London Asia Capital

Dear Shareholder

At the General Meeting held on 18th December Shareholders approved the Report and Accounts of London Asia Capital plc for the year to 31st December 2007. Also approved were the new Articles of Association of the Company and the reappointment of Moore Stephens LLP as Auditors. No Poll was required but in excess of 106 million Proxy Voles were received in favour of the three resolutions, while 17 million votes, substantially those of Simon Littlewood and his associates, were voted against.

At the Meeting Mr Jack Wigglesworth stepped down as Chairman in favour of the Earl of Cromer and both Mr Wigglesworth and Mr George Allnutt resigned as Directors of London Asia Capital plc.

Your Directors would like to take this opportunity to wish all Shareholders a Happy New Year, a year in which we hope that value in the Company’s shares will be restored to Shareholders.

Your sincerely

Keith Negal

Chief Executive

In my last update on 12th June I anticipated that we would circulate accounts during August with a view to holding our AGM during September. However, the task of discovering and analysing the historical financial information for the many group companies has presented challenges which have taken longer to deal with than we would have hoped. It is now our plan to circulate the accounts for 2007 in early November, possibly holding the AGM on 27th November, at which time we will detail certain matters which we believe should be drawn to the attention of shareholders. We then plan to hold further AGMs on or around 31st January and 31st March 2010 to approve the 2008 and 2009 accounts respectively.

We still lack some financial information, but our best estimate is that the net worth of London Asia Capital plc today approaches £20 million. Clearly, this is not the amount that could be realised today in cash and may rise or fall with markets in the future, though values in Asia have been advancing quite well recently. The group currently holds cash and quoted investments to the value of approximately £8 million. Further to this the group also holds a number of unquoted investments which your directors believe may have long term value, in particular a £9 million investment in Zhongying Changjiang based in Wuhan.

Following the cancellation of approximately 98 million shares (the current issued share total is 229,508,582) relating to the four share swap companies, explained in my letter of 7th May, this equates to about 3.5p per share in cash and quoted investments and in excess of 8 p of net assets per share. In addition we are actively seeking the return of further funds owned but not currently held by the group.

Following a review of the commercial arrangements the directors of London Asia Capital plc and the directors China IPO plc have agreed in principle to terminate the contract signed earlier in the year. The 10 million options granted to China IPO at 5p per share remain in place. These changes will have no effect on the structure or operation of the Board of London Asia Capital plc.

In summary, your Board is delighted at that progress we have made so far and continue to make on behalf of shareholders and look forward to providing further information at the forthcoming AGM.

It is proposed that an Extraordinary General Meeting of the Shareholders in London Asia Capital plc will be held on 29th May 2009 (now scheduled on 4th June 2009, see the above letter to shareholders). Full details will be sent to Shareholders shortly.

The resignation of my predecessor, Simon Littlewood, in 2007 and his relocation to Hong Kong removed from London Asia Capital plc (LAC) the resources and knowledge necessary to run the business in the long term. My main priorities on joining the Board in late September were, therefore, to put this right and then to prepare and file accounts for the year to 31 December 2007. The initial plan was to do this by 5 December in time to maintain the Company's AIM listing and to enable us achieve this Toby Parker ACA was appointed Finance Director. However, it quickly became apparent that, with little of the necessary information in the UK and with the need to obtain robust fair valuations for the investee companies and to prepare audited accounts for the many subsidiaries in a wide range of distant countries, more help was needed.

Since the start of 2009, with the support of the China IPO Ltd Directors, The Earl of Cromer, Professor Francesco Gardin and Dennis Bailey, who agreed to join your Board in December, substantial progress has been made. We now have main board Directors on the Boards of most of our important subsidiaries and as signatories on the main bank accounts. We have visited some of our most important investments. In common with many companies the net worth of the business is substantially less than that reported in the 2007 interims. Nevertheless, the business appears to have some assets with real value.

Your Board is now exploring the ways in which it might be possible to return some cash to shareholders and restore liquidity in the shares by returning them to The AIM Market. Whether or not these plans have been fully developed or we have been able to finalise the accounts it is our intention to convene a General Meeting before the end of April, by which date we will be able to provide shareholders with more comprehensive information.