Half Yearly Report

CHAIRMAN'S STATEMENT

I am pleased to have the opportunity to present the unaudited condensed half yearly results of China Growth Opportunities Limited (the "Company") for the six month period ended 30 September 2009.

Key points

Return of Capital of 20 pence per Ordinary Share (equivalent to £10.0 million), comprising 18 pence per Ordinary Share on 15 July 2009 and 2 pence per Ordinary Share on 5 October 2009.

Net assets at 30 September 2009 of £14.4 million (30 September 2008: £47.2 million; 31 March 2009: £25.5million). 

Net assets at 30 September 2009 of 28.8 pence per share (30 September 2008: 94.4 pence; 31 March 2009: 51.04 pence);

Loss for the period ended 30 September 2009 of £2.1 million, equal to a loss of 4.3 pence per share.

On 29 September 2009, notice was given to terminate the Asset Divestment Support Agreement with London Asia Capital (S) Pte Limited on 31 October 2009, and Rhys Davies and Brett Miller, who were Non-Executive Directors, became Executive Directors.

Dr Weiming Zhang appointed to the Board, as a Non-Executive Director, on 9 April 2009.

Resignation of Simon Littlewood as Executive Director on 19 October 2009.

Sale of holdings in United Envirotech, Asia Water Technology and China New Energy for a total of £4.4 million.

Results

During the six months ended 30 September 2009, the Company was successful in finding buyers for three of its investments, United Envirotech, Asia Water Technology and China New Energy (see below for details), and I believe the Company is on course to sell the remaining six investments in the portfolio by 30 September 2010.

The net assets of the Company at 30 September 2009 were £14.4 million a decrease of £11.1 million since 31 March 2009, largely attributable to the return of capital to shareholders of £9.0 million on 15 July 2009 (see below).

The Company suffered a net loss for the period of £2.1 million (4.3 pence per Ordinary Share) (30 September 2008: £24.5 million, 31 March 2009: £46.1 million).

Share Price

The share price rose 72% from the 31 March 2009 price of 12.5 pence to 21.5 pence per Ordinary Share at 30 September 2009. The total return (including the 18.0 pence per share return of capital) was 216% for the period.

Return of Capital

At an Extraordinary General Meeting held on 6 July 2009 the shareholders approved a Return of Capital Scheme and amended the Articles to permit future returns of capital. The Board made an initial return of capital to shareholders of 18 pence per Ordinary Share (equivalent to £9.0 million) on 15 July 2009. A further return of capital of 2 pence per Ordinary Share (equivalent of £1.0 million) was made, after the period end, on 5 October 2009. At 30 September 2009 the Company's cash balance totalled £1.9 million.

Directorate Changes

Dr Weiming Zhang was appointed to the Board on 9 April 2009. On 29 September 2009, following notice of the termination of the Asset Divestment Agreement with London Asia Capital (S) Pte Limited (see below), Brett Miller and I ceased to be classed as Non-Executive Directors and were deemed to be Executive Directors of the Company. On 5 October 2009, Simon Littlewood resigned as an Executive Director.

Asset Divestment Support Agreement

On 29 September 2009 the Company gave notice to terminate the Asset Divestment Support Agreement with London Asia Capital (S) Pte Limited on 31 October 2009. There was no cost to the Company of the termination of the Asset Divestment Support Agreement. Following the termination of the Asset Divestment Support Agreement, the Board has continued to manage the sale of the Company's investments and the Company's investment activities are now fully self-managed, with all services previously provided under the Asset Divestment Support Agreement now being undertaken by the Executive Directors, being Brett Miller and I. This has reduced the investment consultancy costs to the Company significantly.

Change of Nominated Adviser and Nominated Broker

As part of the continuous endeavours of the Board to ensure that the Company receives excellent service as well as value for money from its advisers, on 6 November 2009, the Board terminated the Company's agreement with the Nominated Adviser and Nominated Broker, Collins Stewart Europe Limited, and appointed Singer Capital Markets Limited to undertake both roles.

Investments 

During the period ended 30 September 2009, the Company sold its entire holding in United Envirotech, Asia Water Technology and China New Energy for a total of £4.4 million. This was £0.1 million above the 31 March 2009 "fair value" of these investments but realised a loss of £11.3 million.

The Company now has six remaining investments in its portfolio, valued at £12.0 million. 

At 30 September 2009, the Company's main investment was a 14.64% holding, valued at £7.6 million, in China Metal Packaging Group Company Limited.  China Metal Packaging is a market leader in its sector and represents a pure investment play on the trends of rising urbanization and domestic consumption growth in China.  Brett Miller was appointed to the board of China Metal Packaging Group Company Limited as a non-executive director during the period.

We have valued your investments in China Metal Packaging Group Company Limited and Wan Wei Oil & Gas Technology Group at a 10% discount, in local currency, to their 31 March 2009 valuations. 

This reflects our conservative assessment of the value at which your investments could have been exchanged between knowledgeable, willing parties in an arm's length transaction at the reporting date (so-called "fair value").

The valuation of China CDM Exchange Centre Limited rose by 78% in the period under review as we value it on an NAV basis, using a 50% discount to its AIM listed peer group of environmental investment companies.  Therefore, while the peer group traded at a 29% discount to NAV on 30 September 2009, we valued China CDM Exchange Centre Limited at a 65% discount to its stated NAV at 30 June 2009.

Moreover, as the pound appreciated by 10.4% against the Renminbi during the period under review the overall investment loss in the period was £1,091,000.

Outlook

The Board is optimistic that it will achieve the targets outlined in the Investing Policy and maximise the return to shareholders by negotiating the best possible value for the sale of the remaining investments. 

R Davies

8 December 2009

CONDENSED HALF YEARLY STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 September 2009 

1 April 2009 to

30 September 2009

1 April 2008 to

30 September 2008

1 April 2008 to

31 March 2009

(unaudited)

(unaudited)

(audited)

£'000

£'000

£'000

Investment gains and losses

Net unrealised change in fair value of investments

10,217

(24,320)

(43,339)

Realised loss from sale of investments

(11,308)

-

(6,197)

------------

------------

------------

Total investment loss

(1,091)

(24,320)

(49,536)

Income

Other income 

6

724

109

------------

------------

------------

Total income

6

724

109

Expenses

Investment Consultant's fee

(120)

(709)

653

Performance fee written-back

-

-

3,024

Administration fees

(108)

(63)

(145)

Directors' remuneration

(89)

(36)

(95)

Audit fees

(25)

(58)

(85)

EGM expenses

-

-

(104)

Transaction costs

(102)

-

-

Other expenses

(144)

(59)

(146)

------------

------------

------------

Total expenses

(588)

(925)

3,102

(Loss)/gain on foreign currency exchange

(463)

54

183

------------

------------

------------

Loss for the period/year

(2,136)

(24,467)

(46,142)

Other comprehensive (loss)/income

Foreign currency translation differences

(1)

(1)

2

------------

------------

------------

Total other comprehensive (loss)/income

(1)

(1)

2

------------

------------

------------

Total comprehensive loss for the period/year

(2,137)

(24,468)

(46,140)

------------

------------

------------

Loss per share - basic and fully-diluted

(4.27)p

(48.93)p

(92.28)p

CONDENSED STATEMENT OF FINANCIAL POSITION

as at 30 September 2009

30 September 2009

30 September 2008

31 March 2009

(unaudited)

(unaudited)

(audited)

£'000

£'000

£'000

Non-current assets

Investments at fair value through profit or loss

11,953

47,998

17,412

----------

----------

----------

Current assets

Other receivables

635

877

3,393

Cash and cash equivalents

1,875

3,667

4,930

----------

----------

----------

2,510

4,544

8,323

----------

----------

----------

Total assets

14,463

52,542

25,735

----------

----------

----------

Current liabilities

Payables and accruals

(78)

(5,348)

(213)

----------

----------

----------

Net assets

14,385

47,194

25,522

----------

----------

----------

Capital and reserves attributable to equity holders of the Company

Share capital

500

500

500

Other reserve

2,293

2,293

2,293

Distributable reserves

11,591

44,402

22,727

Foreign exchange translation reserve

1

(1)

2

----------

----------

----------

Total equity shareholders' funds

14,385

47,194

25,522

----------

----------

----------

Net Asset Value per Ordinary Share 

28.77p

94.39p

51.04p

CONDENSED HALF YEARLY STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September 2009 (unaudited)

Share capital

Other reserve

Distributable reserves

Foreign exchange translation reserve

Total

£'000

£'000

£'000

£'000

£'000

Balance at 31 March 2009

500

2,293

22,727

2

25,522

Loss for the six month period

-

-

(2,136)

-

(2,136)

Foreign currency translation differences

-

-

-

(1)

(1)

Return of Capital 

(9,000)

(9,000)

----------

----------

----------

----------

----------

Balance at 30 September 2009

500

2,293

11,591

1

14,385

----------

----------

----------

----------

----------

for the six months ended 30 September 2008 (unaudited)

Share capital

Other reserve

Distributable reserves

Foreign exchange translation reserve

Total

£'000

£'000

£'000

£'000

£'000

Balance at 31 March 2008

500

2,293

68,869

-

71,662

Loss for the six month period

-

-

(24,467)

-

(24,467)

Foreign currency translation differences

-

-

-

(1)

(1)

----------

----------

----------

----------

----------

Balance at 30 September 2008

500

2,293

44,402

(1)

47,194

----------

----------

----------

----------

----------

for the year ended 31 March 2009 (audited)

Share capital

Other reserve

Distributable reserves

Foreign exchange translation reserve

Total

£'000

£'000

£'000

£'000

£'000

Balance at 31 March 2008

500

2,293

68,869

-

71,662

Loss for the six month period

-

-

(46,142)

-

(46,142)

Foreign currency translation differences

-

-

-

2

2

----------

----------

----------

----------

----------

Balance at 31 March 2009

500

2,293

22,727

2

25,522

----------

----------

----------

----------

----------

CONDENSED HALF YEARLY STATEMENT OF CASH FLOWS

for the six months ended 30 September 2009 

1 April 2009 to

30 September 2009

1 April 2008 to

30 September 2008

1 April 2008 to

31 March2009

(unaudited)

(unaudited)

(audited)

£'000

£'000

£'000

Cash flows from operating activities

Other income received

6

358

602

Investment Consultant's fees paid

(220)

-

(350)

Administration fees paid

(138)

(62)

(170)

Directors' remuneration paid

(86)

(29)

(95)

Audit fees paid

(25)

(8)

(74)

EGM expenses paid

-

-

(104)

Other expenses paid

(246)

(48)

(134)

----------

----------

----------

Net cash (outflow)/inflow from operating activities

(709)

211

(325)

Cash flows from investing activities

Purchase of fair value through profit or loss investments

-

-

(334)

Sale of fair value through profit or loss investments

6,930

-

2,000

----------

----------

----------

Net cash inflow from investing activities

6,930

-

1,666

----------

----------

----------

Cash flow from financing activities

Return of capital

(9,000)

-

-

----------

----------

----------

Net cash outflow from investing activities

(9000)

-

-

----------

----------

----------

----------

----------

----------

(Decrease)/increase in cash and cash equivalents

(2,779) 

211 

1,341

----------

----------

----------

Cash and cash equivalents brought forward

4,930

3,402

3,402

(Decrease)/increase in cash and cash equivalents

(2,779)

211

1,341

Foreign exchange movement

(276)

54

187

----------

----------

----------

Cash and cash equivalents carried forward

1,875

3,667

4,930

----------

----------

----------

INVESTMENT PORTFOLIO

as at 30 September 2009

Fair value

Company

Activity/Sector

Listing

Country of Incorporation

30 September 2009

30 September 2008

31 March 2009

£000

£000

£000

China CDM Exchange Centre Limited

Carbon credit brokerage

PLUS

Jersey

1,577

9,900

884

China Metal Packaging Group Company Limited

Consumer

Not quoted

BVI

7,620

9,200

9,440

China Real Estate Services Limited

Property services

Not quoted

China

-

1,300

10

China Solar Energy Company Limited

Clean technology 

Not quoted

Jersey

-

3,000

-

Dalian Business Institute Limited

Education

Not quoted

Jersey

-

1,600

-

Wan Wei Oil & Gas Technology Group

Energy

Not quoted

BVI

2,756 

5,300

2,770

--------

--------

--------

11,953

30,300

13,104

--------

--------

--------

Investments sold in the period ended 30 September 2009

-

17,700

4,308 

--------

--------

--------

11,953

48,000

17,412

--------

--------

--------

For further information please visit www.chinagrowthopportunities.com or contact:

Rhys Davies

Chairman

Tel: +41 (0) 79 620 0215

Roger Clark

Singer Capital Markets Limited

Tel: +44 20 3205 7636

Elysium Fund Management Limited

PO Box 650

No. 1 Le Truchot

St Peter Port

Guernsey

GY1 3JX

Tel: +44 1481 810 100

Fax: +44 1481 810 120

e-mail: [email protected]