News
Grand Group Investment PLC
("Grand Group", the "Company" or the "Group")
Final Results
Grand Group Investment PLC (AIM:GIPO), a provider of expansion capital and value added services to China-based SMEs with high growth potential, today announces its audited Final Results for the period from 1 January 2016 to 31 December 2016 (the "period").
For further information:
Grand Group Investment PLC |
|
James Newman, Non-Executive Chairman |
Tel: +44 (0) 20 7398 7714 |
Yang Xiao, Executive Director |
ZAI Corporate Finance Limited |
|
Ray Zimmerman / Ruby Qu (Nomad) |
Tel: +44 (0) 20 7060 2220 |
Andrew Wilson (Broker) |
CHAIRMAN’S STATEMENT
2016 was an eventful and
challenging year. I refer you to the announcement of 30 September 2016 for a
detailed explanation of the events leading to the delay in issuing both the
2015 audited financials and the 2016 interim statements.
As notified on 30 September 2016,
the company disposed of its two investments: Victory and JXT. These disposals
triggered paragraph 5.6 (sub-paragraph 2) of the AIM Note for Investing
Companies, and as such the company became treated as an AIM Rule 15 cash shell.
In accordance with AIM Rule 15, the company has until 30 September 2017,
approximately 3 months from now, either to implement the current investing
policy or to make an acquisition which would be considered a reverse takeover
under the AIM Rules. If the company is unable to do so it will be
suspended again, this time pursuant to AIM Rule 40.
The company started 2017 with a
virtually clean slate, having sold its investments. As of 2016 year end,
proceeds from the sales of Victory and JXT investments have been coming in on
time, and cash had grown to RMB 140.8 million. As of the end of April, funds
continued to arrive on time and total (unaudited) cash was RMB 221.2 million –
approximately £25 million. No new investments have yet been made with the
proceeds.
The group has much to do in 2017
- notably finishing collecting the proceeds from the investment exits, but as
importantly developing the pipeline of investment opportunities and investing
by the September 30 deadline.
Outlook
As the US Federal Reserve
continues to look to raise interest rates, there has been a significant impact
on the Chinese investment market, causing many asset prices to return to more
rational levels. This provides a great opportunity for Grand. The sales of
Victory and JXT have bolstered Grand's cash reserves for future investments.
Now that Grand has regained listed status on AIM, it is in a better position to
make those investments.
James Newman
Non-Executive Chairman
GRAND
GROUP INVESTMENT PLC
CORPORATE GOVERNANCE REPORT
As an AIM-listed company, Grand
Group Investment PLC (“Grand Group”) does not comply with
the UK Corporate Governance Code published by the Financial
Reporting Council. However, the directors do place a high degree of importance
on ensuring that
high standards of corporate governance are maintained. The following sections
note the governance procedures
applied by Grand Group.
Board
Responsibilities
Following
Stephen Roberts and Ying Ying Gu resignations from Non-Executive Director and
Executive Director respectively during 2016, the Board currently
comprises two
independent Non-Executive Directors (“NED”) and three
Executive Directors. The Directors
expect to be kept fully informed of the Group’s performance, and
other matters that are relevant to the business of the Group and
that should be brought to the attention of the Directors. The Directors have access
to the financial and legal advisers.
The Board has a breadth of
experience relevant to the Group, and the Directors believe that any changes to the
Board’s
composition can be managed without undue disruption. The Board believes
that the mix of skills, experience, ages and length of service are appropriate
to the requirements of the
Group for the time being.
Audit
Committee
The Audit Committee of the Group,
comprising J. Mark
Hemmann and James Newman, is chaired by J. Mark Hemmann.
The Audit Committee is responsible for ensuring that the Group’s financial
performance is properly monitored, controlled and reported. The Audit Committee
is responsible for the
scope and effectiveness of the external audit and compliance by the Group with
statutory and regulatory requirements.
Auditor objectivity and
independence is safeguarded through limiting non-audit services that fall
within defined categories. Non-audit work is approved by the Audit Committee if
the committee
concludes that it is in the interests of the Group to purchase non-audit work
from the external Auditors
(rather than another supplier). Any future non-audit work to be performed by
Moore Stephens LLP will be monitored and approved by the Audit
Committee.
Share
Dealing
The Group has adopted a share
dealing code for Directors’
dealings. The Directors will comply with Rule 21 of the AIM Rules for
Companies relating to Directors’
dealings and will take all reasonable steps to ensure compliance by the
Group’s
applicable employees as well.
GRAND GROUP INVESTMENT PLC
CORPORATE GOVERNANCE REPORT (CONTINUED)
The
Takeover Code
As a company incorporated in the
Cayman Islands, the Group will not be subject to the Takeover Code. As a result,
certain protections that are afforded to Shareholders under the Takeover Code,
for example in relation to
a takeover of a company or certain stake-holding activities by Shareholders, do
not apply to the Group.
However, certain protections have
been incorporated into the Group’s Articles which, to an extent,
mirror the provisions
of Rule 9 of the Takeover Code (the “Relevant Code Provisions”).
The Articles provide that if an acquisition
of Ordinary Shares were to increase the aggregate holding of the acquirer and
its concert parties to shares
carrying 30% or more of the voting rights of the Group, the acquirer and,
depending on the circumstances,
the concert parties, will be required (except with the agreement of the Group
in a general meeting
by ordinary resolution of independent Shareholders) to make a cash offer for
the outstanding shares in
the Group at a price not less than the highest price paid by the acquirer or
its concert parties during the previous
12 months. This requirement would also be triggered by any acquisition of
shares by a person holding (together
with its concert parties) shares carrying between 30% and 50% of the voting
rights in the Group if the
effect of such acquisition were to increase the person’s percentage of voting
rights. The main difference between
these provisions and the Relevant Code Provisions is that the Takeover Panel
does not have any jurisdiction
to enforce these provisions.
Independent Auditors’ Report to the
Shareholders of Grand Group Investment Plc
Opinion
We have
audited the consolidated financial statements of Grand Group Investment Plc
(“the Company”) and its subsidiaries (“the Group”), which comprise the consolidated
statement of financial position as at 31st December 2016 and the consolidated
statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant accounting
policies.
In our
opinion, the accompanying consolidated financial statements present fairly, in
all material respects, the financial position of the Group as at 31st December
2016, and of its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards.
This report
is made solely to the company’s members, as a body, in accordance with our
terms of engagement. Our audit work
has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we
have formed.
Basis for
Opinion
We conducted
our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the
financial statements in British Cayman Islands and Auditing Practices Board’s
(APB’s) Ethical Standards and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Responsibilities
of Management and Those Charged with Governance for the Financial Statements
Management
is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards, and
for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing
the financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease operations, or has
no realistic alternative but to do so.
Those
charged with governance are responsible for overseeing the Group’s financial
reporting process.
Auditor’s
Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance
with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We
also:
·
Identify
and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal
control.
·
Obtain
an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group’s internal
control.
·
Evaluate
the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
·
Conclude
on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report
to the relate disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date
of our auditor’s report. However
future events or conditions may cause the Group to cease to continue as a going
concern.
·
Evaluate
the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
·
Obtain
sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an option on the
consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged
with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant
deficiencies in internal control that we identity during our audit.
The engagement partner on the audit
resulting in this independent auditor’s report is Mark Ayres.
Moore Stephens LLP
150 Aldersgate Street
London, EC1A 4AB
GRAND GROUP INVESTMENT PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
The accompanying
notes on pages 10 to 23 form an integral part of these financial statements.
GRAND GROUP INVESTMENT PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
|
|
|
2016 |
2015 |
|
|
Note |
RMB’000 |
RMB’000 |
|
Assets |
|
|
|
|
Non-current asset: |
|
|
|
|
Unquoted financial
assets at fair value through profit or loss |
8 |
- |
243,440 |
|
|
|
|
|
|
Current assets: |
|
|
|
|
Other receivable |
8 |
175,210 |
10 |
|
Cash and cash equivalents |
13 |
140,844 |
66,632 |
|
|
|
316,054 |
66,642 |
|
|
|
|
|
|
Total assets |
|
316,054 |
310,082 |
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
Shareholders’ Equity: |
|
|
|
|
Share capital |
15 |
14 |
14 |
|
Share premium |
|
66,936 |
66,936 |
|
Contributed
capital |
|
196,000 |
196,000 |
|
Warrants
reserve |
17 |
13,283 |
13,283 |
|
Retained earnings |
|
23,369 |
9,632 |
|
Equity attributable
to owners of the Company |
|
299,602 |
285,865 |
|
Non-controlling
interest |
|
10 |
10 |
|
|
|
|
|
|
Total equity |
|
299,612 |
285,875 |
|
|
|
|
|
|
Non-current liability: |
|
|
|
|
Deferred tax liability |
11 |
- |
6,860 |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Other payable
and accruals |
|
15,451 |
4,299 |
|
Amounts due to shareholders |
14 |
991 |
13,048 |
|
|
|
16,442 |
17,347 |
|
|
|
|
|
|
Total liabilities |
|
16,442 |
24,207 |
|
|
|
|
|
|
Total equity and liabilities |
|
316,054 |
310,082 |
The accompanying notes on pages 10 to 23 form
an integral part of these financial statements.
GRAND GROUP INVESTMENT PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For
the year ended 31
December 2016
|
|
|
|
|
|
|
|
|
|
|
|
Share |
Share |
Contributed |
Warrants |
Retained |
Sub- |
Non- controlling |
Total |
|
|
capital |
Premium |
capital |
reserve |
earnings |
Total |
Interest |
Equity |
|
|
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2014 |
10 |
- |
196,000 |
- |
204,975 |
400,985 |
- |
400,985 |
|
Issued share capital |
4 |
66,936 |
- |
- |
- |
66,940 |
- |
66,940 |
|
Issued warrants |
- |
- |
- |
13,283 |
- |
13,283 |
- |
13,283 |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
(195,343) |
(195,343) |
- |
(195,343) |
|
Non- controlling interest |
- |
- |
- |
- |
- |
- |
10 |
10 |
|
At 31
December 2015 |
14 |
66,936 |
196,000 |
13,283 |
9,632 |
285,865 |
10 |
285,875 |
|
Total comprehensive profit
for the year |
- |
- |
- |
- |
13,737 |
13,737 |
- |
13,737 |
|
At 31
December 2016 |
14 |
66,936 |
196,000 |
13,283 |
23,369 |
299,602 |
10 |
299,612 |
The accompanying notes on pages 10 to 23 form an integral
part of these financial statements.
GRAND GROUP INVESTMENT PLC
CONSOLIDATED CASH FLOW STATEMENT
For the
year ended 31
December 2016
|
|
|
31 December 2016 |
31 December 2015 |
|
|
Note |
RMB’000 |
RMB’000 |
|
Cashflows from operating activities |
|
|
|
|
Profit /(Loss) before tax |
|
18,316 |
(259,483) |
|
Adjustments: |
|
|
|
|
Unrealised loss on unquoted financial assets |
8 |
- |
256,560 |
|
Finance income |
|
(21,760) |
(19,800) |
|
Warrant expenses |
|
- |
13,283 |
|
Increase in other payables and accruals |
|
(287) |
2,981 |
|
Net cash outflow from operating activities |
|
(3,731) |
(6,459) |
|
|
|
|
|
|
Cash flows from investing activity |
|
|
|
|
Dividend received from unquoted financial assets at fair value through profit or loss |
|
- |
19,800 |
|
Cash received from disposal of financial assets |
8 |
90,000 |
- |
|
Acquisition of
unquoted financial assets at fair value through profit or loss |
8 |
- |
(20,000) |
|
Net cash inflow / (outflow) from investing activity |
|
90,000 |
(200) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Cash proceeds from issue of shares |
|
- |
66,940 |
|
Amounts (repay) / from shareholders |
|
(12,057) |
6,340 |
|
Net cash (outflow) / inflow from financing activities |
|
(12,057) |
73,281 |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
74,212 |
66,622 |
|
Cash and cash
equivalents at the beginning of year |
|
66,632 |
10 |
|
Cash
and cash equivalents at the end of year |
|
140,844 |
66,632 |
|
|
|
|
|
The accompanying
notes on pages 10 to 23 form an integral part of these financial
statements.
GRAND GROUP INVESTMENT PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
1.
GENERAL INFORMATION
Grand Group
Investment Plc (“Grand Group” or
the “Company”) was incorporated
and domiciled in the British Cayman Islands on 4 March 2014 and its registered office is 89 Nexus
Way, Camana Bay, KY1-9007,
British Cayman Islands. The principal place of business is Room 2023, South Building, Lihu Technology Innovation Center, No.11,
Wuhu Road, Wuxi City, Jiangsu Province,
People’s Republic of China.
The Company’s
shares were listed on the AIM, a market operated by the London Stock Exchange
on 27 January 2015.
The company is a value-added and technology innovation private equity investment vehicle, which principally focuses on investing in small & medium sized
enterprises in the People’s Republic of China.
2.
RECENT ACCOUNTING PRONOUNCEMENTS
(a)
New interpretations and
revised standards effective for the year ended 31 December 2016
The Group has adopted the new interpretations and
revised standards effective for the year ended 31 December 2016. The adoption
of these interpretations and revised standards had no impact on the disclosures
and presentation of the financial statements during the year.
(b)
Standards and
interpretations in issue but not yet effective
Standards issued but not yet effective up to the date
of issuance of the Group’s financial statements, which the Group
reasonably expects to be applicable at a further date, are listed below. The
Group does not intend to adopt those standards until they become effective.
|
|
|
Effective for accounting period on or after: |
|
IFRS 7 (amended) |
Financial Instruments: Disclosure |
1 January 2018 |
|
IFRS 9 |
Financial Instruments |
1 January 2018 |
|
IFRS 15 |
Revenue from contracts with customers |
1 January 2018 |
|
|
|
|
The Directors anticipate that the
adoption of these standards and interpretations in future periods will have no
material impact on the financial statements.
3.
ACCOUNTING POLICIES
a)
Basis of Preparation
The consolidated financial information has been prepared in accordance with
International Financial Reporting Standards (“IFRS”), which collective term includes all applicable individual IFRS, International Accounting
Standards (“IAS”) and Interpretations issued by the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”).
The
financial information has been
prepared on the going concern basis and under the historical cost convention, except for the revaluation of certain
financial assets, which have been measured at fair value.
The
financial information is presented in Renminbi
(“RMB”), rounded to the nearest thousand,
unless otherwise stated.
b)
Basis of consolidation
The
consolidated financial statements comprise the results of the Company and its
subsidiaries altogether
(the “Group”) for the
year ended 31 December 2016. Subsidiaries are all entities over which the
Company exercises control or owns greater than 50 per cent of the voting rights
during the year. Subsidiaries are fully consolidated from the date on which
control is transferred to the Company. They are deconsolidated from the date
that control ceases. Profit or loss and other comprehensive income of
subsidiaries acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of disposal, as
applicable. Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated in full on consolidation.
c)
Business combination
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of the acquisition-date fair
values of assets transferred, liabilities incurred and the equity interests
issued by the Group, which includes the fair value of any asset or liability
arising from a contingent consideration arrangement. Acquisition costs are
expensed as incurred and included in operating expenses before finance costs.
The Group recognises identifiable assets
acquired and liabilities assumed in a business combination regardless of
whether they have been previously recognised in the acquiree’s
financial statements prior to the acquisition. Assets acquired and liabilities
assumed are generally measured at their acquisition-date fair values.
d)
Foreign currency translation
(i)
Functional
and presentation currency
The financial statements of the Group are presented in the currency of
the primary environment in which the Company operates (its functional
currency). The Directors have considered the currency to which the underlying
investments are exposed. On balance, the Directors believe RMB best represents
the functional currency of the Company. Therefore, the books and records are
maintained in RMB and for the purpose of the financial statements the results
and financial position of the Group are presented in RMB, which is also the presentation currency of
the Group.
(ii)
Transactions
and balances
Foreign currency
transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Consolidated Statement
of Comprehensive Income.
3.
ACCOUNTING POLICIES (CONT’D)
e) Financial
Instruments
Financial assets and financial liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes a party to the contractual
provisions of the instruments. Financial assets and financial liabilities are
initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the
acquisition of financial
assets or financial liabilities at fair value through
profit or loss are recognised
immediately in profit or loss.
Unquoted financial assets at fair value through
profit or loss
Classification
The Group
classifies its unquoted equity interests as financial assets at fair value through profit
or loss. These financial assets are designated by the Directors as at fair
value through profit or loss at inception.
Financial assets
designated as at fair value through profit or loss at inception are those that
are managed as part of an investment portfolio and their performance evaluated
on a fair value basis in accordance with the Group’s investment strategy.
Recognition/derecognition
Purchases and sales of investments are recognised on the trade date – the date on which the Group commits to purchase or sell the investment.
A fair value through profit or loss asset is derecognised when the Group loses control over the contractual rights that comprise that asset. This occurs when rights are realised, expire or are surrendered and the rights to receive cash
flows from the investments have expired or the Group has transferred substantially all risks and rewards of ownership. Fair value through profit or loss assets that are derecognised and corresponding receivables from the buyer for the payment are recognised as of
the date the Group has transacted an unconditional disposal of the assets.
Measurement
Financial assets at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed through profit or loss. Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value in accordance with IFRS13 ‘Fair value measurement’. For determining a suitable valuation technique the company applies International Private Equity and Venture Capital Valuation (“IPEVCV”) guidelines, as the Company’s business is to invest in financial assets with a view to profiting from their total return in the form of capital
growth and income.
Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the
period in which they arise.
Impairment of financial assets
An assessment for impairment is undertaken at least at the end of each
reporting period whether or not there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment loss on financial assets is recognised when there is objective evidence that the Group will not be able to collect all the amounts due to it in accordance with the original terms of the receivables. The amount of the impairment loss is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows.
3. ACCOUNTING POLICIES (CONT’D)
e)
Financial Instruments (Cont’d)
Financial liabilities
The Group’s financial liabilities include amounts due to shareholders and other payable and
accruals. Financial liabilities are recognised when the Group becomes a party to the contractual provision of the instrument. All financial liabilities are recognised initially at their fair value, net of transaction costs, and subsequently measured at amortised cost, using the effective interest method, unless the effect of discounting would be insignificant, in which case they are stated at cost.
The Group derecognises financial liabilities
when, and only when, the Group’s
obligations are discharged, cancelled or they expire.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
f) Cash and cash
equivalents
Cash and cash equivalents includes cash in hand, deposits held on call
with banks and other short term (having maturity within 3 months at inception) highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
g)
Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably and on the following
basis:
l
Dividend income is recognised
when the Group’s right to receive payment is established.
h) Deferred tax
Deferred tax is the tax expected to
be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable income, and is accounted for using the
statement of financial position liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be
utilised.
Deferred tax is calculated at the
tax rates that are expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged or credited in the statement
of comprehensive income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
i) Earnings per share
Basic earnings per
share is computed using the weighted average number of shares outstanding
during the period. Diluted earnings per share is computed using the weighted
average number of shares during the period plus the dilutive effect of dilutive
potential ordinary shares outstanding during the year.
4. ACCOUNTING ESTIMATES AND
JUDGEMENTS
Preparation of financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
In particular, significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial information are in the following areas:
Valuation of unquoted investments
In estimating the fair value for an investment, the Group applies a methodology that is appropriate in light of the nature, facts and circumstances of the
investment and its materiality in the context of the total investment portfolio using reasonable market-data. Carrying values are dealt with in Note
8.
5. FINANCIAL RISK MANAGEMENT
a)
Categories of financial instruments
The carrying amounts of the Group’s financial assets and liabilities as
at the end of each reporting year are as follows:
|
|
2016 |
|
2015 |
|
|
RMB’000 |
|
RMB’000 |
|
Financial asset |
|
|
|
|
Cash and cash equivalents |
140,844 |
|
66,632 |
|
Other
receivables |
175,210 |
|
10 |
|
Investments |
- |
|
243,440 |
|
|
316,054 |
|
310,082 |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
Other payables and accruals |
15,451 |
|
4,299 |
|
Amounts due to shareholders |
991 |
|
13,048 |
|
|
16,442 |
|
17,347 |
5. FINANCIAL RISK MANAGEMENT (CONT’D)
b) Fair value measurement
i) Fair value hierarchy
The following table presents the fair value of the Group’s
financial instruments measured at the end of the reporting period on a
recurring basis, categorised into the three-level fair value hierarchy as
defined in IFRS 13, Fair value measurement. The level into which a fair value
measurement is classified is determined with reference to the observability and
significance of the inputs used in the valuation technique as follows:
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly; and
•
Level 3 fair value measurements are those derived from inputs that are not based on observable market data.
|
|
Fair value
measurement as at 31 December 2016 |
||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
RMB’000 |
|
RMB’000 |
|
RMB’000 |
|
Unquoted financial assets at fair value through profit or loss |
- |
|
- |
|
- |
|
|
Fair value
measurement as at 31 December 2015 |
||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
RMB’000 |
|
RMB’000 |
|
RMB’000 |
|
Unquoted financial assets at fair value through profit or loss |
- |
|
- |
|
243,440 |
|
|
|
|
|
|
|
The Group did not hold any Level 1 or Level 2 financial assets at fair value
through profit or loss in the period.
c) Financial risk
management objectives and policies
The Group is exposed to a variety of financial
risks: market risk (including interest rate risk and currency risk), credit
risk and liquidity risk. The risk management policies employed by the Group to
manage these risks are discussed below. The primary objectives of the financial
risk management function are to establish risk limits, and then ensure that
exposure to risk stays within these limits. The operational and legal risk
management functions are intended to ensure proper functioning of internal
policies and procedures to minimise operational and legal risks.
i)
Interest rate risks
All cash holdings and cash
equivalents are held in accounts with variable rates. The Group does not have
any borrowings and therefore is not materially exposed to interest rate rise.
ii)
Currency risks
Since the Group operates primarily within its local currency with little exposure to currency fluctuations, management considers that foreign currency exposure is not significant to the Group.
5. FINANCIAL RISK MANAGEMENT (CONT’D)
c) Financial risk
management objectives and policies (Cont’d)
iii)
Credit risk
Credit risk refers to the risk that counterparty
will default on its contractual obligations resulting in financial loss to the
Group. As at 31 December 2016, the Group’s exposure to credit risk is mainly
from the collectability of other receivable from the original shareholder of
the investments the Group disposed in 2016. As of the report date, the debtor’s
repayments complied with the agreements and management consider that the debtor
have satisfactory credit quality. Besides, the Group’s cash balances were placed
with reputable banks.
iv)
Liquidity
risk
Liquidity risk is the risk that the Group will
encounter difficulty in meeting the obligations associated with its financial
liabilities. The Group’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The following tables show the remaining contractual
maturities at the end of the reporting period of the Group’s financial
liabilities.
|
|
|
|
Within 1 year |
|
More than 1 year but less than 5 years |
|
More than 5 years |
|
Total |
|
|
|
|
RMB’000 |
|
RMB’000 |
|
RMB’000 |
|
RMB’000 |
|
As at 31 December 2016 |
|
|
|
|
|
|
|
|
|
|
Other payables
and accruals |
|
|
15,451 |
|
- |
|
- |
|
15,451 |
|
Amounts due to
shareholders |
|
|
991 |
|
- |
|
- |
|
991 |
|
|
|
|
16,442 |
|
- |
|
- |
|
16,442 |
|
|
|
|
Within 1 year |
|
More than 1 year but less than 5 years |
|
More than 5 years |
|
Total |
|
|
|
|
RMB’000 |
|
RMB’000 |
|
RMB’000 |
|
RMB’000 |
|
As at 31 December 2015 |
|
|
|
|
|
|
|
|
|
|
Other payables
and accruals |
|
|
4,299 |
|
- |
|
- |
|
4,299 |
|
Amounts due to
shareholders |
|
|
13,048 |
|
- |
|
- |
|
13,048 |
|
|
|
|
17,347 |
|
- |
|
- |
|
17,347 |
The Group’s financial liabilities are primarily comprised of expected tax payables to PRC local
tax authority.
6.
SEGMENT REPORTING
The Group has adopted IFRS
8, “Operating Segments”. IFRS 8 defines operating segments as those activities
of an entity about which separate financial information is available and which
are evaluated by the Board of Directors to assess performance and determine the
allocation of resources. The Board of Directors are of the opinion that under
IFRS 8 the Group has only one operating segment, being the equity investment
located in PRC. The Board of Directors assess the performance of the operating
segment using financial information which is measured and presented in a manner
consistent with that in the Financial Statements. Segmental reporting will be
reviewed and considered in light of the development of the Group’s businesses
over the next reporting period.
7.
INVESTMENT IN SUBSIDIARIES
Details of the Group’s subsidiaries at 31 December 2016 are as follows:
|
Name of subsidiary |
Place of incorporation |
Proportion of ownership
interest |
Proportion of voting
power held |
Principal activity |
|
Directly held |
|
|
|
|
|
Great International Wealth & Wisdom Holding Ltd |
Hong Kong |
100% |
100% |
Investment holding |
|
|
|
|
|
|
|
Indirectly held |
|
|
|
|
|
Grand (Wuxi) Investment Management Co Ltd |
PRC |
100% |
100% |
Investment holding |
|
Wuxi Gaoruibode Management Consulting Co., Ltd |
PRC |
99% |
99% |
Dormant |
As announced on 30 September 2016, the Group
disposed of all the investments: Victory and JXT, for detail, please refer to
Note 8.
8. UNQUOTED
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
|
|
2016 |
|
2015 |
|
|
RMB’000 |
|
RMB’000 |
|
|
|
|
|
|
At 1 January |
243,440 |
|
480,000 |
|
Additions |
- |
|
20,000 |
|
Fair value change through
profit or loss |
- |
|
(256,560) |
|
Disposal |
(243,440) |
|
- |
|
At 31 December |
- |
|
243,440 |
The Group is outside the scope of IAS 28 “Investments in associates” on
the basis it is a private equity investment vehicle. The Group has therefore
elected to measure its investment at fair value through profit or loss in
accordance with IAS 39 “Financial Instruments: Recognition and Measurement”.
On 30 September 2016, the
Company announced that it has contracted for the sale of its entire holdings in
each of Wuxi Victory Media and Culture Co., (“Victory”) and Wuxi Jin Xun Tong
Technology Limited (“JXT”) on the following terms:
In respect of Victory, the
sale of the Group's 33 per cent shareholding for a total consideration of RMB
235.2 million, to be settled in cash by instalments, with RMB 20.0 million paid
within 10 working days of signature of the agreement, followed by ten monthly
instalments of RMB 20.0 million with a final payment of RMB 15.2 million
payable before 30 September 2017. This represents a premium of RMB 39.2
million to the Company's original April 2014 investment of RMB 196 million.
As at 31 December 2016 installments had been received in
a timely fashion and RMB 175.2 million was outstanding.
In respect of JXT, the sale
of its 15 per cent shareholding was for a total consideration of RMB 30.0
million, settled in cash by two equal instalments of RMB 15.0 million, the
first within 30 days of sale agreement, with the second instalment paid before
31 December 2016. The consideration of RMB 30.0 million represents a premium of
RMB 10.0 million to the Company's original April 2015 investment of RMB 20.0
million.
9. STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS
|
|
31 December 2016 |
|
31 December 2015 |
|
|
RMB’000 |
|
RMB’000 |
|
(a)
Staff costs |
|
|
|
|
Wages and salaries |
481 |
|
1,502 |
|
Social security costs |
13 |
|
41 |
|
|
494 |
|
1,543 |
|
|
|
|
|
|
(b) Key management emoluments |
|
|
|
|
Remuneration |
2,305 |
|
2,862 |
|
|
2,799 |
|
2,862 |
The remuneration of
the key management were as follows:
|
|
|
2016 |
|
2015 |
|
|
|
RMB’000 |
|
RMB’000 |
|
Executive Directors |
|
|
|
|
|
Xiao
Yang |
|
500 |
|
500 |
|
Jiang
Zhou |
|
450 |
|
450 |
|
Ying
Ying Gu |
|
146 |
|
500 |
|
Chuang
Li |
|
500 |
|
500 |
|
|
|
|
|
|
|
Non Executive Directors |
|
|
|
|
|
James
Newman |
|
360 |
|
384 |
|
J.
Mark Hemmann |
|
270 |
|
240 |
|
Stephen
Roberts |
|
79 |
|
288 |
|
|
|
2,305 |
|
2,862 |
10.
TAXATION
(a)
Recognised in the statement
of comprehensive income
|
|
31 December 2016 |
|
31 December 2015 |
|
|
RMB’000 |
|
RMB’000 |
|
Corporation tax |
|
|
|
|
Current year charge |
4,579 |
|
- |
|
Deferred Enterprise Income Tax credit (see note 11) |
- |
|
(64,140) |
|
Income Tax expense / (credit) attributable to the Group |
4,579 |
|
(64,140) |
|
|
|
|
|
Under current British Cayman Island law, the Company is not obligated to
pay any taxes in the British Cayman Islands on either income, profits or
capital gains.
According to the PRC Enterprise Income Tax Law and its Detailed
Implementing Rules, a foreign company established out of China where management
is located inside China will be regarded as a Tax Resident Enterprise in China
and subject to tax in China. Management is defined as the management and
control on the overall production/business operation, personnel, books and
records, and assets of the Company.
10. TAXATION(CONT’D)
(b) Reconciliation of taxation
Tax expense for the year can be reconciled to the profit / (loss) per the consolidated
statement of comprehensive income as follows:
|
|
31 December 2016 |
|
31 December 2015 |
|
|
RMB’000 |
|
RMB’000 |
|
|
|
|
|
|
Profit / (Loss) before tax |
18,316 |
|
(259,483) |
|
|
|
|
|
|
Tax at the EIT rate of 25% (2015: 25%) |
4,579 |
|
(64,871) |
|
Tax effect of non-deductible expenses |
- |
|
731 |
|
Tax charge for the
year |
4,579 |
|
(64,140) |
11. DEFERRED
TAX LIABILITY
Under PRC Enterprise Income Tax Law unrealised gains on investment fair
value reflected through profit or loss are not taxable in China. However, if Grand Group
Investment Plc would be regarded as a Tax Resident Enterprise in China, it will
have PRC tax exposure on the gains realised at transfer of shares in the
future. The 2015 deferred tax liability is based on the tax rate and tax base
that are consistent with the manner of recovery or settlement of the asset i.e.
through sale, and has been determined based on a PRC corporate income tax rate
of 25%.
|
|
RMB’000 |
|
At
31 December 2014 |
71,000 |
|
Credit to
statement of comprehensive income |
(64,140) |
|
At 31 December 2015 |
6,860 |
|
Reclassified
to current income tax payable on sale of investments |
(6,860) |
|
At 31
December 2016 |
- |
12. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit
or loss for the year attributable to owners of the Parent by the weighted
average number of ordinary shares outstanding the year.
The calculation of the basic profit per share is based on the following
data:
|
|
31 December 2016 |
|
31 December 2015 |
|
|
RMB’000 |
|
RMB’000 |
|
Profit / (Loss) |
|
|
|
|
Profit / (Loss) attributable to owners of
the Group |
13,737 |
|
(195,343) |
|
|
|
|
|
|
|
Number of shares |
||
|
Shares |
|
|
|
|
Basic |
|
|
|
|
Weighted average
number of ordinary shares in issue at the end of the year |
33,952,631 |
|
33,314,909 |
|
|
|
|
|
|
|
RMB |
|
RMB |
|
Earnings per share |
0.40 |
|
(5.86) |
|
|
|
|
|
|
|
Number of shares |
||
|
Diluted |
|
|
|
|
Weighted average
number of ordinary shares in issue at the end of the year |
33,952,631 |
|
33,314,909 |
|
Effect of dilutive
potential ordinary shares – warrants (note 17) |
1,697,631 |
|
- |
|
Weighted average
number of ordinary shares for the purposes of diluted earnings per share |
35,650,262 |
|
33,314,909 |
|
|
|
|
|
|
|
RMB |
|
RMB |
|
Diluted earnings
per share |
0.39 |
|
(5.86) |
|
|
|||
|
There is no difference
between the basic and diluted earnings per share for 2015, as the warrants
were anti-dilutive in 2015. |
|||
|
|
|||
13. CASH
AND CASH EQUIVALENTS
|
|
2016 |
|
2015 |
|
|
RMB’000 |
|
RMB’000 |
|
|
|
|
|
|
Cash at bank equivalents |
140,844 |
|
66,632 |
|
|
|
|
|
Cash at bank earns interest at floating rates based on daily bank
deposit rates.
The China government has imposed foreign exchange controls on Renminbi
that currency flows in and out of the China are restricted.
14. AMOUNTS DUE TO SHAREHOLDERS
|
|
2016 |
|
2015 |
|
|
RMB’000 |
|
RMB’000 |
|
|
|
|
|
|
Shareholders’ loan |
991 |
|
13,048 |
|
|
|
|
|
The shareholders’
loan as at 31 December 2016 is unsecured, interest free and repayable on
demand.
15. SHARE
CAPITAL
|
|
Number of shares |
|
Nominal value |
|
|
|
|
|
GBP |
Equivalent to RMB |
|
Authorised |
|
|
|
|
|
Ordinary shares of GBP
0.00004 each (note i) |
625,000,000 |
|
25,000 |
250,000 |
|
|
|
|
|
|
|
Issued and fully paid |
|
|
|
|
|
At 31 December 2014 |
25,000,000 |
|
1,000 |
10,000 |
|
Issue of shares upon placing (note ii) |
8,952,631 |
|
358 |
3,580 |
|
At 31 December 2015 and 31 December 2016 |
33,952,631 |
|
1,358 |
13,580 |
Note:
i) The Company was incorporated in Cayman Islands on 4
March 2014 and was authorised to issue 25,000 shares of £1.00 (approximately RMB 10) each.
On 4 September 2014, it was resolved to subdivide the Company’s share capital by a ratio of 1:25,000. The resulting authorised and issued share capital amounts to 625,000,000 shares and 25,000,000 shares respectively.
The
issued shares have nominal value of each share of
£0.00004 and are fully paid at par. There
are no restrictions on the distribution of dividends and the repayment of
capital.
ii) On 27 January 2015, a total of 8,952,631 ordinary shares of £0.00004 each were issued by way
of placing with institutional and other investors at a placing price of £0.825 per placing share for cash consideration £7.1 million (before expenses) (equivalent
to RMB 70 million) on the AIM market of the London Stock Exchange. The excess
of the placing price over the par value of the shares issued was credited to
the share premium account.
Funds received were deposited in the
bank account of Grand Wuxi Limited, the Company’s wholly owned subsidiary. WOFE
status was granted to this entity in May 2015, with effective ownership being
transferred to the Company
on 9 February 2015
through its new 100% interest in Great International Wealth and Wisdom,
registered in Hong Kong.
16. CONTRIBUTED
CAPITAL
|
|
2016 |
|
2015 |
|
|
RMB’000 |
|
RMB’000 |
|
|
|
|
|
|
Contributed capital |
196,000 |
|
196,000 |
|
|
|
|
|
The capital reserve arose as a result of capital contributions made by the shareholders of the Company in transferring effective control and beneficial ownership of their interests in Victory under the VIE Agreements in 2014.
17. WARRANT RESERVE
On 21 January 2015, the Company granted 1,697,631
warrants. Pursuant to the instrument, the warrant holder was entitled to subscribe for 1,697,631 Ordinary
shares as is equal to 5%, of the fully diluted share capital of the Company on
admission at an exercise price of £0.00004, until the fifth anniversary of the Company’s
admission to trading on AIM. None of the above warrants have been exercised as at
31 December 2016.
Details of the warrant movements in the year are as
follows:
|
|
|
Exercise price |
|
No. of warrant |
|
RMB’000 |
|
At the beginning of 2016 |
|
£0.00004 |
|
1,697,631 |
|
13,283 |
|
Granted |
|
|
|
- |
|
- |
|
At the end of 2016 |
|
|
|
1,697,631 |
|
13,283 |
The charge for the
year ended 31 December 2015 of RMB13,283,000 has been charged to profit and
loss in the Statement of Comprehensive Income with a corresponding credit to
Warrant Reserve at 31 December 2015. No other changes occurred during 2016.
Valuation
Upon admission of
the Company’s shares to the AIM, the warrant holder could convert those
warrants into the ordinary shares at once by paying the exercise price only,
which would be disposable at the current trading price. As there was no other
vesting condition, the valuation of the warrants was not subject to any
adjustments and was considered the same as the market price of the underlying
convertible shares at the date of admission to the AIM.
18. CAPITAL MANAGEMENT
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the balance between debt and equity.
The capital structure of the Group as at 31 December 2016 consisted of shareholders’ loans of RMB
991,000 (Note 14) and equity attributable
to the equity holders of the Company, comprising paid in capital of RMB66.950M, contributed capital of RMB196M, warrants
reserve of RMB13.283M and retained
earnings of RMB23.369M (disclosed in the statement of changes in equity).
The Group reviews the capital structure on an on-going basis. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues and the issue of new debt or the repayment of existing debt.
The Group monitors capital using the net debt-to-capital ratio, details of which as at
31 December 2016 and 31
December 2015 were as follows:
|
|
2016 |
|
2015 |
|
|
RMB’000 |
|
RMB’000 |
|
|
|
|
|
|
Amounts due to shareholders |
991 |
|
13,048 |
|
Less: bank balances and cash |
(140,844) |