Final Results

RNS Number:4410L
London Asia Capital PLC
25 April 2005


Strictly embargoed until 07.00, 25 April 2005


                            LONDON ASIA CAPITAL PLC


               FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004


Announcing results for the year ended 31 December 2004, Jack Wigglesworth
Chairman of London Asia Capital plc ("London Asia") said:

"Our investment focus continues to be investing in profitable businesses in the
Greater China region, with strong management teams, which are capable of being
developed to a point where they can be sold on or listed on a stock market.

The Chinese currency's link to the US Dollar continues to reduce the cost of
Chinese companies to UK based investors due to the strength of the pound. We see
the present time as a good opportunity for UK based investors such as ourselves
to acquire Chinese assets whilst the exchange rate is favourable, with a
potential appreciation in the value of those assets in Sterling terms as the
Chinese currency appreciates. We have made a number of investments which will
assist us in exiting our portfolio companies and bringing our clients to listing
outside China, generating fee income."

Financial Highlights

   * Profit after tax increased to #0.33 million (2003: loss #0.16 million)
   * Management fees and dividends of #0.75 million from investee companies
   * Net assets trebled to #12.6 million (2003: #4.2 million)
   * Cash at bank #2.9 million (2003: #2.2 million)
   * Long term investments #9.2 million (2003: #3.0 million)
   * #6.85 million invested in 15 transactions during the year
   * #2.0 million invested in four transactions since year end

Operational Highlights

   * Appointed adviser to five Chinese business parks and economic zones,
     with a further appointment in February this year, giving access to over
     17,000 companies
   * Two investments listed in Singapore, with another filed for listing in
     Malaysia
   * Appointed adviser to a #150 million power project, with two further
     significant advisory mandates announced in March and April this year
   * Strategic stake in Plus Markets plc, operator of the OFEX Stock Market
     in London
   * Signed up five Chinese companies seeking to list on OFEX
   * Stake taken in US broker-dealer JSM and established a team in New York,
     giving access to the US capital markets
   * 6% stake in Chinese investment banking business, with option to increase
     to 20%
   * 30% stake in Malaysian investment banking boutique, giving access to
     Asian market
   * Agreement with Sino-Canadian business park for formation and management
     of a fund within China


Jack Wigglesworth, added: "China saw 9.5% growth in its economy in 2004,
continuing a record which has seen over 8.5% average annual growth for the last
20 years. Whilst the Chinese Government is attempting to reduce the growth in
certain sectors of its economy to prevent overheating, there are few signs of
any threat to the continued growth of the sectors of the economy in which we
operate. China continues to welcome overseas investors, who are providing
capital and expertise to develop China's economy and thereby increasing the
living standards of the people in China."


For further information please visit www.londonasia.com or contact:

Simon Littlewood, Chief Executive            Jeremy Carey/Clemmie Carr
London Asia Capital plc                      Tavistock Communications
Tel: + 44 (0) 7802 857 287                   Tel: + 44 (0) 207 920 3150



Chairman's Statement

Results

I am pleased to announce the Group's results for the year ended 31 December
2004, which showed a profit of #0.33 million (2003: loss #0.16 million) and a
trebling in net assets to #12.6 million (2003: #4.2 million). These results
reflect the substantial expansion in activities which has taken place in the
period, with a considerable strengthening of the company's financial position:

   * management fees and dividends of #0.75 million received from investee
     companies;

   * cash at bank #2.9 million (2003: #2.2 million);

   * long term investments #9.2 million (2003: #3.0 million);

   * #6.85 million invested during the year.

As an investment company, we show our investments at original cost rather than
actual value, and no account is taken of the profits these investments
generated. We only account for the management fees, interest and dividend income
received from them, and the profit on sale when the investment is realized.

During the period, we raised #4.58 million pre expenses via placings in February
and October 2004, with a further #1.9 million raised via the exercise of
warrants attached to the shares placed in October 2003.

The year saw a considerable simplification of the capital structure of the
company, reducing an overhang arising from earlier fund raisings. October saw
the expiry of the remaining warrants, originally allocated in the placing of
2003. Towards the year end, the majority of the Convertible Loan Notes were
converted early, with the remainder converted post year end, saving the Group
#50,000 a year in interest costs going forward and reducing liabilities.

The Directors are not recommending a dividend for the year.

Expansion

2004 saw significant expansion for the Group. In July we opened an office in New
York, which was followed in February 2005 by an investment in US full service
brokerage JSM. This gives us access to the US capital markets, and we are
currently working with a number of Chinese companies that are paying us fees for
raising funds within the US.

In December we made our largest investment to date, #3.9 million in China
Finance & Investment Trust ("China Finance"), a Chinese investment banking
business. China Finance, with a registered share capital of RMB1 billion (#63
million), provides us with a strong platform from which to build via acquisition
an investment banking group within China, and a number of acquisitions in the
financial services sector are currently undergoing due diligence.

We have continued to develop our relationships within China and built on
relationships previously established to ensure continued good quality deal flow:

   * In January 2004 we signed an alliance with the Yantai Wolong Economic
     Zone to provide advice to the businesses in the Zone.

   * In March 2004 we signed an alliance with the Wuhan Eastlake New
     Technology Development Zone to provide advice to the businesses in the 
     Zone. London Asia Investment Bank, our China associated business 
     previously known as TCIB, is currently advising a business in the Zone 
     on listing in Singapore.

   * In June 2004 we signed alliances with three business Parks based in
     Shandong Province, and in February this year we sent a team to do due
     diligence on several businesses in the region, as a result of which we are
     seeking to take one to a listing in Singapore.

   * In November 2004 we announced a partnership with Canton VC, the seventh
     largest Chinese venture capital group, to provide it with corporate finance
     expertise and assist its portfolio companies to go to IPO outside China

   * In February 2005, we announced a partnership with Sino-Canada Business
     Park in Qingdao for the creation of an RMB200 million Fund and to provide
     advice to businesses in the Park.


Investment Activity

Our investment focus continues to be investing in profitable businesses in the
Greater China region, with strong management teams, which are capable of being
developed to a point where they can be sold on or listed on a stock market.

The Chinese currency's link to the US Dollar continues to reduce the cost of
Chinese companies to UK based investors due to the strength of the pound. We see
the present time as a good opportunity for UK based investors such as ourselves
to acquire Chinese assets whilst the exchange rate is favorable, with a
potential appreciation in the value of those assets in Sterling terms as the
Chinese currency appreciates.

We have made a number of investments which will assist us in exiting our
portfolio companies and bringing our clients to listing outside China,
generating fee income:

   * In June 2004 we took a 30% stake in Easset Management Ltd. Easset is a
     Malaysian investment banking boutique which manages funds and assists
     companies to list on stock markets in Malaysia. Easset has been appointed
     placement agent for the MyEG float.

   * In October we took a 6% stake in Plus Markets plc, operator of the UK's
     OFEX Stock Market. OFEX is an ideal first market for Chinese companies
     coming to the UK, and we have mandates for 5 companies to join, of which 
     the first is expected in May 2005.

   * Our investment in JSM in February this year enables us to tap into their
     network of investors for our clients, as well as funding our own
     transactions, such as CFS. It also generates introductory fee income from
     deals we take to them, and interest income on the convertible loan note.

   * In April 2005 we took a stake in Singapore listed Asia Power, which
     provides us not only with a dividend stream, but also a potential exit 
     route for some of our investments and clients in the energy and 
     environmental sector in China.

Corporate Finance Activities

We have recently won two significant mandates, for the raising of funds for US$1
billion of projects in Xiangfan, and for restructuring advice and fund raising
for businesses owned by Zhengzhou Coal Mine Group. The fee income generated for
the Group if we are successful in advising on the fund raisings for these
projects will be considerable, and we are in the process of building a team of
experts specifically for funding and advising on projects in the Energy and
Environmental sector.

We also have a number of clients who are paying us to take them to listing in
Singapore, London, and New York. We are currently actively building a database
of investors interested in being involved in our IPO's, either at the pre IPO
funding stage or at IPO itself.


Fund Management Activities

In October we announced an agreement for the launch of a US$200 million fund for
investment in China in partnership with Global Emerging Markets. Documentation
and structuring for the fund is now virtually complete and marketing of the fund
begins in June.

Our agreement in February 2005 with Qingdao Sino-Canada Science and Technology
Park is the first of several projects we are working on for management of funds
within China, to tap into their huge savings market. Our efforts in this field
are greatly helped by our investment in China Finance, which provides us with a
regulated platform from which to develop fund management products within China.

Outlook

China saw 9.5% growth in its economy in 2004, continuing a record which has seen
over 8.5% average annual growth for the last 20 years. Whilst the Chinese
Government is attempting to reduce the growth in certain sectors of its economy
to prevent overheating, there are few signs of any threat to the continued
growth of the sectors of the economy in which we operate. China continues to
welcome overseas investors, who are providing capital and expertise to develop
China's economy and thereby increasing the living standards of the people in
China.

We have only begun to scratch the surface of the opportunities available in
China. We continue to see considerably more investment opportunities in China
than we have resources available, which has led us to develop both our corporate
finance and fund management activities.

At the time we acquired our 6% stake in China Finance, we were granted an option
to take our stake up to 20%. Whilst originally the option was due to expire in
May 2005, we have negotiated an extension on part of the option. Therefore, it
is our intention to exercise the first part of the option in May 2005, over an
additional 7% stake in China Finance, at a cost of RMB70 million (#4.4 million),
and to exercise the second part of the option over the remaining 7% stake later
in the year.

We are proposing resolutions at the Annual General Meeting ("AGM") to give
directors authority to allot shares and to issue shares for cash on a non
pre-emptive basis, which will enable us to, amongst other things, raise the
money required to exercise the first part of the China Finance option in May.

In order to carry out corporate finance activities in the UK, we are proposing
to acquire London Asia Corporate Finance Ltd ("LACF"), which is regulated by the
UK's Financial Services Authority ("FSA"). LACF, which is an authorised
Corporate Adviser for OFEX, able to advise companies seeking to float on OFEX,
is 91% owned by Simon Littlewood (Chief Executive of London Asia Capital plc),
and 9% owned by Temima Group plc, where Simon Littlewood and Victor Ng (an
executive director of London Asia Capital plc) are directors and shareholders.
The acquisition price has been set at #483,322, equal to the net assets of LACF
as at 31 March 2005, and will be payable via a cash payment of #200,000, with
the remainder in London Asia Capital shares based on the closing share price on
31 March 2005 of 20.25p. The last audited accounts for LACF to 30 September 2004
showed net assets of #113,658 and a profit after tax of #43,237. The Independent
Directors (namely those members of the board excluding Messrs Littlewood and Ng)
have determined that this represents the most cost effective way to obtain
authorisation within the UK both for general corporate finance and OFEX work.
This proposed acquisition of LACF is subject to the approval of the transfer of
ownership by the FSA. In addition, in view of the interests of Simon Littlewood,
the proposed acquisition constitutes a substantial property transaction under
section 320 of the Companies Act 1985, and, accordingly, is also conditional on
the approval of shareholders at the AGM.

We have seen a significant increase in the number of employees and advisers to
the Group to match our increase in activities and growth in offices in China. In
April 2004 we created an Advisory Panel to provide the Group with access to
their specific industry knowledge and contacts within China. In September we
welcomed Cesidio Di Ciacca to the Board.

We are delighted that our unique business model continues to attract talented
staff. Our staff and consultants are paid via a mixture of cash, performance
related bonuses and options, and we have asked for shareholder approval at the
AGM for the creation of additional options to be made available to them.

Singapore continues to attract large numbers of Chinese companies to list on its
Stock Market. We currently have a 30% holding in London Asia Singapore Pte Ltd
("LACS"), with the remainder held by its management team. LACS is currently
seeing a number of attractive opportunities to invest in Chinese businesses
listing in Singapore. It is also working with our Chinese operations on
assisting our Chinese clients to list in Singapore. The Independent Directors
believe that it is now appropriate to take over 100% of the share capital of
LACS to enable the Group to commit additional resources to the Singapore
operations and consolidate their results going forward. The Group is therefore
proposing to purchase the 70% stake in LACS which it does not currently hold
through the acquisition of the remaining SPD210,000 (#68,000) issued LACS shares
(including SPD60,000 (#19,000) held by Victor Ng and associates, and SPD60,000
(#19,000) held by Simon Littlewood and associates). The price to be paid is the
par value of SPD1 per LACS share. In addition, the Group is proposing to convert
its existing loan to LACS of SPD400,000 into LACS shares (to be issued at par
value). The LACS unaudited accounts for the year ended 31 December 2004 show net
assets of SPD248,000 and a loss after tax of SPD52,000.

2004 was a very busy year creating the leading UK based merchant banking group
for the SME sector in China. Our focus going forward is to build on the
infrastructure and position we have already established to generate profits and
returns for shareholders.

Jack Wigglesworth
Chairman
22 April 2005


Chief Executive's Statement

We achieved a great deal in 2004 across all areas of the business:

We invested #6.85 million in 15 transactions, two of which have subsequently
listed in Singapore, with another having filed for listing in Malaysia, and one
on OFEX. Since the year end, we have made four more investments, totaling #2.0
million;

We exited from four of our existing investments at a profit, and earlier this
year assisted one of our portfolio companies, Puca, to acquire a business in
China via a share swap at a valuation considerably in excess of the cost at
which our investment is carried in the accounts;

We were appointed corporate adviser to five business parks and economic zones,
with a further appointment in February this year, giving us access to over
17,000 companies;

We were appointed adviser to a #150 million power project, with two further
significant mandates announced in March and April this year;

We reached agreement for the formation of a US$200 million private equity fund
for China, for which documentation is nearing completion and we will be
marketing over the summer;

We took a strategic stake in Plus Markets plc, operator of the OFEX Stock Market
in London. Since investing we have been marketing OFEX to companies in China,
and have signed up five Chinese companies seeking to list on OFEX who are
currently going through due diligence.

Investment Portfolio

Two companies in our portfolio have obtained listings, with several others
expected to list later this year. Snow City and Sunpower listed in Singapore in
July 2004 and March 2005, with the latter being 224 times oversubscribed and
trading at a significant premium to the listing price. MyEG, a Malaysian
e-government business in which we took a stake in March 2004, has submitted an
application to list on Malaysia's MESDAQ Stock Market.

China Financial Services ("CFS")

Our biggest disappointment during the year was the time taken to list CFS
(formerly known as Beijing Success). Our decision to switch from listing it in
Singapore to the US was driven by the higher valuations and greater liquidity
available in the US for such businesses. However, this meant a significant
re-drafting of the original listing prospectus, with the need to restate
accounts to US GAAP accounting format and increased disclosure resulting from
the need to comply with Sarbanes-Oxley and the tighter regulatory requirements
in the US.

BDO, the accountants for the listing in the US, are completing their audit to
December 2004 and review of the financial information, which will enable us to
begin the submission of documentation to the listing authorities for a listing
on the OTCBB Stock Market in the US. CFS has appointed JSM, the broker in which
we have a stake, as broker for an initial fund raising to be completed prior to
IPO.

Century Data

In March 2004 we took a 10% stake in Chinese GPRS based environmental monitoring
service Biaoqi Century Data, which operates in partnership with China Mobile to
provide an environmental monitoring service tracking the level of pollution
generated by factories and industry in China. This saw pre tax profits of
#264,000 before London Asia's management fee of #75,000. Century Data has won
significant new contracts, and China Finance has been appointed to raise
additional working capital and banking facilities from within China to continue
the expansion of the business.

Biaoqi Media Group

These three companies, in which we hold 51%, performed well during the year,
generating profits before tax and London Asia management charge of #0.22
million. London Asia charged management fees of #88,000. In March
2004 we took a 40% stake in Tianfeng, a Chinese SMS business service
providing secure SMS for the Chinese corporate market. The business operates in
partnership with IBM. The business produced pre tax profits of #340,000, before
London Asia's management fee of #88,000.

I would like to take this opportunity to thank all of our staff, consultants and
employees of the businesses we have invested in, who have achieved an incredible
amount in a short period of time.

Simon Littlewood
Chief Executive
22 April 2005


Consolidated Profit and Loss Account for the Year
Ended 31 December 2004

                                                      Note    2004        2003
                                                             #'000       #'000

Turnover                                              1(g)     751          47
Profit/(loss) on sale of investments                            19           8
Administrative expenses                                       (498)       (170)
                                                            -------     -------
Operating Profit/(loss)                                2       272        (131)
Interest receivable                                            102           2
Interest payable                                               (49)        (31)
                                                            -------     -------
Profit/(loss) on ordinary activities before taxation           325        (160)

Taxation                                               3         -           -
                                                            -------     -------
Retained profit/(loss) for the financial period       14       325        (160)
                                                            =======     =======
Profit/(loss) per share                                5     Pence       Pence

Basic                                                         0.40       (0.50)
Diluted                                                       0.35       (0.50)
                                                            =======     =======

Comparatives
The comparatives for 2003 are for the Company only as no material subsidiary
companies existed at that time.

Continuing operations
All amounts are derived from continuing operations.

Total recognised gains and losses
There were no recognised gains or losses not dealt with through the profit and
loss account.


Balance Sheet as at 31 December 2004

                                 Note         Group       Company       Company
                                        31 Dec 2004   31 Dec 2004   31 Dec 2003
                                              #'000         #'000         #'000
Fixed assets
  Tangible assets                                 5             5             3
  Investments                                 9,212         4,352         2,974
                                           ---------     ---------     ---------
                                              9,217         4,357         2,977
                                           ---------     ---------     ---------
Current assets
  Debtors                                       425         6,197            77
  Current asset investments        6            466           216           138
  Cash at bank and in hand                    2,884         2,287         2,234
                                           ---------     ---------     ---------
                                              3,775         8,700         2,449

Creditors: amounts falling due
within one year                    7            (88)         (108)         (783)
                                           ---------     ---------     ---------
Net current assets                            3,687         8,592         1,666
                                           ---------     ---------     ---------
Total assets less current
liabilities                                  12,904        12,949         4,643

Creditors: amounts falling due
after more than one year           8           (300)         (300)         (459)
                                           ---------     ---------     ---------
Total assets less liabilities                12,604        12,649         4,184
                                           ---------     ---------     ---------

Capital and reserve
  Called up share capital                     6,435         6,435         2,736
  Share premium account                      12,211        12,211         7,815
  Profit and loss account                    (6,042)       (5,997)       (6,367)
                                           ---------     ---------     ---------
Equity shareholders' funds                   12,604        12,649         4,184
                                           ---------     ---------     ---------

The financial statements were approved by the Board on 22 April 2005.


Jack Wigglesworth                Simon Littlewood
Chairman                         Chief Executive



Consolidated Cash Flow Statement For the Year
Ended 31 December 2004

                                     Note    31 Dec    31 Dec   31 Dec   31 Dec
                                               2004      2004     2003     2003
                                              #'000     #'000    #'000    #'000
Net cash flow from operating
activities                              9                (739)              538

Returns on investments and servicing
of finance
    Interest received                           102                  2
    Interest paid                               (39)               (31)
                                             -------            -------
Net cash flow from returns on
investments and servicing of
finance                                                    63               (29)

Taxation paid                                               -                 -

Financial investment and capital
expenditure
  
  Payments to acquire tangible fixed
  assets                                         (3)                (4)
  Payment to acquire investments             (5,102)               (10)
  Proceeds on disposal of investments            21                  -
                                             -------            -------
Net cash flow from financial
  investment and capital expenditure                   (5,084)              (14)

Acquisitions and disposals
  Purchase of subsidiary undertaking              -               (789)
Net cash outflow for acquisitions
and disposal                                                -              (789)
                                                       -------           -------

Net cash outflow before management
  of liquid resources and financing                    (5,760)             (294)

Management of liquid resources
  Purchase of current asset
  investments                                  (415)                 -
  Sale of current asset investments              87                156
                                             -------            -------
Cash flow from management of liquid
resources                                               (328)               156
                                                       -------           -------

Financing
  Net proceeds from issue of ordinary
  share capital                               6,452              2,282
  Convertible loan stock received net
  of cost                                         -                222
  Drawdown / (repayment) of bank
  loans                                         286               (230)
                                             -------            -------
Net cash inflow from financing                         6,738             2,274
                                                      -------           -------

Increase in cash in the year           11                650             2,136
                                                      -------           -------
Comparatives are for the Company only.                            


Notes to the Financial Statement for the Year
Ended 31 December 2004

Note 1 Accounting Policies

The principal accounting policies adopted by the company are as follows:-

a) Convention
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards.

b) Basis of consolidation
The consolidated profit and loss account and balance sheet include the financial
statements of the company and the subsidiary undertakings over which it has
control, made up to 31 December 2004 using the principles of acquisition
accounting. The results of these subsidiaries are included in the profit and
loss account from the date of acquisition.

Where the group does not have control over the financial and operating policies
of a subsidiary undertaking, or where severe long-term restrictions are in place
that substantially hinder the rights of the group over the assets or management
of the undertaking, in accordance with Financial Reporting Standard No.2:
Subsidiary undertakings, the group accounts for the investment at cost less
provision for diminution in value.

c) Fixed asset investments
The directors consider that the principal activity of the group is that of an
investment holding group and therefore to account for its share of the net
assets and liabilities of investments would not be meaningful. As an investment
holding company, in accordance with Financial Reporting Standard No.9:
Associates and Joint Ventures the group accounts for it's investments in
associated undertakings at cost less provision for diminution in value.

d) Current asset investments
Current asset investments comprise marketable and quoted investments held for
resale and are stated at cost.

e) Deferred taxation
Deferred tax is provided in full in respect of taxation deferred by timing
differences between the treatment of certain items for taxation and accounting
purposes. Deferred tax assets are recognised only to the extent that the
directors consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
differences can be deducted. The company has not adopted a policy of discounting
deferred tax assets and liabilities.

f) Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation is
provided at rates calculated to write off the cost less estimated residual value
of each asset over its expected useful life, as follows:

Office equipment                         25% straight line
Fixtures, fittings and equipment         25% straight line

g) Turnover
Turnover represents income derived from dividends and management fees and is all
generated in respect of the Group's overseas operations.


Note 2 Operating Profit/(Loss)

                                                       31 December   31 December
                                                              2004          2004
                                                             #'000         #'000
The operating profit/(loss) is stated after
charging:
Staff costs                                                    165            36
Operating lease rentals - land and
building                                                        64            67
Auditors' remuneration - audit                                  15             7
Amortisation of finance costs                                    9             6
Deprecation of tangible fixed assets                             1             1
                                                      --------------------------

Note 3 Taxation

There is no charge to UK corporation tax due to tax losses brought forward from
previous years. As a consequence no tax reconciliation has been included. A
deferred tax asset of #551,600 has not been recognised on the grounds that it is
uncertain that sufficient capital profits will be made in the foreseeable future
against which these losses may be relieved.


Note 4 Holding Company Profit

The company has taken advantage of the exemption conferred by section 230 of the
Companies Act 1985 from presenting its own profit and loss account. Profit after
taxation amounting to #370,000 (2003: loss #160,000) has been included in the
financial statements of the holding company.


Note 5 Earnings per Share

The calculation of basic earnings per share is based on the profit after tax of
#325,000 (2003: loss #160,000) and on 81,664,943 (2003: 31,810,916) ordinary
shares being the weighted average number of ordinary shares in issue during the
period. The calculation of diluted earnings per share is based on profit after
tax of #371,000, having added back interest paid in the year on convertible loan
stock of #46,000 and on 106,841,285 ordinary shares, being the weighted average
number of ordinary shares in issue, adjusted for the effects of dilutive
potential ordinary shares. The weighted average has been adjusted for the
effects of convertible loan stock, both converted during the year and
outstanding at the year end, warrants both issued during the year and
outstanding at the year end and the options that were dilutive during the year.

The convertible loan stock, options and warrants were anti-dilutive in respect
of the prior year.

Note 6 Current Asset Investments

                               Group               Company              Company
                         31 December           31 December          31 December
                                2004                  2004                 2003
                               #'000                 #'000                #'000
Marketable quoted
investments                      466                   216                  138
                         -------------------------------------------------------


The market value of these investments at the balance sheet date amounted to
#480,000 (2003: #138,000).


Note 7 Creditors: Amounts falling due within one year

                                  Group             Company             Company
                            31 December         31 December         31 December
                                   2004                2004                2003
                                  #'000               #'000               #'000

Bank loan                            16                  16                   -
Trade creditors                      36                  26                   -
Other tax and social
security                              5                   5                   3
Other creditors                      15                  15                 757
Accruals and deferred
income                               16                  46                  23
                         -------------------------------------------------------
                                     88                 108                 783
                         -------------------------------------------------------


Note 8 Creditors: Amounts falling due after more than one year

                                Group              Company              Company
                          31 December          31 December          31 December
                                 2004                 2004                 2003

                                #'000                #'000                #'000
Bank loan                         244                  244                    -
Redeemable
convertible loan
stock                              56                   56                  459
                         -------------------------------------------------------
                                  300                  300                  459
                         -------------------------------------------------------

The bank loan carries interest at 1.65% per annum over LIBOR, is secured by a
fixed floating charge over all of the assets of the company and is repayable as
follows;

                                                                          #'000
Within one year                                                              16
Within one to two years                                                      64
Within two to five years                                                    180
                                                                      ----------
                                                                            260
                                                                      ----------

The redeemable convertible loan stock carries interest of 10% per annum and is
convertible into twenty ordinary 5p shares for every #1 of nominal loan stock
held. The loan stock is redeemable at the option of the Company, but if not
converted will automatically convert into ordinary shares on 24 March 2008.

During the year #443,667 of loan stock was converted into 8,873,340 ordinary 5p
shares. The remaining of loan stock has been converted since the year end.


Note 9 Reconciliation of Operating Profit/(Loss) to Net Cash Flow from Operating
Activities

                                                   31 December      31 December
                                                          2004             2003
                                                         #'000            #'000

Operating profit/(loss)                                    272             (131)
Amortisation of finance cost                                41                6
Depreciation                                                 1                -
Professional fees paid in shares                             3                -
Profit on disposal of investments                           13                8
Increase in debtors                                       (348)              (5)
(Decrease)/increase from operating
activities                                                (721)             660
                                                   -----------------------------
Net cash flow from operating activities                   (739)             538
                                                   -----------------------------


Note 10 Analysis of Changes in Net Funds

               1 January 2004     Cash flow      Other non-cash     31 December
                                                        changes            2004
                        #'000         #'000               #'000           #'000

Net cash:               2,234           650                   -           2,884
                   -----------      --------          ----------       ---------
Cash at bank
and in hand             2,234           650                   -           2,884
                   -----------      --------          ----------       ---------
                                                                             
Debt:                       -          (260)                  -            (260)
Bank loan                (459)            -                 403             (56)
                   -----------      --------          ----------       ---------
Convertible
loan stock               (459)         (260)                403            (316)
                   -----------      --------          ----------       ---------

Liquid
resources:                138           328                   -             466
                   -----------      --------          ----------       ---------
Current asset
investments               138           328                   -             466
                   -----------      --------          ----------       ---------

Total                   1,913           718                 403           3,034
                   -----------      --------          ----------       ---------


Note 11 Reconciliation of Net Cash Flow to Movement in Net Funds

                                          31 December 2004    31 December 2003
                                                     #'000               #'000

Increase in cash in the year                           650               2,136
Cash flow from movement in liquid
resources                                              328                (156)
Cash flow from movement in debt                       (260)                  8
                                               ------------        ------------
Change in net funds resulting from cash
flows                                                  718               1,988
Non cash movements in debt                             403                 (61)
                                               ------------        ------------
Movement in net funds in the period                  1,121               1,974
Opening net funds/(debt)                             1,913                 (61)
                                               ------------        ------------
Closing net funds                                    3,034               1,913
                                               ------------        ------------







                      This information is provided by RNS
            The company news service from the London Stock Exchange

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