08 June, 2016

Dear Shareholder

I am pleased now to enclose your shareholder pack for our Annual General Meeting to be held at 10am on Thursday 30th June 2016. I hope to see as many of you as possible at the meeting. The audited financial statements of the company for the year ended 31st December 2015 and the statutory notice convening the Annual General Meeting are enclosed and are available on the company's website.

During 2015 and 2016 your directors have concentrated on bringing a resolution to the deadlock surrounding the company's investment in Zhongying in a way that should enable shareholders to enjoy the value of the investment. In my statement at last year's Annual General Meeting I set out four objectives that we wished to pursue in order to improve the position of all shareholders and I am pleased to report that these have now been substantially achieved.

It has always been my objective to enable shareholders to sell their shares if they so wish. I can confirm that many shareholders, who have been waiting over 8 years, availed themselves of the opportunity to cash out late last year and early this year. I am really pleased that those who wished to leave the company were able to do so after so many years of being locked in.

We have reached agreement in principle with Zhongying to settle all outstanding matters and regularise the company's shareholding to enable us to participate along with the other Zhongying shareholders in its future. The principal term of the agreement is that the company will pay £4,000,000 in full settlement of all claims including any interest and penalties on late payment of the share subscription.

On completion of the agreement and payment of this sum the company will work cooperatively with other shareholders in Zhongying to create value for all shareholders. As a consequence of this agreement it will be necessary to raise funds from shareholders to ensure that there are sufficient funds available to make this payment and I anticipate writing to you shortly with full details of how we propose to raise the funds.

We are continuing to pursue further realisations and in that regard legal proceedings are under way against certain former directors.

I have to report that Stanley Simmonds resigned as a director on 15 April 2016 due to ill health. We wish him well and I have much appreciated his wise counsel over the last three years; he will be missed by us all. Your board is looking to appoint a replacement non-executive director as soon as an appropriate candidate has been identified.

I should like to thank all my colleagues for their hard work and effort during the past year and also to thank our shareholders for their continued support and patience while we navigate the company towards a position where it can contribute fully to the progress of its largest investment, Zhongying and look to a more positive future.

Yours sincerely

David Buchler
London Asia Capital plc