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enterpriseAsia (EPA)

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Thursday 17 June, 2004

enterpriseAsia

Re Investment Strategy

enterpriseAsia PLC
17 June 2004



Change of Investment Strategy and

Re-admission of the Ordinary Shares to the

Alternative Investment Market

Introduction



On 11 August 2003, the Board of enterpriseAsia plc ('the Company') wrote to
Shareholders advising that the Company intended to discontinue its investment
strategy of providing seed funding to a portfolio of start-up ventures in
information technology, and, instead, change its investment policy by
implementing a strategy focussed on investing in, or acquiring businesses in,
the education and training sector.



On 27 August 2003, Shareholders approved the Company's current strategy of
investing in and/or acquiring businesses, companies or other organisations and
entities in the education and training sectors.



Further to the adoption of the business strategy mentioned above, the Company,
through a wholly owned subsidiary, acquired Chinese Education Holding Co.
Limited ('CE') and Hong Kong Institute of Vocational Learning Limited ('HKIVL').
CE is engaged in the provision of providing summer camps and overseas school
placements and HKIVL operates a private tutorial and language school under the
brand of Universal i Education.



The Company remains committed to investment in education in Mainland China and
it is the Board's belief that the Company's strengths continue to be its
knowledge of, and connections in, the Greater China market. As a result of these
connections, the Company has come across a number of projects outside the
education sector (particularly in the energy and environmental services sectors)
which seem worthy of further evaluation, since they may offer returns in a
shorter timescale than that which the Board currently envisages for education
projects. The Directors intend to look for possible investment opportunities in
areas outside the education sector and thus broaden the Company's portfolio.



The AIM Rules require that a change in the business strategy of an investment
company quoted on AIM must first be approved by its shareholders. On the
obtaining of such approval trading in the company's shares is cancelled. To have
a company's shares re-admitted to AIM a company must publish a new admission
document. A document is therefore being sent to the Shareholders and an EGM is
being convened for the purposes of considering and, if appropriate, approving
the broadening of the existing strategy of the Company of investing in and/or
acquiring businesses, companies or other organisations and entities in the
education and training sectors by permitting investing in and/or acquiring
businesses, companies or other organisations and entities in other sectors.



Business Strategy

Notwithstanding its commitment to developing a portfolio of businesses that
focus on providing education and training services in the Greater China market,
the Directors are very conscious of the need to generate revenue in the short
term and wish, therefore, to broaden the Company's strategy and investment
policy to encompass business opportunities which have arisen in other sectors -
in particular, energy and environmental services - in the Greater China region.



The Directors believe that they are not currently maximising the benefit of
their experience and knowledge of the Greater China market and that the
Company's involvement in other specific sectors could improve short-term
returns, facilitate greater financial stability and improve cash flow. The
Company's current resources are limited; nevertheless, the Directors judge that
there are niche opportunities to leverage the Company's understanding of Chinese
business methods (rather than on any detailed sector expertise) and that this
could facilitate the development of a sustainable portfolio. It may be that, to
take up some investment opportunities, the Company would need to raise further
equity funding.



In conclusion, the Directors believe that it would be in the longer term
interest of Shareholders for the Company to look beyond the education sector,
and that the broadening by the Company of its investment policy into other
sectors such as energy and environmental sectors would enhance shareholder
value.



The Energy and Environmental Sectors



Energy

China has experienced a shortage of electricity supply in recent years; driven
by a booming domestic economy, the power consumption across the country
increased by over 10% in 2003. In the first quarter of 2004, the country
consumed a total of 480 billion kilowatt-hours of electricity, a year-on-year
rise of 16%. In an attempt to tackle the forecast deficiency crisis, the country
has invested over US$13 billion on developing power facilities since the
beginning of 2004.



Even so, the Chinese Government has forecast that electricity demand across the
country will exceed supply capability by 30,000 megawatts during 2004. This gap
between supply and demand is most marked in the major cities with their
combination of large populations and major industrial centres. The Pearl River
Delta and the Yangtze River Delta are amongst the worst affected regions. The
provincial power grids (the state departments responsible for the distribution
of electricity) have placed a ceiling on power use during the period of peak
demand in the summer. This means that some areas may face mandatory restrictions
on electricity consumption.



Environmental

The pace of China's recent economic expansion is well documented. Less well
known, in the Directors' view, are the efforts of the Chinese government to
implement a programme of environmental protection to try to keep pace with the
rapid industrial expansion. In 2002, China implemented a national policy of
environmental protection and, while the Directors believe that there is still
much progress to be made in this respect, they do detect a shift in management
ideas and practices which suggest new business opportunities in areas such as
the management of waste disposal.



Solid waste pollution is becoming a serious issue and has raised public concern
within Mainland China. The annual generation of Municipal Solid Waste (MSW) in
China has increased in the past 20 years from 31 million tonnes in 1980 to over
300 million tonnes in 2003. Nearly one-half of the waste generated is dumped in
the suburbs untreated and the accumulated quantity has reached over 6 billion
tonnes. The improper disposal of MSW has created environmental problems such as
soil erosion and water contamination.



At present, land-filling, composting and incineration are the most prevalent
methods used in within Mainland China to treat MSW. In some cities where land
resources are limited, local government favours incineration, not least because
this requires less land than other treatment options. The potential for
generation of electricity by the use of dual purpose power generation and waste
incineration are attractive to operators, while modern incineration processes
are seen to be more environmentally friendly than other options.



Proposed Acquisition and Investment

The Company has identified two projects which are currently being evaluated and
which may be the first to be effected under the proposed new strategy. The first
is a new venture in Guangdong Province in Southern China for the generation of
electricity using small scale gas fired generators; the Company would have a
consultative role in developing the project and, were the opportunity to become
available and subject to further consideration, would invest in a small equity
stake. This project is scheduled to be started by the end of 2004. The second
project, also in Guangdong Province, is in solid waste management where a medium
scale incineration plant will be developed by a local company to treat domestic
and factory waste. Again, the Company is considering a combined advisory/
investment opportunity.



Loss of Capital

In the course of the audit of the Company's accounts for the financial year
ended 31 December 2003,  the Directors have become aware that the Company's net
assets have fallen to less than half of the Company's called-up share capital.



In such circumstances, Section 142 of the Companies Act 1985 obliges the
Directors to convene an extraordinary general meeting of the Company to consider
what specific steps, if any, should be taken to address the situation. The EGM
is therefore also being convened for the purpose of giving consideration to the
loss of capital issue referred to above as well as for the purpose of
considering the proposed change to the Company's investment strategy.



The Directors consider that, at present, no specific steps should be taken in
respect of the loss of capital other than that the Directors should proceed by
monitoring the value of the Company's net assets in the short term and allow the
effects of the proposed change of investment strategy (if approved) to become
apparent before deciding upon whether any further specific steps are required.



Shareholders will have the opportunity to discuss the Company's loss of capital
at the EGM.



Extraordinary General Meeting

A notice convening the EGM of the Company to be held at The Worshipful Company
of Insurers, The Hall, 20 Aldermanbury, London EC2V 7HY at 11:30 a.m. on 25
August 2004 is set out in the circular being sent to shareholders. At the EGM,
the Resolution will be proposed to authorise the change in investment strategy.



Availability of Document

Copies of the document will be available free of charge from Insinger de
Beaufort, 44 Worship Street, London EC2A 2JT for a period of one month from the
date of Admission and on the Company's website at www.enterpriseasia.com.hk.



For further information:


Ka Lai, Chief Executive Officer:                                + 852 2116 5900
Phill Brown, Corporate Relations Director:                      01274 623478
Stephen Goschalk, Insinger de Beaufort:                         020 7377 6161




                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                           

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