News

Grand Group Investment PLC
Further Investment

22 April 2015

Grand Group Investment PLC (AIM:GIPO), a provider of expansion capital and value added services to China-based SMEs with high growth potential, is pleased to announce that it has entered into an agreement to make a cash investment of RMB 20 million (approximately GBP 2.16 million) through its newly incorporated wholly-owned subsidiary Gao Rui De ("WuXi") Cultural Development Ltd by acquiring a 15 per cent shareholding in WuXi Jin Xun Tong Technology Limited ("JinXunTong" or "JXT"). The percentage investment is subject to upwards only adjustment depending on the profitability of JXT for the financial year 2015. No such adjustment is currently contemplated.

JinXunTong is an online learning solutions provider to China's urban and rural vocational education industry that was incorporated in 2010 in WuXi City, China. It operates an integrated online training website Gong Yuan Wang (http://www.gongyuannet.com/), which provides online training video courses for industrial workers. Gong Yuan Wang has developed an advanced data centre that is supported by one of China Telecom's three five-star internet data centres. This advanced dedicated line for connectivity ensures the stability of the system, speed of the website and security of the data.
The website currently has approximately four million registered members, of which approximately two million are paying members who have already paid total membership fees of approximately RMB 200 million.

JXT's unaudited results for its year ended 31 December 2014 showed profits after tax of RMB 22.6 million (approximately GBP 2.45 million) (2013: net loss of RMB 0.30 million) on total revenue of RMB 40.9 million (approximately GBP 4.43 million) (2013 Nil). Unaudited net assets at 31 December 2014 were RMB 23.0 million (approximately GBP 2.49 million). Trading in the first quarter of 2015, based on unaudited management accounts, showed profit after tax of RMB 25.5 million (approximately GBP 2.76 million) on total revenues of RMB 40.7 million (approximately GBP 4.4 million). Unaudited net assets at 31 March 2015 were RMB 88. 6 million (approximately GBP 9.57 million).

Along with Grand's cash investment, Grand's 33 per cent initial investee company Wuxi Victory Media & Culture Co., Limited ("Victory") has vended certain assets, licenses and expertise related to courseware development into JXT in return for an 18 per cent shareholding of JXT. (Victory specialises in the development of traditional, "offline" courseware for the training of industrial workers. Assets sold into JXT include vocational training and the recruiting information website "Kaigongla".) JXT and Victory will work closely together to develop vocational educational technology.

JXT is Grand's second investment in education technology related businesses in China, which is an area where the Directors continue to see significant potential for growth and the enhancement of shareholder value.

James Newman, Non-Executive Chairman of Grand Group Investment PLC, said: "The Board is pleased to announce Grand Group's investment in JXT, following the Group's involvement in Victory Group, a vocational training software and videos provider for the metallurgy sector. The demand for skilled labour in China represents strong potential for training providers, particularly those which could cater their offering for the expanding online audience. We are particularly pleased with the close fit between our first two investments, allowing them to contribute to each other's growth. Coupled with the active involvement of Grand Group, the Board is confident in the long term prospects for JXT.

"The Board is pleased that Grand Group has started to deliver in key areas of our commitment to shareholders set out at the time of the IPO. As an active investor based in China, having strong access to university research facilities and extensive industry contacts, Grand Group is well-positioned to benefit from the high growth technology sector in China."

 

For further information:

Grand Group Investment PLC  
James Newman, Non-Executive Chairman Tel: +86 510 8329 1718
  www.grandgroupplc.com
ZAI Corporate Finance Limited  
Ray Zimmerman / Ivy Wang Tel: +44 (0) 20 7060 2220
Steven Baird (Broker) www.zaicf.com

 

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Notes to editors

About Grand Group

The Grand Group was founded in 2014 by Yang Xiao and other founding shareholders. The Company has been established for the purpose of identifying, acquiring and investing in small to medium-sized companies with high growth potential, principally operating in the People's Republic of China ("PRC").

Grand is a late stage incubator which focusses on investing in established businesses with either technology or intellectual property which the Board believes will benefit from Grand's university research resources.

Partnerships
The TKK Society has fostered and maintained a broad network of contacts with individuals at local and international higher education institutions, including: Jiangnan University; Xiamen University; Jimei University; NanYang Technological University (China); University of California Berkeley (Tan Kah Kee Hall); National University of Singapore; University of Hong Kong; Oxford Brookes University; Keuka College (New York State); and the University of Greenwich.

Amongst these universities, Grand has already established effective relationships with Jiangnan University and Jimei University for its current projects and the Directors believe that similar relationships can be developed with other universities.

Investments - Victory

Victory produces vocational training software, and most importantly training videos for basic blue collar jobs, primarily in the metal working (known in China as the "metallurgy") sector. Victory works in a field which represents one of the fundamental social problems in the PRC today: that of unskilled labour migration from the countryside to urban areas.

Upon completion of the pre-IPO reorganisation, Grand acquired 33% of Victory from Shenzhen Grand, which had previously made an investment of RMB 196 million in cash into Victory. As at 30 June 2014, the fair value of the Company's investment in Victory remained RMB 196 million. The Directors understand Victory is targeting a flotation within the next two years.

For further information, please visit www.grandgroupplc.com.

 

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