Dear Shareholders,

Please refer to the following:

Financial Times – Money Section (page 10)
29 January 2011

A Cautionary Tale of Investing in China
By David Stevenson

Summary
"The London Asia Capital saga is unlikely to be unique" David Stephenson.

Singapore-based shareholder entity, Richpoint Overseas Group - the groups largest shareholder, called a general meeting this week following 13 of the company's investments in Chinese stocks being written down to nil-value. It was hoping to use the meeting to win a vote to restructure the company around one of its last remaining assets - a private company called Zhongying. London Asia's board rejected the vote, which has now been postponed until February.

Since the new management team took over £5m in cash has been recovered, hope of recovering any more appears to rest on prospects for Zhongying.

London Asia had previously been the adviser to go to for small-cap Chinese companies seeking a UK stock market listing. Led by Simon Littlewood, Chief Executive and Viktor Ng, Chairman the company had led a surge of Chinese capitalism into the London markets. Backed by a team of non-executives which included a former London mayor, the company's prospects in the middle of the last decade had looked very different.

However, in 2008 unhappy institutional investors brought in a new management team, led by the Earl of Cromer, to find out what had happened to their investments in China. By 2010 this team had discovered that 13 of the companies in which the group had invested were worthless, had found there to be no money in the company's London bank account and that the company had not presented its financial reports and accounts for three years.

Certain shareholders believe that London Asia's problems should serve as a warning that China is still a high-risk investment option. Doug Steen, a private shareholder, is quoted saying: "With the increased visibility of China as a key market, there is a belief that it is safer - this belief may be unfounded. Unless the UK authorities sit up and take action, foreign markets will see the UK as a soft touch and investors will continue to be at risk."

Others believe that the London Asia saga highlights the need for UK directors to understand the way business is done in China.

Small chinese companies listed on American exchanges are currently being targetted by short-sellers worried that London Asia's problems are not unique. A Chinese national who advises western investment funds on Chinese small caps warns that "2011 is the year it's all going to come tumbling down."