies totalling £12 million. These appeared in the Chief Executive's Report in the 2006 Report & Accounts as signed by Mr Simon Littlewood and as a post balance sheet event note, in which shareholders were informed on various other matters, including:  China Exchange Limited had acquired an 80% stake in SYGC  China Exchange Limited had acquired a 40% stake in Xi'an Private Equity Exchange  London Asia Limited had acquired a 51% stake in Jin Lian Ann Insurance Broker of Beijing  London Asia Limited had acquired a 51% stake in Zhong Nan Auction House The 2007 Interim Report also referred to these acquisitions. We are unable to find evidence that these acquisitions took place and they are not recorded in the audited accounts of those companies. The first indication was an email sent in May 2008 by Mr Simon Littlewood to Moore Stephens, auditors to LAC, shown below: No statement concerning these events was made to shareholders until the announcement made in my letter to shareholders on 7th May 2009, which meant that LAC was in breach of its obligations to the AIM market and gave a misleading impression of its financial status. 6.6 Diversion of Funds In December 2007, London Asia Capital (Singapore) PTE Limited ("LAC(S)") was due £1.6 million from China Growth Opportunities plc in respect of performance fees. At the written instructions of Josée Lai, wife of Mr Simon Littlewood, these funds were not paid to LAC(S) but instead to London Asia Fund Management Ltd, a Brunei company in which LAC held 40% of the equity, while Mr Simon Littlewood and associates held the remaining 60% shareholding. On receipt of these funds by the Brunei company, £401,440 was immediately transferred to each of Mr Simon Littlewood and a third party. In so far as the Directors are aware, LAC and its subsidiaries have no contractual relationship with that third party. 6.7 Improper Share Support Activity Between December 2007 and April 2008, shares in LAC were purchased on the AIM market by the Company totalling 1.85 million shares. RNS announcements were issued stating they were to be held in Treasury. The majority of these transactions were arranged by Mr Simon Littlewood. Your Directors have been advised that these purchases were illegal because LAC did not have sufficient distributable reserves and was therefore in breach of the Companies Act. While Mr Simon Littlewood was a Director of Huang He Securities Ltd, one of the Share Swap companies mentioned earlier, instructions were given for the purchase of 2.5 million shares of LAC in 2007 and 2008. The cash to buy these shares came from London Asia Investments (Hong Kong) Ltd ("LAI(HK)") and thus the transaction was circular. The effect was to artificially support LAC's share price which was in breach of the Companies Act. 6.8 Substantial sums of circa £50 million which passed through the accounts of LAI(HK) Since March 2006 Mr. Simon Littlewood has served and continues to serve on the Board of CGO, previously called London Asia Chinese Private Equity Fund plc, which invested heavily in China and Asia, raising and investing circa £50 million. We have discovered that the cash for these investments made by CGO passed through the bank accounts of LAI(HK). LAI(HK)'s records do not provide full transparency for these arrangements and neither can all such sums be validated. Commissions received by LAI(HK) from CGO for both managing and investing the fund were paid away and could not all be reconciled from the information available. Pursuant to the cooperation agreement referred to in paragraph 5 above, LAC asked CGO (including Mr Brett Miller) for details of the substantial commission payments, but in breach of that agreement CGO withdrew and refused to provide further information, frustrating our efforts and further delaying the preparation of the Accounts of LAC. 6.9 Shares Held in Trust in China LAC has significant shareholdings in unquoted Chinese companies. It is now clear that, with the exception of Zhongying and Biaoqi Tienfeng, the shares are not held directly by LAC or its subsidiaries but instead are held in trust by a Chinese private company under an informal arrangement with no proper documentation or trust documents. LAC and its subsidiaries may therefore have paid substantial sums in shares for investments where proof of ownership is uncertain. 6.10 China Financial Services China Financial Services ("CFS") was one of LAC's early investments, and paid substantial dividends. CFS provided real-time information on securities and analysis software to support investors to buy in the stock market. We understand that CFS was prepared for a public listing in 2006. As at 30 June 2007 the fair value of this investment of £4.76 million was included in LAC's interim results. Your Directors have now discovered that in the summer of 2006, the China Stock Exchange announced that it would no longer provide free market data and as a result the business of CFS rapidly collapsed. In calendar year 2006, CFS's revenue was £2.78m and pre-tax profits £1.97m. Based on the information available, the revenue in 2007 was £227,873 and the losses amounted to £1.34m. In the first half of 2008, CFS had no revenue and lost £841,103. It is believed the business has since ceased operating. In 2007, LAC announcements were made to the London Stock Exchange concerning CFS but none indicated its rapid trading decline. The last statement included in the Offer Document referred to below mentions "the confidence we have in CFS`s expansion strategy". Failure to keep shareholders and the market informed is in breach of the AIM rules. 6.11 Sale of Shares in Investee Companies by LAC On 5th October 2007 London Asia Corporate Finance Limited (an FSA-regulated corporate finance company headed by Mr. Simon Littlewood) authorised the issue of an Offer Document, which stated that six LAC portfolio investments valued at £7.7 million were being offered to LAC shareholders at a discounted value for a direct investment therein. The Offer Document stated the portfolio investments being sold represented "less than 10% of the LAC balance sheet as at 30th June 2007" and went on to state "should the Offer be taken up in full there will be a realised profit on disposal of over £1.5 million." Your Board could not reconcile these holdings to the books of LAC and have subsequently discovered that some of the shares offered belonged to Third Parties. The Offer Document makes no such reference to Third Parties and indicates that all the shares on offer were owned by LAC and related companies. On 30th October 2007 LAC announced, "There was a strong level of interest shown in the Offer, with offers made for a total of £3 million worth of shares, out of £7.7 million on offer. The total sold represents 7% of LAC's reported net asset value as at 30th June 2007. Based on the original cost of £1.4 million, the profit on sale against original cost amounted to approximately £1.5 million." Of the purported £3 million sales proceeds, less than £700,000 has been traced. Failure to keep the markets and shareholders informed is in breach of the AIM rules.
12/3/2010
18:09
loverat: A Message From The Chief Executive Officer We are writing to update shareholders on progress at Commodity Growth plc, formerly Europasia Education plc (EPE). You will recall that the current board were appointed in 2003 following a succession of losses in the company including losses in 2002 of £2.2m. The board implemented a new strategy, raising in excess of £1.5m from investors in a series of funding rounds and re positioning the company as a pioneering education investment company focused on the fast growing Chinese market where the company opened a representative office. The company purchased 100% of Management International, a vocational and business training organisation and English 2000 a leading English language school. In addition, we established "Hello English" as a joint venture which went on to develop radio based courses in China which attracted an estimated four million participants, the largest non governmental training programme in the world. These successes led to Consultancy work for the Group including with the BBC to develop English language courses and with a number of Chinese Colleges. After careful research, the company made two very important strategic investments. the first was in the Shandong International Institute for Translation which was purchased by Europasia Beijing and in which EPE had a 15% stake having invested £156,000 in cash and a much larger amount in shares. EPE Beijing was subsequently listed on PLUS market in London with a new ultimate holding company, China Education Group plc. Our investment at the time and subsequently helped to develop a second campus of 22,000 square metres of lecture rooms, libraries and student accommodation, boosting student numbers by over 3,000. The value of our investment, reflected in the PLUS listed shares rose by 160% at their height. Building on this success, the company then invested to take a 10% stake in the Dalian Business Institute. As with the previous investment, the College was assisted in the development of new courses, marketing strategies and accounting systems and with a listing onto PLUS. The number of students rose by over 1.000. EPE increased its stake by another 5%. At its height, this investment produced a return in the form of PLUS shares of 109% for EPE The loss in EPE of £2.2m in 2002 was turned into an audited profit of £1.1m for the financial year 2006. Despite these achievements, the company was not able to translate the success into a rising share price. A consolidation, press coverage and private client broker tours failed to address this. The company was unable to raise additional sums needed for the next identified investments and so a decision was taken to alter the focus in order to continue growth. Victor Ng, an EPE Director devised the new strategy. The company would remain a China focused investment business but would concentrate on commodities. A new management team of four was recruited to run the business in China. Each of the four had the background, experience and contacts in the industry needed for the strategy. Benson Day was recruited as Chief Executive Officer, the London office was closed and a new office opened in Singapore where Benson Day was based. James Holmes, stepping down as CEO, joined George Allnutt as a non executive Director. The new management team announced the first investments had been identified and due diligence was underway. In the course of the following months the company moved back from profit to loss and the quote on AIM was ended. These events led to the resignation of the management team, then the new CEO and then Victor Ng. These events have left the company in a difficult position. There is no longer an office or administrative base and there are now significant accrued interest payments due to loan note holders which will make a re-admission to the market and a fundraising difficult. The non executive directors have had to temporarily reassume executive functions in order to manage the portfolio and negotiate with the loan note holders. If these negotiations are successful, the directors plan to consult with shareholders on ways to develop the business and restore value to shareholders. James Holmes Chief Executive Officer 20/7/09 So can we have an update, Mr Holmes? And, why is Nigel Smith, the shareholders champion, the registant of the website.
29/11/2009
18:29
loverat: And for those who have not read the shocking and shameful events at London Asia Capital - here is the summary. A clear, concise and in my opinion honest appraisal of events. I think the hard work carried out by Keith Negal and the others to repair the damage bodes well for the future of LAC. And as for what went on I think it could quite easily be compared to Meldex and Langbar, albeit perhaps on a smaller scale. Refreshing to see it all out in the open. Dear Shareholder The last year has been extremely difficult and I am pleased that we are now in a position to put before you the accounts for 2007. It is the intention of your Board that the accounts for 2008 and 2009 will follow shortly and that by March 2010 we will be able to put the appalling affairs, which have caused us so much trouble and damaged the reputation of your company, behind us. Moreover, it seems very likely that out of this unholy mess will develop a strong relationship with a successful Chinese entrepreneur. We believe that this has the potential to lift the performance of your company above many others whose business lies in China. During our investigations your Directors have found it difficult to grasp the full extent of the problems we unearthed. The task of putting matters right and preparing accounts for audit has taken many months. One of the most difficult problems to solve has been dealing with the many millions of shares in London Asia Capital Plc either issued in order to purchase valueless companies or purchased by subsidiaries and associates of London Asia Capital Plc in an attempt to support the share price. We have been successful in cancelling 98m of these shares, thereby increasing the net assets per share by over 40%. Some of the shares in LAC purchased by group companies have been sold for the benefit of shareholders. Others, however, were purchased illegally leaving us no choice but to write these off at a cost to the company. These transactions will not wash through the system until the accounts for 2009 and this will inevitably cause these accounts for all three years to look rather strange. From 2010 these peculiarities will be behind us. In the 2007 accounts the balance sheet and the adjusted net assets per share provide shareholders with a true picture. At this point I must make it clear that the interim accounts for 2007, which showed a net worth of some £44 million were so inaccurate as to be meaningless; for example, £10 million of those assets relate to the four virtually valueless share swap companies mentioned in the Chairman's Report. Other investments to which a value was attributed cannot, at this time, be regarded as having any value whatsoever. At the time of writing this letter your directors believe the net asset value of the business to be in excess of £24 million, equivalent to over 10.7p per share. This compares favourably with the mid-market closing price of 2.75p per share when your Chairman, Jack Wigglesworth, and the then Managing Director, George Allnutt, were obliged to ask for the shares to be suspended because of their concerns about their inability to obtain believable figures. It is inevitable that shareholders will wish to understand precisely what has happened to their company since the accounts for the year 2006 were placed before them. I shall now do my best to explain the most significant of those many matters which have troubled your Directors over the last year. Share Swap Companies In May and June 2007, LAC announced to the London Stock Exchange that it had issued in total 98 million fully-paid new shares (valued at approximately £10 million) to shareholders in four newly-formed companies, three in Hong Kong and one in Singapore, in return for a 40% interest in those companies ("Share Swap companies"). In each of the four Share Swap companies third-party investors held the remaining 60% interest. In aggregate, these third-party investors paid little more than twenty thousand pounds for their investment, which effectively gave them collectively a 30% shareholding in LAC. In breach of the Companies Act, no valuation of the Share Swap companies was obtained prior to their acquisition by LAC in May and June 2007. Details of these share issues and of the acquisitions were described in the Audited Accounts for the year to 31st December 2006, and in company regulatory announcements to the London Stock Exchange. Applications were made for the shares to be dealt on AIM and a further review of the acquisitions was made in the 2007 interim results. These interim results showed that these virtually valueless companies were purported to have increased the LAC Net Asset Value by £10.9 million, equivalent to almost 25% of LAC net asset value. It was stated in the 2007 interim results that these Share Swap companies had a "combined capital value of over £27 million." The Audited Accounts of those companies demonstrate little or no value. At all relevant times these transactions were managed by Simon Littlewood. We succeeded in having the 98 million shares in LAC, referred to above, gifted back to LAC plc and cancelled at a Board Meeting held on 22nd May 2009, resulting in the number of shares in issue dropping from 327 million to 229 million, to the benefit of shareholders and increasing pro forma Net Asset Value from 6.8p to 9.7p per share. LAC is now pursuing claims for up to £16 million against the four 60% shareholders in each of these Share Swap companies for the consideration they failed to pay on their shares. While it is unlikely that these claims will be met in full, we are confident that there will be a significant net financial benefit to shareholders in LAC. Aborted Acquisitions Not Announced In May and June 2007 announcements were made to the London Stock Exchange of acquisitions by the above Share Swap companies totaling £12 million. These appeared in the Chief Executive's Report in the 2006 Report & Accounts as signed by Simon Littlewood and as a post balance sheet event note, in which shareholders were informed on various other matters, including: • China Exchange Limited had acquired an 80% stake in SYGC • China Exchange Limited had acquired a 40% stake in Xi'an Private Equity Exchange • London Asia Limited had acquired a 51% stake in Jin Lian Ann Insurance Broker of Beijing • London Asia Limited had acquired a 51% stake in Zhong Nan Auction House The 2007 Interim Report also referred to these acquisitions. We are unable to find evidence that these acquisitions took place and they are not recorded in the Audited Accounts of those companies. The first indication that these acquisitions had not taken place was an email sent on 22nd May 2008 by Simon Littlewood to Moore Stephens, auditors to LAC. No statement concerning these events was made to shareholders until the announcement made in my letter to shareholders on 7th May 2009, which meant that LAC was in breach of its obligations to the AIM market and gave a misleading impression of its financial status. Loan of $5 Million Written Off On 7th September 2005 (well before the period dealt with in these accounts, but never previously explained to shareholders) LAC plc lent $5 million to Nourican Adriatic d.o.o., in Zagreb, Croatia. The purpose of the loan was to help Nourican Adriatic d.o.o. provide evidence to the Croatian Stock Exchange (Zagrebaka Burza) that cash needed for a bid to be made by two Croatian companies for Industrogradnja was available. LAC was to receive a fee of US$ 1 million for this loan. The bid for Industrogradnja was launched on 11th November 2005 at a share price of 650 Kuna at a discount to its market price of 810 Kuna. As a result, only 2,640 shares were tendered for at a total cost of $273,244. It appears that the $5 million loan provided by LAC was not used for the bid and should have been returned to LAC in January 2006, together with the $1 million fee. Sadly, the $6 million has never been received by LAC, nor is there documentary evidence to show that steps were taken through courts in any country to recover this money. The document transferring the $5 million to Nourican Adriatic was signed solely by Simon Littlewood. A signed contract confirms that the loan was to have been secured by a pledge over 25,000 shares in Industrogradnja d.d., but no signed guarantee or pledge has been traced. Bank Accounts In September 2008, most of LAC's funds were in the bank accounts of its foreign subsidiaries and associated companies, under the control of Simon Littlewood and his wife, Josée Lai. Simon Littlewood resigned as a director of LAC on 25th July 2007 and so it was not proper for him to continue to control –to the exclusion of all other main board directors – the Company's cash and investments. Simon Littlewood failed to tell LAC directors of the locations of many LAC subsidiaries and associated company bank accounts. For example, the LAC directors were told that there were no bank accounts in Singapore, although LAC's wholly-owned Singapore subsidiary, London Asia Capital (Singapore) PTE Ltd in fact had accounts with DBS Bank, Fortis and UOB. Undocumented Transactions With the directors of LAC having no control over the subsidiary company bank accounts, your Board was shocked when investigation revealed that large sums of money had entered, left and moved around LAC in a way that was not supported by proper contracts, invoices or proper business practice. Sums due to one company had improperly been paid to others; in particular, funds due to wholly-owned subsidiaries of LAC were paid into companies in which LAC was only an 80% or even 40% shareholder. Many of the investments, particularly those in China, were held in a way that made it impossible to prove title. Some shares, which were the property of LAC or its subsidiaries, were held by private companies in China, with no adequate contract or other safeguard for the shareholders of LAC. Substantial Sums Which Passed through the accounts of LAI(HK) Since March 2006 Mr. Simon Littlewood served until 19th October 2009 on the Board of China Growth Opportunities ('CGO', previously called London Asia Chinese Private Equity Fund plc, which invested heavily in China and Asia, raising and investing circa £50 million. We have discovered that the cash for these investments made by CGO passed through the bank accounts of LAI(HK). LAI(HK)'s records do not provide full transparency for these arrangements and neither can all such sums be validated. Commissions received by LAI(HK) from CGO for both managing and investing the fund were paid away and could not all be reconciled from the information available. Pursuant to the cooperation agreement referred to above, LAC asked CGO (including Brett Miller) for details of the substantial commission payments, but in breach of that agreement CGO withdrew and refused to provide further information, frustrating our efforts and further delaying the preparation of the Accounts of LAC. Diversion of Funds In December 2007, London Asia Capital (Singapore) PTE Limited ("LAC(S)") was due £1.6 million from China Growth Opportunities plc in respect of performance fees. At the written instructions of Josée Lai, wife of Simon Littlewood, these funds were not paid to LAC(S) but instead to London Asia Fund Management Ltd, a Brunei company in which LAC held 40% of the equity, while Simon Littlewood and associates held the remaining 60% shareholding. On receipt of these funds by the Brunei company, £401,440 was immediately transferred to each of Simon Littlewood and Joyce Ng. In so far as your Directors are aware, LAC and its subsidiaries have no contractual relationship with Joyce Ng although she has been in receipt of substantial sums from LAC Group companies. Improper Share Support Activity Between December 2007 and April 2008, shares in LAC were purchased on the AIM market by the Company totaling 1.9 million shares. RNS announcements were issued stating they were to be held in Treasury. The majority of these transactions were arranged by Simon Littlewood. Your Directors have been advised that these purchases were illegal because LAC did not have sufficient distributable reserves and was therefore in breach of the Companies Act. While Simon Littlewood was a Director of Huang He Securities Ltd, one of the Share Swap companies mentioned earlier, instructions were given for the purchase of 2.5 million shares of LAC in 2007 and 2008. The cash to buy these shares came from London Asia Investments(Hong Kong) Ltd ("LAI(HK)") and thus the transaction was circular. The effect was to artificially support LAC's share price which was in breach of the Companies Act. Shares Held in Trust in China LAC has significant shareholdings in unquoted Chinese companies. It is now clear that, with the exception of Zhongying and Biaoqi Tienfeng, the shares are not held directly by LAC or its subsidiaries but instead are held in trust by a Chinese private company under an informal arrangement with no proper documentation or trust documents. LAC and its subsidiaries may therefore have paid substantial sums in shares for investments where proof of ownership is uncertain. China Financial Services China Financial Services ("CFS") was one of LAC's early investments, and paid substantial dividends. CFS provided real-time information on securities and analysis software to support investors to buy in the stock market. We understand that CFS was prepared for a public listing in 2006. As at 30 June 2007 the fair value of this investment of £4.76 million was included in LAC's interim results. Your Directors have now discovered that in the summer of 2006, the China Stock Exchange announced that it would no longer provide free market data and as a result the business of CFS rapidly collapsed. In calendar year 2006, CFS's revenue was £2.78m and pre-tax profits £1.97m. Based on the information available, the revenue in 2007 was £227,873 and the losses amounted to £1.34m. In the first half of 2008, CFS had no revenue and lost £841,103. It is believed the business has since ceased operating. In 2007, LAC announcements were made to the London Stock Exchange concerning CFS but none indicated its rapid trading decline. The last statement included in the Offer Document referred to below mentions "the confidence we have in CFS`s expansion strategy". Failure to keep shareholders and the market informed is in breach of the AIM rules. Sale of Shares in Investee Companies by LAC On 5th October 2007 London Asia Corporate Finance Limited (a wholly-owned subsidiary of LAC and an FSA-regulated corporate finance company headed by Mr. Simon Littlewood) authorised the issue of an Offer Document, which stated that six LAC portfolio investments valued at £7.7 million were being offered to LAC shareholders at a discounted value. The Offer Document stated the portfolio investments being sold represented "less than 10% of the LAC balance sheet as at 30th June 2007" and went on to state "should the Offer be taken up in full there will be a realised profit on disposal of over £1.5 million." Your Board could not reconcile these holdings to the books of LAC and have subsequently discovered that some of the shares offered belonged to third parties. The Offer Document makes no such reference to third parties and indicates that all the shares on offer were owned by LAC and related companies. On 30th October 2007 LAC announced, "There was a strong level of interest shown in the Offer, with offers made for a total of £3 million worth of shares, out of £7.7 million on offer. The total sold represents 7% of LAC's reported net asset value as at 30th June 2007. Based on the original cost of £1.4 million, the profit on sale against original cost amounted to approximately £1.5 million." Of the purported £3 million sales proceeds, less than £700,000 has been traced. Such failure to keep the markets and shareholders informed is in breach of the AIM rules. There is more but despite this astonishing list I am pleased to be able to tell you that the future for your company looks far better than it has in some time, whether you wish to have cash returned or to stay with the company now that it is well placed to benefit from the opportunities of China. Your Chairman through these troubled times, Jack Wigglesworth, has let it be known that he will be retiring at the forthcoming AGM and will not be seeking re-election. Jack has faced great difficulties and has been mislead and frustrated in his task. I wish him well for the future for it is thanks to him that your new Board is in place. At the AGM the Earl of Cromer has indicated that he will be prepared to take over the role of Chairman. Having worked with Lord Cromer over the past year and seen firsthand the impact that his experience and understanding of China can have on negotiations, I am confident that your company will go from strength to strength under his leadership. As for the future, the first task of your Board will be to prepare the accounts for 2008 and 2009 which we plan to publish early next year. While this activity continues we will progress with Wuhan Kaidi the proposed Tender Offer which will aim to allow those shareholders who seek an exit at 5p per share to sell at least 29.9% of their holding or LAC to raise cash for future development. We will work with Wuhan Kaidi to maximise the value of Zhongying in preparation for eventual flotation and determine the true worth of those other LAC investments currently given no value but which we hope with local expertise may increase our net assets. Finally we will to seek other investments in China to take advantage of the growth of 8% per annum in the Chinese economy and the continuing appreciation of the Chinese currency against sterling. We will endeavour to restore LAC's listing at the earliest possible opportunity while throughout we will undertake a programme to rationalise the unnecessarily complex structure of the Group. We expect to be able to report progress in all respects by the General Meeting at which the Report and Accounts for 2009 are presented to shareholders. Keith Negal Chief Executive 19 November 2009
29/10/2009
19:02
loverat: The much trumpeted share buyback programme - Apparently illegal. 6.7 Improper Share Support Activity Between December 2007 and April 2008, shares in LAC were purchased on the AIM market by the Company totalling 1.85 million shares. RNS announcements were issued stating they were to be held in Treasury. The majority of these transactions were arranged by Mr Simon Littlewood. Your Directors have been advised that these purchases were illegal because LAC did not have sufficient distributable reserves and was therefore in breach of the Companies Act. While Mr Simon Littlewood was a Director of Huang He Securities Ltd, one of the Share Swap companies mentioned earlier, instructions were given for the purchase of 2.5 million shares of LAC in 2007 and 2008. The cash to buy these shares came from London Asia Investments (Hong Kong) Ltd ("LAI(HK)") and thus the transaction was circular. The effect was to artificially support LAC's share price which was in breach of the Companies Act. RNS Number:4535S London Asia Capital PLC 16 April 2008 London Asia Capital ("London Asia" or the "Company") Purchase of own shares The Company announces today that it purchased 250,000 of its own ordinary shares at 4.7p per share on 11 April 2008. These shares are to be held in treasury. Following the share purchase, the Company now has 1,900,000 ordinary shares held in treasury. Following the share purchase, the Company has 327,378,990 ordinary shares of 5p in issue, with voting rights attached (one vote per ordinary 5p share). Therefore the total voting rights figure of 325,478,990 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, London Asia under the Disclosure and Transparency Rules. Enquiries: London Asia Capital: George Allnutt
29/10/2009
18:44
loverat: An amazing letter and for those who have not read it these are the findings of the new LDC/LAC board into what happened under previous management. http://www.londonasiacapital.com/LAC_27_10_2009.pdf 6. CAUSES FOR CONCERN 6.1 Bank Accounts In September 2008, almost all LAC's funds were in the bank accounts of its foreign subsidiaries and associated companies, under the control of Mr Simon Littlewood and his wife, Josée Lai. Mr Simon Littlewood resigned as a director of LAC on 25th July 2007 and so it was not proper for him to continue to control - to the exclusion of all other main board directors - the Company's cash and investments. Mr Simon Littlewood failed to tell LAC directors of the locations of many LAC subsidiaries and associated company bank accounts and subsequently volunteered the minimum of information. For example, the LAC directors believed that there were no bank accounts in Singapore, although LAC's wholly-owned Singapore subsidiary, London Asia Capital (Singapore) PTE Ltd, had bank accounts with DBS Bank, Fortis and UOB. Your Board persuaded HSBC in Hong Kong and DBS Bank in Singapore to suspend local bank accounts and were able to send £500,000 back to the UK, thereby putting LAC in funds so that the Company could afford to run day-to-day activities and commence the forensic investigation necessary for the preparation of the accounts for 2007 and beyond. 6.2 Undocumented Transactions With control of the bank accounts, it became apparent that large sums of money had entered, left and moved around LAC in a way that was not supported by proper contracts, invoices or proper business practice. Sums due to one company had improperly been paid to others; in particular, funds due to wholly-owned subsidiaries of LAC were paid into companies in which LAC was only an 80% or even 40% shareholder. Many of the investments, particularly those in China, were held in a way that made it impossible to prove title. Some shares, which were the property of LAC or its subsidiaries, were held by private companies in China, with no adequate contract or other safeguard for the shareholders of LAC. 6.3 Loan of $5 Million Written Off Our investigations have uncovered that on 7th September 2005, LAC plc sent $5 million to Nourican Adriatic d.o.o., in Zagreb, Croatia. The transfer document was signed by Mr Simon Littlewood. A signed contract confirms that the loan was to have been secured by a pledge over 25,000 shares in Industrogradnja d.d., but no signed guarantee or pledge has been traced. The purpose of the loan was to help Nourican Adriatic d.o.o. provide evidence to the Croatian Stock Exchange (Zagrebaka Burza) that cash needed for a bid to be made by two Croatian companies for Industrogradnja was available. LAC was to receive a fee of US$ 1 million for this loan. The bid for Industrogradnja was launched on 11th November 2005 at a share price of 650 Kuna at a discount to its market price of 810 Kuna. As a result, only 2,640 shares were tendered for at a total cost of $273,244. It appears that the $5 million loan provided by LAC was not used for the bid and should have been returned to LAC in January 2006, together with the $1 million fee. We can find no evidence that this sum reached LAC, nor is there documentary evidence to show that steps were taken through the courts in any country to recover this money. The transaction was managed by Mr Simon Littlewood, who has since commented that the "Croatian Mafia" has the outstanding $6 million belonging to LAC shareholders. 6.4 Share Swap Companies In May and June 2007, LAC announced to the London Stock Exchange that it had issued in total 98 million fully-paid new shares (valued at approximately £10 million) to shareholders in four newly-formed companies, three in Hong Kong and one in Singapore, in return for a 40% interest in those companies ("Share Swap companies"). In each of the four Share Swap companies third-party investors held the remaining 60% interest. In aggregate, these third-party investors paid little more than £20,000 (twenty thousand pounds) for their investment, which effectively gave them collectively a 30% shareholding in LAC. In breach of the Companies Act, no valuation of the Share Swap companies was obtained prior to their acquisition by LAC in May and June 2007. Details of these share issues and of the acquisitions were described in the audited accounts for the year to 31st December 2006, and in company regulatory announcements to the London Stock Exchange. Applications were made for the shares to be dealt on AIM and a further review of the acquisitions was made in the 2007 interim results. These interim results showed that these valueless companies were purported to have increased the LAC Net Asset Value by £10.9 million, equivalent to almost 25% of LAC net asset value. It was stated in the 2007 interim results that these Share Swap companies had a "combined capital value of over £27 million." The audited accounts of those companies demonstrate little or no value. At all relevant times these transactions were managed by Mr Simon Littlewood. We succeeded in having the 98 million shares in LAC, referred to above, gifted back to LAC plc and cancelled at a Board Meeting held on 22nd May 2009, resulting in the number of shares in issue dropping from 327 million to 229 million, to the benefit of shareholders and increasing pro forma Net Asset Value from 7.5p to 10.7p per share. LAC is pursuing claims for up to £16 million against the four 60% shareholders in each of these Share Swap companies for the consideration they failed to pay on their shares. While it is unlikely that these claims will be met in full, we are confident that there will be a significant net financial benefit to shareholders in LAC. 6.5 Aborted Acquisitions Not Announced In May and June 2007 announcements were made to the London Stock Exchange of acquisitions by the above Share Swap companies totalling £12 million. These appeared in the Chief Executive's Report in the 2006 Report & Accounts as signed by Mr Simon Littlewood and as a post balance sheet event note, in which shareholders were informed on various other matters, including:  China Exchange Limited had acquired an 80% stake in SYGC  China Exchange Limited had acquired a 40% stake in Xi'an Private Equity Exchange  London Asia Limited had acquired a 51% stake in Jin Lian Ann Insurance Broker of Beijing  London Asia Limited had acquired a 51% stake in Zhong Nan Auction House The 2007 Interim Report also referred to these acquisitions. We are unable to find evidence that these acquisitions took place and they are not recorded in the audited accounts of those companies. The first indication was an email sent in May 2008 by Mr Simon Littlewood to Moore Stephens, auditors to LAC, shown below: No statement concerning these events was made to shareholders until the announcement made in my letter to shareholders on 7th May 2009, which meant that LAC was in breach of its obligations to the AIM market and gave a misleading impression of its financial status. 6.6 Diversion of Funds In December 2007, London Asia Capital (Singapore) PTE Limited ("LAC(S)") was due £1.6 million from China Growth Opportunities plc in respect of performance fees. At the written instructions of Josée Lai, wife of Mr Simon Littlewood, these funds were not paid to LAC(S) but instead to London Asia Fund Management Ltd, a Brunei company in which LAC held 40% of the equity, while Mr Simon Littlewood and associates held the remaining 60% shareholding. On receipt of these funds by the Brunei company, £401,440 was immediately transferred to each of Mr Simon Littlewood and a third party. In so far as the Directors are aware, LAC and its subsidiaries have no contractual relationship with that third party. 6.7 Improper Share Support Activity Between December 2007 and April 2008, shares in LAC were purchased on the AIM market by the Company totalling 1.85 million shares. RNS announcements were issued stating they were to be held in Treasury. The majority of these transactions were arranged by Mr Simon Littlewood. Your Directors have been advised that these purchases were illegal because LAC did not have sufficient distributable reserves and was therefore in breach of the Companies Act. While Mr Simon Littlewood was a Director of Huang He Securities Ltd, one of the Share Swap companies mentioned earlier, instructions were given for the purchase of 2.5 million shares of LAC in 2007 and 2008. The cash to buy these shares came from London Asia Investments (Hong Kong) Ltd ("LAI(HK)") and thus the transaction was circular. The effect was to artificially support LAC's share price which was in breach of the Companies Act. 6.8 Substantial sums of circa £50 million which passed through the accounts of LAI(HK) Since March 2006 Mr. Simon Littlewood has served and continues to serve on the Board of CGO, previously called London Asia Chinese Private Equity Fund plc, which invested heavily in China and Asia, raising and investing circa £50 million. We have discovered that the cash for these investments made by CGO passed through the bank accounts of LAI(HK). LAI(HK)'s records do not provide full transparency for these arrangements and neither can all such sums be validated. Commissions received by LAI(HK) from CGO for both managing and investing the fund were paid away and could not all be reconciled from the information available. Pursuant to the cooperation agreement referred to in paragraph 5 above, LAC asked CGO (including Mr Brett Miller) for details of the substantial commission payments, but in breach of that agreement CGO withdrew and refused to provide further information, frustrating our efforts and further delaying the preparation of the Accounts of LAC. 6.9 Shares Held in Trust in China LAC has significant shareholdings in unquoted Chinese companies. It is now clear that, with the exception of Zhongying and Biaoqi Tienfeng, the shares are not held directly by LAC or its subsidiaries but instead are held in trust by a Chinese private company under an informal arrangement with no proper documentation or trust documents. LAC and its subsidiaries may therefore have paid substantial sums in shares for investments where proof of ownership is uncertain. 6.10 China Financial Services China Financial Services ("CFS") was one of LAC's early investments, and paid substantial dividends. CFS provided real-time information on securities and analysis software to support investors to buy in the stock market. We understand that CFS was prepared for a public listing in 2006. As at 30 June 2007 the fair value of this investment of £4.76 million was included in LAC's interim results. Your Directors have now discovered that in the summer of 2006, the China Stock Exchange announced that it would no longer provide free market data and as a result the business of CFS rapidly collapsed. In calendar year 2006, CFS's revenue was £2.78m and pre-tax profits £1.97m. Based on the information available, the revenue in 2007 was £227,873 and the losses amounted to £1.34m. In the first half of 2008, CFS had no revenue and lost £841,103. It is believed the business has since ceased operating. In 2007, LAC announcements were made to the London Stock Exchange concerning CFS but none indicated its rapid trading decline. The last statement included in the Offer Document referred to below mentions "the confidence we have in CFS`s expansion strategy". Failure to keep shareholders and the market informed is in breach of the AIM rules. 6.11 Sale of Shares in Investee Companies by LAC On 5th October 2007 London Asia Corporate Finance Limited (an FSA-regulated corporate finance company headed by Mr. Simon Littlewood) authorised the issue of an Offer Document, which stated that six LAC portfolio investments valued at £7.7 million were being offered to LAC shareholders at a discounted value for a direct investment therein. The Offer Document stated the portfolio investments being sold represented "less than 10% of the LAC balance sheet as at 30th June 2007" and went on to state "should the Offer be taken up in full there will be a realised profit on disposal of over £1.5 million." Your Board could not reconcile these holdings to the books of LAC and have subsequently discovered that some of the shares offered belonged to Third Parties. The Offer Document makes no such reference to Third Parties and indicates that all the shares on offer were owned by LAC and related companies. On 30th October 2007 LAC announced, "There was a strong level of interest shown in the Offer, with offers made for a total of £3 million worth of shares, out of £7.7 million on offer. The total sold represents 7% of LAC's reported net asset value as at 30th June 2007. Based on the original cost of £1.4 million, the profit on sale against original cost amounted to approximately £1.5 million." Of the purported £3 million sales proceeds, less than £700,000 has been traced. Failure to keep the markets and shareholders informed is in breach of the AIM rules.
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