LCP Lon.Asia China

RNS Number:6620H
London Asia Capital PLC
14 November 2007


14 November 2007

                            LONDON ASIA CAPITAL PLC

                        ("London Asia" or "the Company")

                                Business Update


London Asia Capital PLC, the AIM listed (code LDC) Asian focused investment
group, is pleased to give an update on recent developments across the group.


London Asia Chinese Private Equity Fund ("the Fund")

The Fund, advised by London Asia, recommenced trading on AIM (code LCP) on 1
November, following the release of its audited accounts to 31 March 2007, which
showed profits of #18.4 million and net assets up 33% in its first year of
operation, after accrual of a performance related fee ("the Performance Fee") to
London Asia of #3.3 million. The calculation of the Performance Fee is based on
the increase in the Fund's net assets and various other criteria, is payable
only on realisation of individual assets by the Fund, and could be reduced in
the event that there was any subsequent fall in the net asset value per share of
the Fund. The Company therefore does not anticipate accounting for the
Performance Fee until it receives the actual cash payment or other confirmation
from the Fund of the exact amount receivable, without any clawback or
conditions, which means there is unlikely to be any significant amounts
accounted for in this financial year. The fund management team working on the
Fund is entitled to 50% of the Performance Fee due to the Company.


In addition to the Performance Fee, London Asia receives a management fee of 2%
of the net assets of the Fund, which based on the increase in net assets for the
Fund to 31 March 2007, will generate an additional #0.3 million p.a of income
for the Company starting 1 April 2007.


Share Buy-backs

The recent successful offer to shareholders has generated cash and realised
profits for the Company, putting it in a position to be able to buy-back its own
shares. The Company has authority to buy back up to 10% of its ordinary share
capital, and intends to implement a programme to acquire its own shares,
addressing the gap between reported net asset value per share and current share
price.


LAC Zhongying ("Zhongying")

The Company has reached agreement with the other shareholders in Zhongying to
sell its minority stake to the other Zhongying shareholders for cash at the
original cost of approximately #12.4 million. Zhongying has fully invested all
its capital in a number of transactions, primarily in the energy, environment
and financial services sectors, but, as a result of various changes in the
regulations in China, has encountered significant problems achieving its
original business plan of acquiring and exploiting a series of financial
services licences. Restrictions imposed by the Chinese Government on foreigners
entering the financial services sector have also prevented the Company from
partnering with, or bringing in as shareholders, non Chinese financial services
groups, which has limited our ability to find buyers and realise the full value
of the investment. Whilst the Board considers Zhongying a good long term
investment, our minority stake gives us little control over the ability to
realise value from the investment in the short term. The Board believes that the
capital freed up by the sale of the stake can be better deployed in the
financial services businesses acquired earlier this year and in China Financial
Services, where London Asia holds a 48% stake.


Yellow River Securities ("YRS")

YRS, the Company's 40% owned securities trading business, has been active in the
booming Hong Kong stock market. It has invested over US$1 million over the last
few months, which has generated an unrealised profit of over US$1 million, given
the strong performance of the Hong Kong stock market recently. YRS's strategy is
to take short term positions in listed stocks, and it is actively trading its
positions to realise the paper profit.


Further investment in portfolio companies

The Board has been reviewing the Company's existing investment portfolio to
identify ways of accelerating value, make better use of the Company's growing
cash resources, and take advantage of the scarcity of deal flow and high
valuations in the region as a result of restrictions on the investment by non
Chinese into Chinese assets, and the recognition by both local and overseas
investors of the potential for Chinese equities as China continues its strong
economic growth and development.


The Board has identified two businesses within the existing portfolio that it
believes are suitable for immediate follow-on financing and flotation in the
near future, and is working with the companies to determine whether the
businesses are suitable for listing on NYSE Euronext's Alternext stock market,
where we were recently approved as a sponsor for listings.


The Board believes several of the other portfolio businesses would benefit from
additional injections of capital to bring them to a size where they could be
taken to capital markets, sold on in a trade sale or refinanced. The Board is
determining whether London Asia should invest additional funds in these
businesses, or third party funding be sought, based on the projected timing of
cash inflows from realisation of existing assets, and the needs of the portfolio
businesses.


Jack Wigglesworth, London Asia Chairman, commented: "The success of the Fund
demonstrates the upside potential of our investment portfolio. Part of the
reason for the relatively greater success of the Fund portfolio relative to our
own, has been that the investments made by the Fund have been in larger
businesses than those which the Company has historically invested in. Whilst our
own investments are demonstrating good organic growth, in order to get to a size
where they can be exited at the sort of valuations being achieved by Chinese
assets in the current market, they will need to make acquisitions to boost the
size of their revenue and profits. The Board is therefore looking at which of
our portfolio businesses would benefit most from a further injection of our
capital to get them closer to the point where we can achieve an exit.


"Our strategy is to apply the increasing levels of cash being generated by our
operations to reduce the gap between the Company's assets and share price, and
accelerate the realisation of our investment portfolio through further
investment. New investments will be made in businesses where we can exercise a
level of control and have an economically significant stake, both within our
traditional Greater China region, and in the other areas of Asia where LAL is
expanding.


"The decision earlier this year to create a number of operating businesses part
owned by London Asia and part owned by the management of the new businesses is
demonstrating results, as we are able to expand much more rapidly into new
areas, such as securities trading through YRS, than was previously possible when
everything had to be financed and all management came from London Asia."

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


Cecilia Wong              John West/Andrew Dunn           Jonathan Wright
London Asia Capital plc   Tavistock Communications        Seymour Pierce
Tel: +852 2251 8373       Tel: 020 7920 3150              Tel: 020 7107 8050






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

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