27 Jun 2013 16:44
27 June 2013
China Private Equity Investment Holdings Limited (AIM: CPEH)
("CPE" or the "Company" or "Group")
Final Results for the year ended 31 December 2012
Highlights
·; Consolidated net asset value of US$23.2 million (2011: US$33.4 million)
·; Consolidated net asset value per share of US$0.30 (2011: US$0.44)
·; Continued exploration of opportunities for long term growth despite external pressures
·; Key long-term strategic alliance agreed with Hong Kong-based independent asset management firm Gen2 Capital Partners Limited - since renamed Adamas Asset Management ("Adamas").
·; Successful secondary listing on the Frankfurt exchange, providing additional liquidity in trading of Company's shares
·; Stakes acquired in two companies listed on Bursa Malaysia, Patimas Computer Berhad ("Patimas") during January 2013, and Asia Bioenergy Technologies Berhad ("ABT") in May 2013.
·; Two key holdings - Enfinium International Holdings Limited ("Enfinium") and Fortel Technology Holdings Limited ("Fortel") impacted financial results, but seen by the Board as temporary setback.
John Croft, CPE's Chairman and CEO commented: "With little relief in the pressure on global economies, and continued heightened risk in the private equity investment sector, the year to 31 December 2012 was undoubtedly a challenging period for CPE. There is no doubt it is taking longer than we hoped for our investments to generate returns for our investors, and while we remain confident that positive returns will ultimately be delivered, we have taken a strategic decision to target much of our new investment in assets with an income stream either in the private equity sector or, as evidenced by our recent investments in Patimas and ABT, in suitable publicly-quoted companies. We believe this will provide a better balance between longer term returns and liquid assets for our investment portfolio.
"It is in support of this strategy that we are building closer ties with Adamas, which typically invests in high yield assets in Greater China. Our plan is to co-invest with Adamas where synergies are strong, and to share resources as much as possible to improve efficiencies within both businesses.
"I remain confident that our strategy shift towards more liquid and income-generating assets, underpinned by our strong relationship with Adamas, will deliver improved returns for shareholders, in the medium term."
For further information, please visit www.cpe-invest.com or contact:
Maria Leung China Private Equity Investment Holdings Ltd |
+852 2801 6770
|
Azhic Basirov / Siobhan Sergeant, Nominated Adviser and Broker Smith & Williamson Corporate Finance Ltd | +44 (0) 20 7131 4000
|
Allan Piper Investor Relations (Hong Kong) First City Public Relations |
+852 2854 2666
|
Simon Hudson Investor Relations (London) Tavistock Communications |
+44 (0) 20 7920 3170
|
www.cpe-invest.com | Ticker symbol: London - CPEH Frankfurt - AA1JBE5 |
Chairman's Statement
With little relief in the pressure on global economies, and continued heightened risk in the private equity investment sector, the year to 31 December 2012 was undoubtedly a challenging period for CPE. While the Board continued to explore opportunities for solid long term growth, successfully entering into a long-term strategic alliance and equally successfully achieving a secondary listing on the Frankfurt Stock Exchange, external conditions led to setbacks that impacted the Group's Net Asset Value (NAV) and deepened consolidated losses.
Since its arrival on AIM in October 2009, CPE has sought to identify investment opportunities that bring the prospect of long-term returns for shareholders in the TMT and financial service sectors which are identified as having strong growth potential. During 2012, two of those key holdings - Enfinium International Holdings Limited ("Enfinium") and Fortel Technology Holdings Limited ("Fortel") brought disappointments that have impacted our financial results but which the Board believes to be temporary. We continued during the year to move forward cautiously, restructuring our portfolio and agreeing a key alliance, and did not undertake any new investments. Our work to identify new growth opportunities materialised after the year end, with announcements during the first half of the current year that we had taken stakes in two companies listed on Bursa Malaysia, Patimas Computer Berhad ("Patimas") during January, and Asia Bioenergy Technologies Berhad ("ABT") in May. Both of these companies are going through re-organisations of their management and business portfolios, in which CPE may have valuable contributions and where the new business opportunities arising from these re-organisations may benefit the other portfolio companies of CPE.
In line with previous years, I have asked one of our Directors, Hanson Cheah, an experienced private equity investor in China, to provide an overview of recent trends and activities in the private equity and venture capital market in the region. His report is summarised in the section below that follows my statement.
In this forward-looking light, the Board remains confident of CPE's long-term growth prospects despite a decrease in the Company's consolidated net assets at 31 December 2012 to US$23.2m (2011: US$33.4 million), equivalent to US$0.30 per share (2011: US$0.44). Consolidated losses for the year deepened to US$10.25m (2011: US$2.89 million) following decreases in the fair values of the Company's stake in Enfinium and Fortel. The value of our holding in Enfinium was reduced by US$3.34 million following the exchange of the Company's shares for 127,000 shares in AIP Global Holdings Ltd. ("AIP Global"), Enfinium's parent company. In addition, the Board decided to downgrade the value of our investment in Fortel by US$5.88m following an internal Fortel share-transfer transaction in November 2012. The aforesaid decreases in fair values are non-cash charges to the Group's income statement. Both of these transactions are discussed in detail below. At the same time, CPE's other key investee company, China iEducation, maintained its valuation solidly throughout the year, and we believe - like Enfinium and Fortel - also remains on course for strong long-term performance.
Operating expenses incurred during the year remained largely unchanged from 2011.
During the year, the Company successfully achieved a secondary listing on the Frankfurt exchange and this has provided some additional liquidity in trading in the Company's shares, albeit at frustratingly high discounts to our NAV. We were also very pleased towards the end of the year to announce plans for a long-term strategic partnership with the Hong Kong-based independent asset management firm Gen2 Capital Partners Limited - since renamed Adamas Asset Management ("Adamas") - which we believe marks a key step towards increased positive momentum for the Company in the coming years.
The importance of this alliance lies in the strong presence and track record of Adamas in the Asia Pacific market, with assets under management of approximately US$500 million and primary focus on East Asian investment opportunities. Adamas also has offices in Tokyo and in Xiamen in China's Fujian Province, and employs over 30 experienced investment professionals. The Board believes the alliance creates strong synergies which mean CPE is now positioned to benefit from the reach and experience of Adamas in the Greater China region while Adamas gains from CPE's operational experience, hands-on involvement with investees companies, and connections within the TMT and financial service sectors. Adamas has announced its intention to strengthen the relationship in the future by steadily increasing its shareholding in CPE, and it is clear that a number of Adamas' investee assets may eventually fit well within CPE's portfolio.
Equally important for the Company's long-term strategic positioning, shortly before the Adamas agreement, and as referred to above, we announced the completion of discussions to broaden our investment in the holding company of Enfinium, AIP Global, to provide wider geographical exposure to its growth opportunities. On 12 October 2012, the Company entered into an agreement with AIP Global, exchanging its own 24% interest in Enfinium for 127,000 shares in AIP Global, which represent 2.54% of the issued share capital of AIP Global. AIP Global had earlier acquired a majority interest in Enfinium, in March 2012.
Following the conclusion of negotiations with AIP Global, the Company evaluated the carrying value of the 127,000 shares in AIP Global and determined that a further write down in fair value of US$3.34 million from the carrying value of the Enfinium investment should be recognised in the statement of comprehensive income for the year ended 31 December 2012. We remain hopeful that this investment will ultimately produce positive returns, but in the meantime we have taken a cautious approach with regard to the valuation in our accounts.
Progress on Fortel's plans for an IPO in Hong Kong has been frustratingly slow, and was delayed further during 2012 by a decision to change auditors. This has necessitated audits for Fortel's financial years 2010 and 2011 to be started again and, because of the elapsed time, 2012 results now also need to be completed in order for Fortel to qualify for admission to the Hong Kong Stock Exchange. The audit process is now almost complete and we are anticipating that Fortel will be able to submit its application to join the Hong Kong Stock Exchange in the very near future.
In November 2012, shares of Fortel were transferred between shareholders at a consideration of HK$4,000 per share. Based on this transaction there is an implied decrease in the value of our investment of US$5.88m and this has been recognised in the statement of comprehensive income for the year ended 31 December 2012.
In 2012, China iEducation generated strong revenue from the traditional database sales and licensing business, and continued to develop its online service business model. 2013 is expected to be another good year for the traditional business as the development of an important online examination module in Nanning was completed earlier this year, which is expected to generate a significant new revenue stream. The new online business, after nearly two years of trials and fine tuning, has developed into a combination of online and offline tutorial service. With the opening of its first physical tutorial service centre in Changsha (Hunan Province) in Q3 2013, the "Chinaschool" brand will commence the offering of online and offline tutorial service before September 2013 and is expected to rapidly roll out to more provinces throughout China.
There is no doubt it is taking longer than we hoped for our investments to generate returns for our investors, and while we remain confident that positive returns will ultimately be delivered, we have taken a strategic decision to target much of our new investments in assets with an income stream either in the private equity sector or, as evidenced by our recent investments in Patimas and ABT, in publicly-quoted companies. We believe this will provide a better balance between longer term returns and liquid assets for our investment portfolio.
It is in support of this strategy that we are building closer ties with Adamas, which typically invests in high yield assets in Greater China. Looking forward, our plan is to co-invest with Adamas where synergies are strong, and to share resources as much as possible to improve efficiencies within both businesses.
Against that outlook, I remain confident that while 2012 produced disappointing results for the Group, our strategic shift towards more liquid and income-generating assets, underpinned by our strong relationship with Adamas, will deliver improved returns for shareholders, and that this should also be reflected in an improved share price with a much smaller discount to Net Asset Value.
In April 2013 the Group successfully raised US$4 million through the placing of 50 million new ordinary shares at US$0.08 per share. The equity raising was completed in order to provide additional funds to be deployed for new investments, and in May 2013 we announced our investment in Asia Bioenergy Technologies Berhad. We hope to be announcing further new investments in due course.
Finally, I would like to express thanks to our former Chairman Patrick Macdougall who retired at the end of February 2013, and who provided invaluable experience and advice to the team throughout his tenure.
John Croft
Chairman of the Board
An Overview of the Private Equity Market in China
Private-equity funds in China are still holding on to about 82 percent of the companies they have invested in since 2007, according to a report from China First Capital, a Shenzhen-based advisory firm. Funds typically seek to cash out of their investments within three to five years, often through IPOs. As such there is an overhang of funds waiting for exits to happen.
Many institutional investors have been playing a "wait and see" game to see if exits were forthcoming in 2013. The private equity industry thus rejoiced at the initial public offering of Lightinabox, a Chinese e-commerce firm. This was the first IPO by a Chinese company on US markets this year. Lightinabox has received investments from various private equity funds including Zhenfund, GSR Ventures, Ceyuan Ventures and TrustBridge Partners. Trading under the ticker LITB, shares rose 22.2% to $11.61 during the stock's first day of trading on the New York Stock Exchange, raising a total of $79 million. Before this event IPOs by Chinese companies have received a chilly reception from investors in the US and Hong Kong for more than a year now, the result of a number of factors including a series of accounting scandals involving Chinese companies listed in the US.
We began to see some signs of improving investor sentiment late last year, when social networking site YY (Nasdaq: YY) made a successful listing in New York and shares of recently listed discount retailer Vipshop (NYSE: VIPS) also started posting big gains.
On the other side the companies that have raised RMB-denominated funds are looking for their portfolio companies to be listed domestically. At the moment, only about 250 Chinese private companies go public each year domestically. The reason is that the Chinese securities regulator, the CSRC, keeps tight control on the supply of new issues. Their goal is to keep the supply at a level that will not impact overall stock market valuations. This results in a long queue for companies getting a listing. Domestic initial public offering prices have tumbled 70 percent since 2012 despite the Shanghai Stock Exchange Composite Index rising 24 percent from last year's four-year low on 3 December 2012. There have been no domestic IPOs this year, and new deals are virtually halted.
Companies looking for exits for their investors have turned to other paths which include overseas listings, reverse takeover of public listed shells and more M&A activities. We expect to see these activities increase over the second half of the year.
Another growing trend in China is private equity firms investing in Chinese companies that are already publicly listed in the US to take them private. In the last two years, more than 40 US-listed Chinese companies have announced plans to delist in "take private" deals. About half the deals have a PE firm at the centre of things, providing a large chunk of the capital. The PE firms argue that the US stock market has badly misunderstood, and therefore deeply undervalued these Chinese companies. The PE firms confidently boast they are buying into great businesses at fire sale prices. These companies included Focus Media, 7 Days Inn and the aborted Ambow Education deal. This may be another path the PE firms will take as they look to "safer" deals in the future.
Hanson Cheah
Non-Executive Director
Extract from the Directors' Report
The board ("the Board") of directors ("the Directors") are pleased to present their report on the affairs of the Company and its subsidiaries (collectively referred to as "the Group"), together with the audited financial statements for the year ended 31 December 2012.
PRINCIPAL ACTIVITIES
The Company was incorporated with limited liability under the laws of the British Virgin Islands ("BVI"). The Company's shares were admitted to the AIM Market ("AIM") of the London Stock Exchange on 19 October 2009.
The principal activity of the Company is investment holding. The Group is principally engaged in investing primarily in unlisted assets in the areas of telecommunications, media and technology ("TMT") as well as financial services or listed assets driven by corporate events such as mergers and acquisitions, pre-IPO, or re-structuring of state- owned assets.
RESULTS AND DIVIDENDS
The loss on ordinary activities of the Group for the year ended 31 December 2012 after taxation was US$10.3 million (2011: loss US$2.89 million).
The Directors are not recommending the payment of a dividend for the year.
REVIEW OF THE BUSINESS
The Group's audited consolidated loss for the year ended 31 December 2012 amounted to US$10,251,000 (2011: loss: US$2,885,000). The Group's audited net asset value as at 31 December 2012 stood at US$23,174,000 (2011: US$33,423,000), equivalent to US$0.30 per share (2011: US$0.44).
Consolidated losses for the year deepened primarily as a result of decreases in fair value of the Company's stakes in Enfinium and Fortel.
On 12 October 2012, the Company entered into an agreement with AIP Global, exchanging its own 24% interest in Enfinium for 127,000 shares in AIP Global, which represent 2.54% of the issued share capital of AIP Global. AIP Global had earlier acquired a majority interest in Enfinium, in March 2012.
Following the conclusion of negotiations with AIP Global, the Company evaluated the carrying cost of the 127,000 shares in AIP Global and determined that a further write down in fair value of US$3.34 million from the carrying value of the Enfinium investment should be recognised in the statement of comprehensive income for the year ended 31 December 2012. We remain hopeful that this investment will ultimately produce positive returns, but in the meantime we have taken a cautious approach with regard to the valuation in our accounts.
Progress on Fortel's plans for an IPO in Hong Kong has been frustratingly slow, and was delayed further during 2012 by a decision to change auditors. This has necessitated audits for Fortel's financial years 2010 and 2011 to be started again, and because of the elapsed time, 2012 results now also need to be completed in order for Fortel to qualify for admission to the Hong Kong Stock Exchange. The audit process is now almost complete and we are anticipating that Fortel will be able to submit its application to join the Hong Kong exchange in the very near future.
In November 2012, shares of Fortel were transferred between shareholders at a consideration of HK$4,000 per share. Based on this transaction there is an implied decrease in the value of our investment of US$5.88m and this has been recognised in the statement of comprehensive income for the year ended 31 December 2012.
In 2012, China iEducation generated strong revenues from the traditional database sales and licensing business, and continued to develop its online service business model.
Operating expenses incurred during the year remained largely unchanged from 2011.
During the year, the Company successfully achieved a secondary listing on the Frankfurt exchange and this has provided some additional liquidity in trading in the Company's shares.
We were also very pleased towards the end of the year to announce plans for a long-term strategic partnership with the Hong Kong-based independent asset management firm Gen2 Capital Partners Limited - since renamed Adamas Asset Management ("Adamas")-which we believe marks a key step towards increased positive momentum for the Company in the coming years.
It is in support of this strategy that we are building closer ties with Adamas, which typically invests in high yield assets in Greater China.
John Croft
Executive Chairman
26 June 2013
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2012
2012 | 2011 | |
US$'000 | US$'000 | |
Fair value changes on financial assets | ||
at fair value through profit or loss | (9,246) | (1,730) |
Administrative expenses | (1,402) | (1,426) |
Operating loss | (10,648) | (3,156) |
Finance income | 275 | 274 |
Loss before taxation | (10,373) | (2,882) |
Taxation | - | - |
Loss for the year | (10,373) | (2,882) |
Other comprehensive expense | ||
Currency translation differences | 122 | (3) |
Total comprehensive loss for the year | (10,251) | (2,885) |
Loss per share | ||
Basic | 13.60 cents | 4.11 cents |
Diluted | 13.60 cents | 4.11 cents |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2012
Share | (Accumulated | ||||
based | Foreign | losses)/ | |||
Share | payment | translation | retained | ||
capital | reserve | reserve | earnings | Total | |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Group balance at 1 January 2011 | 24,572 | 799 | (68) | 4,005 | 29,308 |
Loss for the year | - | - | - | (2,882) | (2,882) |
Other comprehensive expense | |||||
Currency translation differences | - | - | (3) | - | (3) |
Total comprehensive expense for the year | - | - | (3) | (2,882) | (2,885) |
Issue of shares | 7,000 | - | - | - | 7,000 |
Group balance at 31 December 2011 and 1 January 2012 | 31,572 | 799 | (71) | 1,123 | 33,423 |
Loss for the year | - | - | - | (10,373) | (10,373) |
Other comprehensive income | |||||
Expired options | - | (799) | - | 799 | - |
Currency translation differences | - | - | 122 | - | 122 |
Total comprehensive (expense)/income for the year | - | - | 122 | (10,373) | (10,251) |
Issue of options | - | 2 | - | - | 2 |
Group balance at 31 December 2012 | 31,572 | 2 | 51 | (8,451) | 23,174 |
Consolidated Statement of Financial Position
As at 31 December 2012
2012 | 2011 | |
US$'000 | US$'000 | |
Non-current assets | ||
Fixtures, fittings and equipment | 7 | 7 |
Unquoted financial assets at fair value through profit or loss | 20,133 | 29,248 |
Total non-current assets | 20,140 | 29,255 |
Current assets | ||
Loans and other receivables | 3,023 | 3,363 |
Quoted financial assets at fair value through profit or loss | - | 176 |
Cash and cash equivalents | 489 | 1,159 |
Total current assets | 3,512 | 4,698 |
Total assets | 23,652 | 33,953 |
Current liabilities | ||
Other payables and accruals | 478 | 494 |
Shareholder's loan | - | 36 |
Total liabilities | 478 | 530 |
Net current assets | 3,034 | 4,168 |
Net assets | 23,174 | 33,423 |
Equity and reserves | ||
Share capital | 31,572 | 31,572 |
Share based payment reserve | 2 | 799 |
Foreign translation reserve | 51 | (71) |
(Accumulated losses)/retained earnings | (8,451) | 1,123 |
Total equity and reserves attributable to owners of the parent | 23,174 | 33,423 |
Consolidated Cash Flow Statement
For the year ended 31 December 2012
2012 | 2011 | |
US$'000 | US$'000 | |
Cash generated from operating activities | ||
Loss before taxation | (10,373) | (2,882) |
Adjustments for: | ||
Depreciation | 3 | 2 |
Financing income | (275) | (274) |
Fair value changes on unquoted financial assets at fair value through profit or loss | 9,223 | 1,671 |
Fair value changes on quoted financial assets at fair value through profit or loss | 23 | 59 |
Share-based expenses | 2 | - |
Increase in receivables | (39) | (10) |
(Decrease)/increase in other payables and accruals | (17) | 186 |
Net cash used in operating activities | (1,453) | (1,248) |
Cash flows from investing activities | ||
Acquisition of fixtures, fittings and equipment | (3) | (2) |
Finance income received | 275 | 185 |
Sale proceeds/(purchase) of quoted financial assets at fair value through profit or loss | 154 | (235) |
Sale proceeds of unquoted financial assets at fair value through profit or loss | - | 3,800 |
Loans granted | (3,528) | (6,266) |
Proceeds from repayment of loan granted | 3,919 | 3,055 |
Net cash generated from investing activities | 817 | 537 |
Cash flows from financing activities | ||
Net proceeds from issue of shares | - | 1,000 |
(Repayment to)/loan from shareholders | (36) | 22 |
Net cash (used in)/generated from financing activities | (36) | 1,022 |
Net (decrease)/increase in cash and cash equivalents | (672) | 311 |
Cash and cash equivalent at the beginning of the year | 1,159 | 851 |
Effect of foreign exchange | 2 | (3) |
Cash and cash equivalent at the end of the year | 489 | 1,159 |
Notes to the Financial Statements
For the year ended 31 December 2012
1. Board Approval and 2012 Annual Report and Financial Statements
The financial information included in this report has been extracted from the Group Financial Statements for the year ended 31 December 2012 which were both approved by the Board of Directors on 26 June 2013. These Group Financial Statements have been prepared in accordance with the accounting policies set out therein and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The auditors have reported on the 2012 Financial Statements, their report is unqualified. The information included does not constitute the Company's statutory accounts. The full financial statements will be included in the Group's annual report.
2. Loss per Share - Continuing Operations
The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the Group is based on the following:
2012 | 2011 | ||
US$'000 | US$'000 | ||
Numerator | |||
Basic/Diluted | Net Loss | (10,373) | (2,882) |
No. of Shares | No. of Shares | ||
'000 | '000 | ||
Denominator | |||
Basic: | Weighted average shares | 76,285 | 70,134 |
Effect of diluted securities | |||
Share options | 750 | 1,336 | |
Diluted | Adjusted weighted average shares | 77,035 | 71,470 |
For the year ended 31 December 2012 and 2011, the share options are anti-dilutive and therefore the weighted average shares in issue are 76,285,000 and 70,134,000 respectively.
3. Unquoted Financial Assets at Fair Value through Profit or Loss
Group | Company | |
2012 | 2012 | |
US$'000 | US$'000 | |
Balance as at 1 January 2011 | 28,718 | 2,000 |
Fair value changes through profit or loss | (1,671) | (1,671) |
Additions | 6,000 | 6,000 |
Disposals | (3,800) | - |
Effect of foreign exchange | 1 | - |
Balance as at 31 December 2011 and 1 January 2012 | 29,248 | 6,329 |
Fair value changes through profit or loss | (9,223) | (3,344) |
Effect of foreign exchange | 108 | 22 |
Balance as at 31 December 2012 | 20,133 | 3,007 |
The Group adopted the recent investment methodology prescribed in the IPEVCV guidelines to value its investments at fair value through profit and loss. Applying the methodology, the Group has used the purchase consideration paid by third parties in the acquisition of new shares in Fortel and Enfinium as the basis to estimate the fair value of the investment.
Fortel Technology Holdings Limited ("Fortel")
CPE TMT holds a 33.6% stake in Fortel.
This has been accounted for as a financial asset at fair value through profit or loss as it is to be held as part of an investment portfolio. The Group will dispose of the shareholding upon approval by the investment committee which monitors the investment/divestment decision on an ongoing basis. In November 2012, shares of Fortel were transferred between shareholders at a consideration of HK$1.000 per share ("Fortel Share Transfer"). Based on the Fortel Share Transfer, a decrease in fair value of US$5.879 million in the valuation of Fortel was recognised in the statement of comprehensive income for the year ended 31 December 2012.
AIP Global Holdings Limited ("AIP Global")
The Company also entered into an agreement to acquire a 30% interest in Hong Kong-based Enfinium
International Holdings Limited ("Enfinium"), for an initial consideration of US$6 million during the year ended 31 December 2011. The consideration was settled by way of issuing 10 million new ordinary shares of no par value of the Company.
In November 2011, Enfinium allotted further shares to third parties ("Corporate Events"). Following the Corporate Events of Enfinium, the Company's interest in Enfinium was diluted from 30% to 24% and based on the above allotment price, a decrease in fair value of US$1,671,000 was recognised in the statement of comprehensive income for the year ended 31 December 2011.
On 12 October 2012, the Company entered into an agreement with AIP Global pursuant to which the
Company exchanged its 24% interest in Enfinium for 127,000 shares in AIP Global, which represent 2.54% of the issued share capital of AIP Global. AIP Global acquired a majority interest in Enfinium in March 2012.
Following the conclusion of negotiations with AIP Global, the Company evaluated the carrying cost of the 127,000 shares in AIP Global and determined that a further write down in fair value of US$3.34 million from the carrying value of the Enfinium investment should be recognised in the statement of comprehensive income for the year ended 31 December 2012.
China iEducation Holdings Limited ("iEducation")
During the year ended 31 December 2010, the Company entered into a subscription agreement with iEducation to subscribe its guaranteed convertible note (the "Note") at a consideration of US$2,000,000. The major shareholder of iEducation is the guarantor of the Note. The Note was converted into 6,666 ordinary shares of iEducation in December 2011, representing a 40% interest in iEducation. As the Directors were not aware of any adverse elements that would materially affect the value of the shares, they considered the original cost was an appropriate valuation as at 31 December 2011. An independent professional qualified valuer has performed a valuation in accordance with IPEVCV guidelines for the valuation of our interest in iEducation as of 31 December 2012 at a valuation of US$2.17 million. The Directors consider the valuation of iEducation of US$2 million is a fair valuation as of 31 December 2012.
4. Posting of Accounts
The Company will post the Annual Report and Account for the year ended 31 December 2012 to shareholders shortly. The Annual Report and Accounts will also be made available on the Company's website at www.cpe-invest.com.