13 August, 2017

The following are the highlights of the Chairman’s Q&A session at the 2017 AGM.

Q1. How long until shareholders can withdraw funds and get movement in their shares and share price?

A1. I am going to spend a little time giving you some background because I think that will better answer your question.  The reason your board go to China is in relation to the principal asset of the company which is our 20% stake in Zhongying. We have worked hard over the last three or four years to develop a very close relationship with Zhongying and the chairman of Kaidi, Mr Chen. Kaidi is probably the largest biomass and clean energy company in China.

Kaidi have factories all over China producing clean gas and electricity through burning rubbish and mainly agricultural and forest waste. It is an interesting and complicated business.

The business now has orders and potential projects all over Europe. Kaidi signed its first project in Europe in Finland which is to build a new factory at a cost of approximately 1 billion Euros which is to produce clean gas and clean biofuel that can be used in buses, generators and even aeroplanes. This involves some of Kaidi’s proprietary technology. They would also have the ability to burn wood pulp that is sourced from Finnish forests and by replanting trees they can grow these to full height within a few years rather than 25 years. They are doing this using replanting technology which all makes for a very interesting package.

So, talking to China about getting closer through our joint venture and looking at consolidating or in some way doing something a little bit innovative or interesting that benefits all shareholders of both groups would be beneficial to all. One of the reasons that your directors are going to China in a few weeks’ time is to further those discussions. We meet with Mr Chen perhaps four or five times a year.  Your Managing Director was there in March in advance of our meeting in two weeks time. I can't tell you today where these efforts will ultimately lead but the journey will be interesting. One thing is to see how best they can work with us to raise funds to build factories in Europe by access to European financial markets. Perhaps one of the ways will be for this company to go back to the public market again here in London.  That might cover your question with regard to being able to realise some of your shares and get price movement in your shares. If this was a future possibility it would still be a year or two off at least.

Q2. Does LAC have other assets besides Zhongying?

A2. Zhongying apart, our other assets are mostly cash realised from past disposals but there are some potential litigation assets that we are still pursuing.

Q3. Does the settlement agreement with Ng and Littlewood contain confidentiality clauses?

A3. Yes, there are confidentiality provisions and I'm afraid that we cannot get around those.

Q4. Can you tell us anything about the other litigation?

A4. We have other litigation in two areas. The first involves an investment we made some 11 years ago into Croatia by way of a 5 million US dollar loan. Our predecessor boards were unsuccessful in making any real progress to recover these funds but we have made substantial efforts to both trace the funds and hopefully try to recover them. We have been to Croatia and we have had detailed discussions with the police there about the matter. They have been extremely helpful assisting us in tracing what actually happened to the loan proceeds. We do have at least two people of interest that could help us with our enquiries. We can't really put any real prospects of recovery until we have finished this investigative process but we owe it to the company to at least try.

The second area of litigation unfortunately is against our former Finance Director, Mr Parker and is taking place in Singapore. This litigation is in fact set to come to court in Singapore towards the end of this year and relates to a substantial amount that we argue was wrongly paid out from a subsidiary. There appears to be some ambiguity to say the least on how these amounts were described in the accounts. We are seeking a court ruling which if given in our favour will result in us being awarded substantial damages. I can't say more than that at this stage because the case is pending and hopefully it will be resolved one way or another this year.

Q5. We own 20% of Zhongying. What can we offer Kaidi, presumably a listed company in Europe to roll out their green program?

A5. I don't want to be too prescriptive. It is a picture of LAC and Zhongying working more closely together for the benefit of all shareholders across the joint venture and perhaps getting closer together to see if that might then assist with any funding issues that the business requires. If we succeed it would be valuable to all concerned.  It can be difficult to move capital out of China to meet the demands of a growing international business.

Q6. Is our Chinese director stopped from travelling to meetings outside China?

A6. No.

Q7. Is Kaidi listed?

A7. Our understanding is that one part of the group is listed on the Shenzhen exchange.

Q8. What is happening with the shares and share capital raisings?

A8. The only time we have sought to raise money from shareholders was last year and that was in order to resolve the outstanding dispute between LAC and Zhongying. If you recall, Zhongying and Kaidi were of the view, which was correct, that we had not paid the full subscription price for our 20% shareholding dating all the way back to 2005. We took the view that we had to resolve that dispute and everything that has followed and our hopes for the future required a settlement to be reached and that was the reason for the fundraising. We have no current plans to seek any more money from our shareholders. I repeat we have no plans but if we did that would only ever happen if there was a good reason that benefited all shareholders.

Q9. What is happening about profits and income for the company?

A9. May I refer you to our latest Accounts that we have just adopted at this meeting. The company does not make trading profits but the value of the company at the end of the financial period has increased and going forward will depend on our negotiations with Kaidi and our other Zhongying shareholder partners. If we continue to work ever closer with them then that may be of great value to shareholders. Hopefully we will find some sort of journey that will be of benefit and real substance to all shareholders.

Q10. So when will value be returned to shareholders?

A10. Presumably if you are alluding again to a listing then nothing is going to happen for at least a year or two.

Q11. Do we have any new numbers on Zhongying’s finances?

A11.  We do have a fair bit of information but without proper context the information is very difficult to assess. Transparency for Chinese companies is not as evolved as for UK companies. The Kaidi group structure is complex and it operates across a number of different countries from China to the USA and Canada. We are expecting to get full financials for this year from Zhongying and that will certainly aid our understanding.

Q12.  Do we have a feel for the scale of the business?

A12. As mentioned the Kaidi Group have around 50 plants in China and a plant in Vietnam. They are going to have one in Finland and they have a subsidiary in Canada and that gives you an idea on scale. They have stated publicly that they intend to provide a substantial part of the one billion euros funding required for the Finland project from their own resources. This is a very substantial business but it is extremely difficult for an outsider to build up a complete picture. We hope in time as partners to get a better picture.

Q13. Any present reason for the change in the Articles to give the board power to change the company’s name?

A13. No current need but in the context of our plans, any future funding or flotation would need a rebrand to give us a break from our past. A change of name would be part of that process so it is simply just giving the board the authority to be able to do that but there is no name change in mind for now.

Q14. What about Richpoint?

A14. Richpoint underwrote the capital raise last year and they came up with the funds and helped put everything in place. We have met with them. They are serious people and long-term residents in Singapore. They are private investors with their own portfolio. They are good people to have on side.  

Q15. Where can we do some research on the Kaidi technology?

A15. There is information available on the web.  I suggest you tap in www.sunshinekaidi.com for references to the Kaidi group and www.kaidi.fi for the Finland project. 

Q.16 Have you visited their factories?

A16. Yes, but not all of them.

Q17. Could we thank the Chairman and the board for all that they are doing for the company and have done?

A17. Thank you. I think there is a sense now that the company is moving forward.