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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| London Asia | LSE:LDC | London | Ordinary Share | GB0008251513 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.85 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:5935Q
London Asia Capital PLC
07 October 2003
LONDON ASIA CAPITAL PLC ("London Asia" or the "Company")
PRELIMINARY RESULTS
London Asia Capital plc, the AIM-listed investment holding company which invests
in Greater China, announces its audited preliminary results for the year ended
31 May 2003.
Highlights:
* Four investments in Chinese ventures to date at cost of #524,000
* Loss after tax and provisions substantially reduced to #215,000
(2002: loss #3.6m)
* First IPO of Chinese investment planned
* Additional investments in pipeline
* Option to increase holding in Beijing Success Technology to 51%
to be exercised
* Overheads substantially reduced
Chairman Jack Wigglesworth said: "The losses include provisions of #233,000
against investments made by the previous management under the old investment
strategy."
"Despite the substantial increase in investment activity, the Company radically
reduced UK overheads during the year, and continues to seek further cost savings
to ensure its resources are focused on Greater China where the wealth is being
generated for shareholders."
"It is the Board's intention to exercise our option to increase our stake in
Beijing Success from 25% to 51%, following which we shall review the possibility
of listing it on the stock market here or in Asia.
"The future of the Company lies in the opportunities available in Greater China
as a result of the rapid economic changes there, arising from the continuing
shift to a market economy and its entry into the World Trade Organisation. The
Board believes the Company is in a good position to take advantage of the
opportunities as they arise.
"Despite the current difficult economic climate and uncertainty, we feel
confident that our focus on one of the few growth areas in the world will return
value to shareholders".
-ends-
For further information:
Paul Quade 07947 186694
CityRoad Communications 020 7334 0243
CHAIRMAN'S STATEMENT
Results
I am pleased to announce the Group's first set of results since the change in
strategy and business focus. These results reflect a considerably reduced post
tax loss of #215,000, which compares with a loss of #3,576,000 for the same
period last year. The losses include additional provisions of #233,000 against
investments made by the previous management under the old investment strategy.
Despite the substantial increase in investment activity, the Company has
radically reduced UK overheads during the year, and continues to seek further
cost savings to ensure that it's resources are focused on Greater China, where
the wealth is being generated for shareholders.
During the year the Company made four investments in China, in line with its new
strategy of focusing on investing in profitable businesses in the Greater China
region. Whilst the Company's investments in China are generating substantial
profits, as an investment business the profits generated by our individual
investments are not shown in our own results. The Company only accounts for a
profit when the investment is sold, so that the Company generates losses in the
accounts as a result of administration costs until its investments are sold.
Moreover, we are showing the investments at the cost to the Company on
acquisition, with no revaluation made of the Chinese investments to reflect the
increase in profits made since acquisition - our 25% stake in Beijing Success,
for example, is shown in the accounts at a cost of #0.16m, despite our share of
the #1.2m annual profits alone being over #0.3m.
Financial Position
The year saw the realisation for cash of several investments made by the old
management, which no longer fit with the Company's new investment strategy. We
continue to look for ways of generating cash from historical investments to
apply the proceeds to the opportunities available in Greater China, and to this
end in September we announced the disposal of the whole of our stake in Kelkoo
for cash of #165,000.
In September 2003, the Company announced the successful closure of a fund
raising via the issue of #500,000 of five year Convertible Loan Notes, of which
a large part was taken up by the Board and its associates in the early part of
the year.
New Strategy
The future of the Company lies in the opportunities available in Greater China
as a result of the rapid economic changes there arising from the continuing
shift to a market economy, and its entry into the World Trade Organisation.
China is the fastest growing major economy in the world, and recent press
coverage has highlighted the progress that China is making. There are a number
of opportunities in China, and the Board, two of whom are based primarily in
China, believes that with the contacts the Company has built up in the region,
the experience we have gained from the investments we have made to date, and the
management team's experience of listing companies on stock markets in Europe,
the US and Asia, the Company is in a good position to take advantage of the
opportunities as they arise. Our focus is on investing in profitable businesses
with strong management teams, which are capable of being developed to a point
where they can be sold on or listed on a stock market within two years of
investment, so that investments can be realised and re-invested in future
projects.
The Company has made four investments to date in China, details of which are
included in the Chief Executive's statement below. In total our investment in
China has been #524,000, the bulk of which has been via the issue of ordinary
shares at a substantial premium to the then prevailing share price.
It is the Board's intention to exercise our option to increase our stake in
Beijing Success from 25% to 51%, following which we shall review the
possibilities of listing it on the stock market here or in Asia.
The Board believes that with the current low value of the Chinese currency, the
economic reforms being implemented to reform the Chinese economy, and the likely
impetus to the reform process and economic growth from Beijing's hosting of the
Olympics in 2008, now is the time to make investments in the region with a view
to realising those investments in the future.
In September we announced the opening of London Asia Capital Hong Kong, which
completes our coverage of the region. The business is headed by Mr C.K Cho, who
has considerable experience of due diligence, legal and investment issues in
relation to investments in the region. Hong Kong's capital market and investors
have considerable experience in investing in China, and we look forward to
developing the opportunities which a presence in Hong Kong will bring us.
Board Changes
The Board has undergone considerable changes, as the Company moved away from its
focus on early stage investment, to investing in Greater China focused
businesses.
George Allnutt joined the Board in June 2002. George's expertise lies in
turning round struggling businesses and developing businesses to a point where
they can be sold on.
December 2002 saw the resignations of Peter Catto and Andrew Balcombe from the
Board, and we thank them for their contributions to the Company and wish them
well in their future ventures.
I joined the Company in January this year, attracted by the businesslike
qualities I had observed for some time in the Chief Executive, Simon Littlewood,
who had transformed the company into one with a sharp focus on China, destined
to be the country with the world's biggest purchasing power parity GDP within
the next 20 years, and already second only to the USA on this basis. Simon's
skill and enterprise has justified the Board's faith in him as the results
clearly show.
Victor Ng, who is based in Beijing, China, was appointed in March to head the
Company's operations in China. Victor began investing in China in 1996,
achieving his first listing of a Chinese business outside China in 1999 when he
floated Asia Power, a Chinese power business, on the Singapore market. Victor
has been responsible for identifying the investments in China that the Company
has made to date, developing our partnerships and building a team to identify
future investment opportunities.
Susan Tham, who is based part time in China and partly in the UK, joined in July
to assist with identifying opportunities in China.
As well as the Directors of the Board mentioned above, Barry Gold has been
invaluable in all aspects of transforming the company throughout the year. I am
delighted that we now have a Board uniquely qualified to make the company's
China focused business plan a great success.
Outlook
Despite the current difficult economic climate and uncertainty, we feel
confident that our focus on one of the few growth areas in the world will return
value to shareholders.
Jack Wigglesworth
Chairman
6th October 2003
CHIEF EXECUTIVE'S STATEMENT
I was appointed Chief Executive of the Company in May last year. Since that
time, the Company has been changed from a loss making investor in early stage
internet businesses, to a specialist investment business focusing on making late
stage investments in profitable businesses in Greater China, with a view to
listing those investments on stock markets here and in Asia, or selling on to
Western companies seeking access to Chinese markets.
China Investments
The Company made its first investments in China in September 2002, and has to
date made four investments, details of which follow:
Beijing Success Technology Company Ltd ("Success")
London Asia took a 25% stake in Success in November 2002, at a cost of #163,000,
with an option to increase our stake to 51%. The option price is payable 65% in
shares and 35% in cash, based on a multiple of post tax profits to 30th June
2003. We announced in September that Success had made post tax profits of #1.2
million to 30th June 2003. Given Success' strong profits and growth potential,
it is the Boards intention to exercise the option to acquire an additional 26%
to take our stake to 51%. Following the exercise of the option, London Asia's
total investment in Success will amount to approximately #2.5m, valuing the
Success business at only #4.95m, a multiple of only 3.8 times the profits to
June 2003.
Founded in Beijing in January 1999, Success provides securities analysis tools
and related data services in China. Success began as a reseller of third party
securities analysis products, building up a network of customers, a sales team,
and experience in the market place, primarily in Beijing. In late 2000, Success
launched its first product, M-Plan, a basic analysis product which it sold into
the Beijing market. Since January 2002, Success has developed a series of
analysis products and services, from basic to highly sophisticated tailored
products. Customers include private investors, securities companies,
institutional investors, listed companies, advisory companies, data service
companies, training institutes and media companies.
Since London Asia invested, Success has expanded its own sales team and
appointed a number of regional distributors so that its products are now sold in
twenty of the major cities in China. There is scope to not only expand the
geographical coverage, but also the product range to provide further sales
growth going forward. Prices vary from #120 for the basic product for private
investors to #4,600 for a full service system for institutions. Success
announced in late September that it has reached agreement with China-Morning
Information News Group ("MIN"), a popular securities media group, to provide
training courses for people interested in investing in the securities and
futures markets in China. MIN is one of the largest Chinese financial
publishers, with its newspaper, Information Morning, having an estimated
subscription of over 20 million people each month.
Following the investment by London Asia in November 2002, Simon Littlewood and
Victor Ng were appointed to the Success Board to represent London Asia's
interests and assist in the development of the business. Once the option has
been exercised, it is the Board's intention to seek to list Success on a Stock
Exchange in London or Asia.
Beijing Biaoqi Culture Development Ltd ("Biaoqi Culture").
Biaoqi Cultire is a Chinese publishing and media company in which London Asia
took a 51% stake in September 2002. It has reported unaudited interim profits
for the six months ended 30th June 2003 of RMB689,441 (#53,000). These strong
results were achieved despite the loss of several large projects as a result of
the impact of SARS in China, which affected the whole of the period covered by
these results. In September this year it won the award for the Best Documentary
in the Ninth Ornamental Pillar Awards issued by the Chinese Government, which is
one of the highest government awards in the industry, for a documentary about
the scenery, culture and history of "Gu Lang Yu", a famous small island in
China. London Asia holds 51% of the company, which it acquired for shares.
Beijing Biaoqi Advert Company Ltd ("Biaoqi Advert").
Biaoqi Advert produces adverts for Chinese TV stations. It is believed to be one
of the top privately-run advertising production companies in China, and holds a
coveted TV advertising and movie production licence. As the advertising market
develops in China, we look forward to an expansion of the company's activities.
London Asia holds 51% of the company, which it acquired for shares.
Temima China Investment Bank ("TCIB")
In April this year, London Asia took a 25% stake in TCIB via the issue of London
Asia shares. TCIB is a joint venture with Xian Prutention Investment
Development Company Ltd ("Prutention"), a well know Chinese investment group
headed by Mr Qu Xiang Jun, based in Xi'an, capital of Shanxi Province, China.
Prutention has a team of twenty with experience across a range of industries,
and is the representative in Xi'an for the China Venture Investment Committee, a
Chinese Government venture capital organisation. Xi'an is one of the most
important cities in China, having served as the seat of 12 imperial capitals for
over a thousand years and is now a world famous tourist destination as the home
of the Terracotta Warriors
TCIB carries out corporate finance and investment banking activities within
China, and identifies investment opportunities and carries out due diligence for
London Asia. Victor Ng is Deputy Chairman of TCIB.
Non China Investments
Europasia Education plc ("EPE")
In August 2002, London Asia invested #40,000 in this UK AIM listed business,
which following agreement with the then Board and an Extraordinary General
Meeting in January this year agreed to appoint George Allnutt to the Board to
represent London Asia's interests, and changed its investment strategy to
focusing on education opportunities in Europe and Asia. In July and August this
year, the company raised over #500,000 via a placing.
Dynamis plc
The company operates the web sites businessesforsale.com and
franchisesforsale.com, which are business exchange platforms for buyers and
sellers of businesses and franchises. Led by a young management team, the
company is now trading profitably, has cash reserves, and is in a good position
to capitalise on its position, recently agreeing a tie-up with the Financial
Times. Earlier this year we increased our stake in the company from 0.6% to
3.6%.
Idiom
Despite the very difficult funding environment for technology companies, Idiom
Holdings Ltd, an Irish based SMS messaging services business trading under the
name Puca, in which your Company has a 16% stake, obtained second round funding
from private investors and Enterprise Ireland earlier this year. As part of the
funding round, London Asia converted its loan to Idiom into shares to reduce
dilution of its holding.
Kelkoo
In September 2003, we announced the sale of our holding in this French software
business for cash at its book value of #165,000.
Staff
The composition of the Board has changed considerably since I joined the
business in May last year. In January I stepped down as Chairman to welcome Jack
Wigglesworth as our new Chairman. Jack has had a distinguished career in the
City working for a variety of organisations, including ABN Amro, Phillips & Drew
and J.P Morgan, and was formerly Chairman of the London International Financial
Futures and Options Exchange (LIFFE). Jack is currently Deputy Chairman of UK
listed investment bank Durlacher Corporation plc, Chairman of Hackney Council's
Education Action Zone and on the Board of several private companies. Jack's
many years of experience in the City will be of great value to the Company going
forward as we seek to expand our business.
We now have a team in place with the necessary skills and experience to achieve
our business plan. I am very grateful for the support provided by the Board and
by our Financial Controller, Gerry Desler, in helping to make London Asia a
success.
Simon Littlewood
Chief Executive
6th October 2003
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MAY 2003
2003 2002
#'000 #'000
(Loss)/profit on sale of investments (11) 18
Other operating income 38 47
Administrative expenses (214) (441)
------ ------
Operating loss (187) (376)
Interest receivable 1 3
Interest paid (24) (25)
Amounts written off investments (5) (3,178)
------ ------
Retained loss for the financial year (215) (3,576)
------ ------
Loss per share Pence Pence
Basic and diluted (1.45) (32.4)
------ ------
BALANCE SHEET AS AT 31 MAY 2003
2003 2002
#'000 #'000 #'000 #'000
Fixed assets
Investments 781 -
Investments - 267
Current assets
Debtors 72 48
Investments 302 434
Cash at bank and in 98 72
hand
------ ------
472 554
Creditors: amounts falling due within one (172) (184)
year
------ ------
Net current assets 300 370
------ ------
Total assets less current 1,081 637
liabilities
Creditors: amounts falling due (413) (170)
after more than one year
------ ------
Net assets 668 467
------ ------
Capital and reserves
Called up share capital 1,117 701
Share premium account 5,758 5,758
Profit and loss account (6,207) (5,992)
------ ------
Equity shareholders' funds 668 467
------ ------
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY 2003
2003 2002
#'000 #'000 #'000 #'000
Net cash outflow from operating activities (128) (375)
Returns on investments and servicing of
finance
Interest received 1 3
Interest paid (24) (25)
---- -----
Net cash outflow from returns on
investments
and servicing of finance (23) (22)
Taxation paid - (57)
Financial investment
Payments to acquire investments (109) -
Receipts from sales of investments 19 289
---- -----
Net cash (outflow)/inflow from financial (90) 289
investment
Acquisitions and disposals
Purchase of subsidiary undertaking (34) -
---- -----
Net cash outflow for acquisitions and (34) -
disposal
----- -----
Net cash outflow before management of
liquid resources
and financing (275) (165)
Management of liquid resources
Current asset investments 131 -
Financing
Issue of ordinary share capital 11 301
Convertible loan stock received 256 -
Finance cost paid (31) -
Repayment of bank loan (60) (60)
----- -----
Net cash inflow from financing 176 241
------ ------
Increase in cash in the year 32 76
------ ------
Notes To The Accounts
1. Basis of preparation
The financial information herein does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information has
been extracted from the Company's 2003 statutory financial statements upon which
the auditors opinion is unqualified and does not include any statement under
section 237 of the Companies Act 1985. The accounts have been prepared in
accordance with applicable accounting standards and under the historical cost
convention.
2. Significant accounting policies
Fixed asset investments
Fixed asset investments are stated at cost less provision for diminution in
value.
Current asset investment
Current asset investments comprise marketable and quoted investments held for
resale and are stated at the lower of cost and net realisable value.
Investments other than quoted investments held for resale were previously
disclosed as a separate classification on the company's balance sheet, as they
were not considered by the directors to be either current assets specifically
held for resale or as fixed assets to be held for the long term. The directors
have now re-assessed the nature of these investment holdings and have
re-classified them in the company's balance sheet accordingly.
Group accounts
The financial statements present information about the company as an individual
undertaking and not about its group. The company has taken advantage of the
exemptions provided by Section 229(3) of the Companies Act 1985 not to prepare
group accounts on the basis that severe long term restrictions are in place
which hinder the exercise of the company's rights over the assets and management
of its subsidiary undertakings.
Associated undertakings and participating interests
The company has not treated certain investments in which it holds more than 20%
of the shares as associated undertakings as the directors consider that the
company does not have the required significant influence over the operations of
these undertakings.
3. Earnings per share
The calculation of basic loss per share is based on the loss after tax of
#215,000 (2002: #3,576,000) and on 14,838,345 (2002: 11,041,024) ordinary shares
being the weighted average number of ordinary shares in issue during the year.
There is no dilutive effect of warrants and options due to the fair price of the
shares during the year being less than the exercisable price of those warrants
and options. There is also no dilutive effect on conversion of the convertible
loan stock.
4. Reconciliation of movements in shareholders' funds
2003 2002
#'000 #'000
Loss for the financial year (215) (3,576)
Shares issued during the year 416 301
------ ------
Net addition to shareholders' funds 201 (3,275)
Opening shareholders' funds 467 3,742
------ ------
Closing shareholders' funds 668 467
------ ------
5. Reconciliation of operating loss to net cash outflow
from operating activities
2003 2002
#'000 #'000
Operating loss (187) (376)
Amortisation of finance cost 6 -
Depreciation - 10
Loss on disposal of tangible fixed asset - 47
Loss / (profit) on disposal of investments 11 (18)
(Increase) / decrease in debtors (24) 115
Increase / (decrease) in creditors 66 (153)
------ ------
Net cash outflow from operating activities (128) (375)
------ ------
6. Availability
Copies of the annual report and accounts are available to the public free of
charge from the Company's registered office, 11 Central House, High Street,
Ongar, Essex CM5 9AA during normal office hours, Saturdays and Sundays excepted,
for one month from today.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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