AGM 29.06.2015 – Question & Answer Session

Here are the highlights from the Question and Answer session that took place at the recent Annual General Meeting.

Q. There are a number of pieces of litigation currently occurring. Does the Company have sufficient resources to pursue these pieces of litigation?

A. We think so. We think that there are a number of issues still worth pursuing and we would not pursue the matters if we did not think that these matters were worth pursuing.

Q. You suggested that the shareholders may need to put money into the Company. How much money will need to be raised per share?

A. The way forward has not yet been resolved, but it may be a rights issue, loan or other capital raising. We met with Richpoint last week following meetings in China. We have meetings with the lawyers next week.

Q. But how much money will be raised per share?

A. We need at least £5 million to clear the investment, and we want to ensure that there is money left back to purchase the shares of the selling shareholders. Given that we need £5 million and currently have about 230,000,000 shares in issue, we would be looking at around 2.3p – 2.5p per share.

Q. How much is the shareholding in Zhongying worth?

A. We are not really sure. One of the reasons that the section 110 reorganisation did not work was that we were not provided with a formal valuation of Zhongying by the company.

Q. Could we not offset the money that we owe them against the money that they owe us?

A. The valuation could be anything and so it is difficult to work out how matters will pan out. It is difficult to value. Further, there is the question of if we get to a point where we can recover money from China, how would we go about getting it out of China?

Q. Presumably the money cannot be raised without a valuation?

A. Around £5 million is the amount that is needed to be paid under the SHA/JV agreement and is fixed and needs to be paid. Is £5 million worth paying? I don't know, but there is a debt for this amount. But our intention is to have money to return to the shareholders. There are also other fees that should have been paid that have not yet been paid.

Q. Is there any indication as to how the 20% sits and whether Richpoint will want to buy the 20%?

A. Richpoint is not interested in buying the 20% but there is a need in China for the 20% to be paid up under Chinese regulatory law requirements.

Q. What chance is there of getting money back from China if the Company pays up the Zhongying shares?

A. That will depend on how Zhongying performs in the future and how our Chinese shareholder partners decide how they can best use it.

Q. Looking at some of the numbers in the accounts – some of them have increased significantly and there are certain related party transactions and costs that have increased. Is there a remuneration committee?

A. Yes, but it is not a separate committee to the Board – it is a board committee. However, it does include independent directors and independent auditors.

Q. There is currently £500,000 of expenses going out of the Company to directors and related parties.

A. I hear what you say, but I do not agree.

Q. There is £75,000 spent on premises. How much is used for this? How much space? And how are all the directors not mentioned as a related party?

A. Noted.

Q. Rent/IT/services have all increased. The directors are looking after themselves rather than acting for the benefit of the shareholders. There is no clear plan for the Company.

A. I don't agree with that statement – the Company has previously written off $3.5 million of loans to directors with no recourse/attempt to recover this amount – and over $8 million of costs written off over the period.

Q. What was the issue with the s.110 reorganisation?

A. We always needed a valuation, and the Chinese just did not offer us a valuation.

Q. Have Richpoint indicated that they would be interested in taking up rights?

A. Yes they have.

Q. What about the valuation then – is there any process available for obtaining the valuation in China?

A. There is an arbitration process but it is unenforceable without a process to get agreement on various matters – we would need to get Richpoint to agree to any action.

Q. Is there any more information about the dealing process for the shares?

A. We will have details in the next 14 days or so as to the mechanism being proposed.

Q. If we cannot get a valuation for Zhongying, can the Company get information about Zhongying to allow shareholders to form their own opinion?

A. Yes – could be available.

Q. What do Zhongying do? It appears that the 20% shareholding in Zhongying is the Company's only asset?

A. Zhongying is involved in renewable energy – it turns waste into fuel. It owns land on which a biomass plant has been built in Wuhan in China.

Q. Who is advising the Company in relation to the fundraising?

A. The lawyers – no corporate finance yet.

Q. What prices will be paid for sales/investment?

A. Not sure – the prices might be the same, but the details have not been established. But we are still taking advice in relation to the proposals.

Q. Will Richpoint take up rights?

A. They have indicated that they may do so and will support the proposals of the Company.

Q. Are there any audited accounts for Zhongying?

A. No.

Q. So it is a gesture of goodwill to make the investment?

A. No There are claims against the Company so we cannot just make a distribution to shareholders.

Q. Why are we paying interest on money if Zhongying is in breach of the shareholders agreement and not providing information required under the JV agreement?

A. That is correct but the advice is that financial set-off could only be done against dividends – but not against not having the board representation etc under the SHA/JV agreement.

Q. What appetite does Zhongying/Wuhan have to settle the litigation?

A. The Zhongying shareholders have an obligation to have settlement of subscription monies and Zhongying need to show their regulators that they have received the subscription monies.

Q. Are the directors' service contracts available for inspection?

A. Yes – they are available at the meeting.