TIDMGIPO
RNS Number : 6526S
Grand Group Investment PLC
23 December 2016
23 December 2016
Grand Group Investment PLC
("Grand Group", the "Company" or the "Group")
Interim 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 interim results for the
period from 1 January 2016 to 30 June 2016 (the "period").
Financial Highlights
-- Total assets stand at RMB 316.2 million, and net assets at
RMB 289.5 million (approximately GBP35 million and GBP32 million
respectively). This compares to RMB 548 million and RMB 463 million
at 30 June 2015.
-- Of total assets, investments total RMB 251.3 million (RMB 500
million at 30 June 2015).
-- The company's cash position RMB 62.7 million (approximately
GBP7m), with net cash of RMB49.9m (GBP5.5m). This compares to RMB
48.4 million and RMB 35.4 million at 30 June 2015.
-- There was a profit for the period of RMB 3.7 million
(approximately GBP0.41 million). This compares to a loss of RMB 7.6
million for the same period in 2015.
-- NAV per share as at 30 June 2016 stood at RMB 8.53 (vs RMB
8.42 at 31 December 2015).
*The illustrative exchange rate as at 30 June 2016 was 1 GBP: 9
RMB
Several significant macroeconomic financial events have occurred
in past 12 months with an impact on Grand, and they pose both
challenges and opportunities for us.
-- The UK's vote for Brexit led to an approximately 10% fall in the GBP against the RMB (as of mid-December), which (1) increases the value of RMB assets in GBP terms, and (2) reduces listing and other costs for a Chinese company listed in the UK.
-- On 30 September 2016 the RMB joined the IMF's Special Drawing
Rights basket, thus recognising not only China's, but specifically
the RMB's importance in global trade.
-- Turn of the FED's interest rate cycle: although the Fed
raised rates marginally in December 2015 from zero to 0.25%, events
of the past year have kept those rates stable. However, another
25bp increase was widely expected before year end, and indeed has
just occurred as I write. This expected turning of the Fed cycle
has had 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 in the coming year. We had
RMB 62.7 million (about GBP7 million) in cash on the books as of
the end of the interim period, and recently contracted to sell our
two existing assets, both at premiums to their purchase prices,
back to their founders. Consideration for the smaller one, JXT,
should be fully paid by the end of the calendar year, while the
larger, Victory, is being paid in 12 equal monthly instalments.
Thus, by year-end we should have a significant war chest of cash in
the bank for further investments in 2017.
Chairman's Statement
As discussed in the recently issued annual report, 2016 has been
eventful and challenging. I refer you to that report, as well as
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 these interims statements.
As notified on 30 September 2016, we disposed of our two
investments: Victory and JXT. These disposals triggered paragraph
5.6 (sub-paragraph 2) of the AIM Note for Investing Companies, and
as such we became treated as an AIM Rule 15 cash shell. In
accordance with AIM Rule 15, we have 12 months from 30 September
2016, i.e. approximately 9 months from today, to implement our
current investing policy or make an acquisition which would which
would be a reverse takeover under the AIM Rules. If we are unable
to do so we will be suspended pursuant to AIM Rule 40.
With those issues successfully managed, it is now time to look
forward. We will start the new year with a virtually clean slate:
Grand still had cash in the bank of RMB 62.7 million as of the end
of the interim period. As of early December, proceeds from the
sales of our Victory and JXT investments have been coming in on
time, and cash has grown to an (unaudited) figure of RMB 103.6
million. We plan to appoint a senior finance executive soon to
strengthen our finance and accounting function.
We have much to do in the new year - notably finishing
collecting the proceeds from our investment exits, but most
importantly developing our pipeline of investment
opportunities.
China's Economy
In the first half of 2016, China's GDP growth rate was 6.7%, a
slowdown that is a reflection of the economic and structural
transformation of the country. The Chinese government has continued
to carry out a series of policies in response to the economic
slowdown. Firstly, the government has sought to deleverage the
country through restrictions on certain types of lending and
through reductions in banking leverage ratios. Secondly, investment
is being "rationalised" in an effort to bolster improved income
distribution, provision of public services and improvements in
social security. This is in addition to the promotion of consumer
spending, which remains an over-arching policy goal of the
government. Thirdly, the government intends to 'vigorously develop
the new economy' and 'optimize the allocation of resources'. This
'development of the new economy' has become the embodiment of the
government's drive to manage the supply side of structural reforms.
For instance, through the implementation of the "Public
entrepreneurship, and the Peoples' innovation" and "Made in China
2025" and "Internet+" strategies, the government intends to
optimise the country's industrial structure and thereby enhance the
growth of China's economy in a 'post-industrial' world. Given Grand
Group's strategy, the company stands to benefit from this
heightened focus of the PRC government. Additionally, in
preparation for these structural changes and recognising the
requirement to weather the same, the company has adopted a cash
conservation strategy, which will well-position the firm as
opportunities present themselves.
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 in the
coming year. The sales of Victory and JXT will bolster Grand's cash
reserves for future investments in high-quality projects. Once we
have regained our listing status on AIM, we will be in a better
position to make those investments.
James Newman
Non-Executive Chairman
23 December 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 June 2016
Note Unaudited Unaudited Audited
Period Period
from from Year ended
1 January 1 January 31 December
2016 2015 to 2015
to 30 30 June RMB'000
June 2015 RMB'000
2016
RMB'000
Unrealised gain/ (loss)
on unquoted financial
assets 7,840 - (256,560)
Finance income - - 19,800
Administrative expenses (2,259) (7,659) (9,585)
Financial expenses 39 64 (13,138)
----------- -------------- -------------
Profit/(Loss) before
tax 5,620 (7,595) (259,483)
Taxation 12 (1,960) - 64,140
----------- -------------- -------------
Profit/(Loss) after
tax 3,660 (7,595) (195,343)
Other comprehensive - - -
income
----------- -------------- -------------
Total comprehensive
gain/(loss) for the
period 3,660 (7,595) (195,343)
----------- -------------- -------------
Gain/(Loss) per share
* Basic 11 0.11 (0.30) (5.86)
Diluted 0.10 (0.30) (5.86)
=========== ============== =============
(expressed as RMB per
share)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
Unaudited Audited
30 June 31 December
2016 2015
Note RMB'000 RMB'000
Assets
Non-current assets:
Unquoted financial assets
at fair value through
profit or loss 4 251,280 243,440
---------- -------------
Current assets:
Accounts receivable 2,152 10
Cash and cash equivalents 62,726 66,632
---------- -------------
64,878 66,642
---------- -------------
Total assets 316,158 310,082
========== =============
Equity and liabilities
Shareholders' Equity:
Share capital 6 14 14
Share premium 66,936 66,936
Contributed capital 7 196,000 196,000
Warrants reserve 13,283 13,283
Retained earnings 13,292 9,632
---------- -------------
Equity attributable to
owners of the Company 289,525 285,865
Non controlling interest 10 10
---------- -------------
Total equity 289,535 285,875
---------- -------------
Non-current liabilities:
Deferred tax liability 12 8,820 6,860
---------- -------------
8,820 6,860
Current liabilities:
Other payable and accruals 4,963 4,299
Amounts due to shareholders 5 12,840 13,048
---------- -------------
17,803 17,347
Total liabilities 26,623 24,207
Total equity and liabilities 316,158 310,082
========== =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 30 June 2016
Share Share Retained Contributed Warrants Sub-Total Non-controlling Total
capital premium earnings capital reserve Interest
RMB' RMB' RMB' RMB' RMB' RMB' RMB' RMB'
000 000 000 000 000 000 000 000
1 January
2015 10 - 204,975 196,000 - 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 period - - (195,343) - - (195,343) - (195,343)
Non- controlling
interest - - - - - - 10 10
--------- --------- ---------- ------------ --------- ---------- ---------------- ----------
31 December
2015 14 66,936 9,632 196,000 13,283 285,865 10 285,875
========= ========= ========== ============ ========= ========== ================ ==========
Non-
Share Share Retained Contributed Warrants Sub- controlling
capital premium earnings capital reserve Total Interest Total
RMB' RMB' RMB' RMB' RMB' RMB' RMB' RMB'000
000 000 000 000 000 000 000
1 January
2016 14 66,936 9,632 196,000 13,283 285,865 10 285,875
Total
comprehensive
profit
for the
period - - 3,660 - - 3,660 - 3,660
30 June
2016 14 66,936 13,292 196,000 13,283 289,525 10 289,535
================= ======== ========= ============ ========== ======== ============= ===========
CONSOLIDATED CASH FLOW STATEMENT
For the six month period ended 30 June 2016
Period Period
from from
1 January 1 January
2016 to 2015 to
30 June 30 June
2016 RMB'000 2015
RMB'000
Cash flows from operating
activities
Profit/(Loss) before tax 5,620 (7,595)
Adjustments:
Unrealised (gain) on unquoted (7,840) -
financial assets
Increase in other payables 664 -
and accruals
Decrease in other payables
and accruals (363) (337)
Net cash outflow from operating
activities (1,919) (7,932)
-------------------- ----------------------
Cash flows from financing
activities
Cash proceeds from issue
of shares (1,781) 70,035
Loan from shareholders (206) 6,333
Net cash inflow from financing
activities (1,987) 76,368
-------------------- ----------------------
Cash flows from investing
activities
Invest to other company - (20,000)
Net cash inflow from investing
activities - (20,000)
-------------------- ----------------------
Net (decrease)/increase
in cash and cash equivalents (3,906) 48,436
Cash and cash equivalents
at the beginning of period 66,632 10
Cash and cash equivalents
at the end of period 62,726 48,446
==================== ======================
NOTES TO THE FINANCIAL INFORMATION
For the six month period ended 30 June 2016
1. GENERAL INFORMATION
The financial information set out herein is in respect of Grand
Group Investment PLC ("Grand Group" or the "Company") for the
period from 1 January 2016 to 30 June 2016 and has been prepared by
the directors of the Company (the "Directors").
The Company was incorporated on 4 March 2014 and is domiciled in
the British Cayman Islands and its registered office is at 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,
PRC.
On 4 September 2014, it was resolved by the shareholders that
the Company change its name from Grand Group Investment Limited to
Grand Group Investment PLC.
2. PRINCIPAL ACTIVITIES
The Company is a value-added and technology innovation private
equity investment vehicle, which principally focuses on investing
in small and medium-sized enterprises in the People's Republic of
China.
3. BASIS OF PREPARATION
The unaudited financial information has been prepared in
accordance with the recognition and measurement principles of
International Financial Reporting Standards ("IFRS") as endorsed by
the European Union with the exception of International Accounting
Standard ('IAS') 34 - Interim Financial Reporting. Accordingly, the
interim financial statements do not include all the information or
disclosures required in the annual financial statements and should
be read in conjunction with the Company's 2015 annual financial
statements.
The same accounting policies, presentation and method of
computation are followed in this financial information as was
applied in the Company's latest annual audited financial statements
and using accounting policies that are expected to be applied for
the financial year ending 31 December 2016. Practice is continuing
to evolve on the application and interpretations of IFRS. Further
standards may be issued by the International Accounting Standards
(IASB) and standards currently in issue and endorsed by the EU may
be subject to interpretations issued by International Financial
Reporting Interpretations Committee. The financial information is
presented in Renminbi ("RMB"), rounded to the nearest thousand,
unless otherwise stated.
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.
Significant areas of estimation, uncertainty and critical
judgements in applying accounting policies that have the most
significant effect on the amount recognized in the financial
information are in the following areas:
Valuation of unquoted investments
In estimating the fair value for an investment, the Company
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 4.
The Company has adopted the "multiple methodology" prescribed in
the International Private Equity and Venture Capital Valuation
("IPEVCV") guidelines to value its investments at fair value
through profit or loss.
4. UNQUOTED FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Note RMB'000
At 1 January 2015 480,000
Additions 20,000
Recognised in Statement of
Comprehensive Income (256,560)
----------
At 31 December 2015 (a) 243,440
Additions (b) -
Fair value change through profit
or loss 7,840
----------
At 30 June 2016 251,280
==========
(a) Wuxi Victory Media & Culture Co. Ltd. ("Victory
China")
During the period, the Company held an indirect,
non-controlling, 33% interest in Wuxi Victory Media and Cultural
Co. Limited ("Victory China") which was acquired on 3 June 2014.
Victory China's principal activity is the production of video
course ware for the vocational training of migrant workers in
China.
The Company is outside the scope of IAS28 "Investments in
Associates" on the basis that it is a private equity investment
vehicle. The Company has, therefore, elected to measure the
investment at fair value through profit or loss in accordance with
IFRS 9 "Financial Instruments".
As PRC law and regulations prohibit foreign control of companies
involved in internet content, the Company is unable to take a
direct equity interest in Victory China. As a result:
i. The Company's 33% interest in Victory China is held via
Weirui Culture Development (Wuxi) Company Limited ("Victory WFOE"),
a company incorporated in the PRC in which the Company in directly
owns 33% of the equity (as described below);
ii. Victory WFOE holds an effective 100% interest in Victory
China through a series of contractual arrangements referred to as
Variable Interest Entities Agreements dated 3 June 2014 (the "VIE
Agreements"). These agreements are explained in detail below.
The equity interests of Victory WFOE are legally held directly
or indirectly by the shareholders of the Company via intermediary
holding companies as follows:
Victory Education Investment Limited
The Company has a 33% equity interest in Victory Education
Investment Limited ("Victory Cayman", a company incorporated in the
Cayman Islands) under a subscription agreement dated 21 April 2014.
This company is a non-trading holding company.
Victory Education Investment Holding Limited
Victory Cayman owns 100% of the equity of Victory Education
Investment Holding Limited ("Victory Hong Kong", a company
incorporated in Hong Kong). Victory Hong Kong owns 100% of the
equity of Victory WFOE.
VIE agreements
Whilst Victory WFOE does not hold the equity in Victory China,
it has effective control and beneficial ownership of Victory China
via the VIE agreements. The risks inherent in the nature of the
Company's investment in Victory China are disclosed in Note 9.
In April 2014, Shenzhen Grand Culture and Technology Development
Co. Ltd ("Shenzhen Grand", a related party by virtue of the fact
that it has a common shareholder structure, see Note 8) was issued
33% of the equity of Victory China for a total consideration of
RMB196m. In June 2014, Shenzhen Grand, together with the other
shareholders of Victory China entered into the VIE agreements to
transfer their interests in Victory China (as described below) to
Victory WFOE.
The VIE agreements include an Exclusive Business Cooperation
Agreement, an Exclusive Option Agreement, a Loan Agreement, a
series of Equity Pledge Agreements, a Spouse Consent Letter, and a
Power of Attorney.
Victory WFOE does not enjoy direct equity ownership of Victory
China. Instead, the VIE agreements enable Victory WFOE to:
- Receive substantially all of the economic benefits and
residual returns from Victory China as if it were a wholly owned
subsidiary;
- Exercise effective control over Victory China; and
- Have an exclusive option to acquire all of the equity interests in Victory China.
Fair value
Based on the events after the reporting period, the Group valued
its investments at fair value through profit or loss. With
reference to the gain on disposal, which was calculated at 8% per
annum over the 30-months holding period from April 2014 to
September 2016, the Group recognised part of the gain from 1
January 2016 to 30 June 2016, being the cumulative change in the
fair value.
(b) Wuxi Jin Xun Tong Technology Ltd ("JinXunTong")
The Company holds an indirect, non-controlling 15% interest in
Wuxi Jin Xun Tong Technology Ltd ("Jin Xun Tong" or "JXT") which
was acquired on 18 May 2015. 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.
The Company is outside the scope of IAS 28 "Investments in
Associates" on the basis it is a private equity investment vehicle.
The Company has therefore elected to measure the investment at fair
value through profit or loss in accordance with IFRS 9 "Financial
Instruments".
Fair value
The Company has adopted the "recent investment methodology"
prescribed in the IPEVCV guidelines to value its investment at fair
value through profit or loss. Applying this methodology, and due to
the proximity to the period end of the purchase of 15% of the
equity of JinXunTong (in May 2015), the Company used RMB20m, the
purchase consideration paid for shares in JinXunTong, as the basis
to estimate the fair value of the investment. The Directors
consider that there has been no subsequent investment events which
would result in a fair value change and no impairment in the value
of the investment in the period since acquisition.
5. AMOUNTS DUE TO SHAREHOLDERS
Unaudited Audited
30 June 2016 31 December
2016
RMB'000 RMB'000
Shareholders' loan 12,840 13,048
============== =============
The shareholders' loan for all periods discussed herein, was
unsecured, interest-free and repayable on demand and was repaid
after the period end.
6. SHARE CAPITAL
The Company was incorporated in the Cayman Islands on 4 March
2014 and is authorised to issue 25,000 shares of GBP1.00
(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 authorized and
issued share capital amounts to 625,000,000 shares and 25,000,000
shares respectively.
The issued shares have a nominal value GBP0.00004 per share and
are fully paid at par. There are no restrictions on the
distribution of dividends and the repayment of capital.
On 27 January 2015, the Company raised GBP7.1 million (before
expenses) by placing 8,952,631 ordinary shares with institutional
and other investors at a placing price of 80 pence per ordinary
share on the AIM market of the London Stock Exchange. This amounted
to RMB 70 million. Monies received were deposited in the bank
account of Wuxi Cultural Development Limited, the Company's wholly
owned PRC based subsidiary.
WFOE status, through its new 100% intermediary Hong Kong based
holding company Great International Wealth and Wisdom, was
confirmed as the creation of this entity in April 2014, with
effective ownership having been transferred to the Company on 14
January 2015.
7. CONTRIBUTED CAPITAL
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
China under the VIE Agreements as disclosed at Note 4 and made by
placing ordinary shares with institutional and other investors at a
placing price of 80 pence per ordinary share on the AIM market of
the London Stock Exchange at Note 6.
Unaudited Audited
30 June 2016 31 December
2016
RMB'000 RMB'000
Capital reserve 196,000 196,000
============== =============
8. RELATED PARTY TRANSACTIONS
a) Remuneration was accrued, but none paid to key management personnel during the period.
b) Shenzhen Grand Culture and Technology Development Co. Ltd.
("Shenzhen Grand"), is a related party by virtue of the fact that
the Company and Shenzhen Grand are subject to the same ownership
structure. The Company has a ten year Strategic Cooperation
Agreement (dated 24 November 2014) with Shenzhen Grand whereby the
Company is required to pay a 0.5% finder's fee for any investment
introduced.
c)
30 June
2016
&
31 December
2016
RMB'000
Victory China finder's fee payable per -
the Strategic Cooperation Agreement
(includes a non-compete clause in relation
to investment activities).
=============
9. FINANCIAL INSTRUMENTS
VIE agreement risk
As PRC law and regulations prohibit foreign control of companies
involved in internet content, the Company is unable to take a
direct equity interest in its two underlying investments, Victory
China and JinXunTong. Currently, the Company has an indirect
interest in both Victory China and JinXunTong through a series of
contractual arrangements (the VIE Agreements) entered into,
respectively, between Victory WFOE, Victory China and its
shareholders (as detailed in Note 4) and the JinXunTong WFOE,
JingXunTong China and its shareholders.
In the opinion of the Company's management, the VIE Agreements
provide the Company with the ability to control both investments
and the entitlement to substantially all the economic benefits from
the underlying businesses in China. Therefore, indirectly, the VIE
Agreements provide the Company with a 33% investment in Victory
China, and a 15% interest in JinXunTong.
Furthermore, in the opinion of the Company's PRC legal counsel,
the VIE Agreements do not violate any current applicable PRC laws,
rules and regulations.
However, due to the uncertain ties regarding the interpretation
and enforcement of PRC laws, rules and regulations, including but
not limited to the laws, rules and regulations with respect to the
validity and enforcement of the VIE Agreements or the contractual
arrangements, the risk of being challenged by PRC regulatory
authorities may not be completely ruled out.
If the Company's ownership structure and the VIE Agreements were
found to be in violation of any existing or future PRC laws or
regulations by the relevant regulatory authorities, the Company may
be subject to penalties, which may include but not be limited to,
revocation of the business licenses or operating licenses of its
PRC associates or that of Victory China, being required to
restructure the Company's operations or discontinue the Company's
operating activities. If any of these penalties result in its
inability to receive economic benefit from Victory China, the
Company's investment in Victory China may be impaired.
In addition, if Victory China or its shareholders fail to
perform their obligations under the VIE Agreements, the Company and
its investee companies may have to incur substantial costs and
expend resources to enforce the Company's rights under the
contracts. The Company and its associates may have to rely on legal
remedies under PRC law, including seeking specific performance or
injunctive relief and claiming damages, which may not be effective.
All these VIE Agreements are governed by PRC law and provide for
the resolution of disputes through arbitration in the PRC.
Accordingly, these contracts would be interpreted in accordance
with PRC law and any disputes would be resolved in accordance with
PRC legal procedures. The legal system in the PRC is not as
developed as in other jurisdictions, such as the United Kingdom. As
a result, uncertainties in the PRC legal system could limit the
Company's ability to enforce these VIE Agreements. Under PRC law,
rulings by arbitrators are final, parties cannot appeal the
arbitration results in courts, and prevailing parties may only
enforce the arbitration awards in PRC courts through arbitration
award recognition proceedings, which would incur additional
expenses and delay. In the event the Company and its associates are
unable to enforce these VIE Agreements, the Company may not be able
to receive economic benefit from Victory China and its investment
in Victory China may be impaired.
Valuation risks
While investments in companies whose business operations are
based in China may offer the opportunity for significant capital
gains, such investments also involve a degree of business and
financial risk, in particularly for unquoted investments.
Generally, the Company expects to hold unquoted investments in the
mid to long term, especially if the investee company is not in a
position for an admission to trading on a stock exchange. Sales of
securities in unquoted investments maybe
made at a discount to the book value.
The Company has policies and procedures in place to ensure that
investments are made in accordance with the Company's investment
policy and its objectives. The Company expects to work closely with
potential investee companies for a period of 6 months to 18 months
prior to making an investment, therefore increasing the level of
information and understanding available to make investment
decisions. All investment decisions are made with the benefit of
third party due diligence and on a majority decision of the
Board.
10. CAPITAL MANAGEMENT
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximizing the return to
shareholders through the optimization of the balance between debt
and equity.
The capital structure of the Company at 30 June 2016 consisted
of shareholders' loans of RMB 13m (Note 5) bank balances and cash
of RMB 63m and equity attributable to the equity holders of the
Company, comprising capital contributions/share premium of RMB
263m, paid in capital of RMB 14,000 and retained earnings/warrant
reserve of RMB 27m (disclosed in the statement of changes in
equity).
The Company 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 Company
will balance its overall capital structure through the payment of
dividends, new share issuances and the issue of new debt or the
repayment of existing debt.
The Company monitors capital using the net debt-to-capital
ratio, details of which as at 30 June 2016 and 31 December 2015
were as follows:
Unaudited Audited
30 June 31 December
2016 2015
Note RMB'000 RMB'000
Amounts due to shareholders 5 (12,840) (13,048)
Bank balances and cash 62,726 66,632
---------- -------------
Net cash 49,886 53,586
---------- -------------
Equity 283,646 285,865
========== =============
11. EARNINGS PER SHARE
Unaudited Unaudited
30 June 2016 30 June
2015
Profit/(Loss) attributable
to owners of the Group 3,660,000 (7,595,000)
Weighted average number of
shares in issue 33,952,631 25,000,000
-------------- ------------
Earnings/(Loss) per share
(expressed as RMB per share) 0.11 (0.30)
============== ============
12. TAXATION
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. The Company has received a
certificate undertaking as to a tax concession issued by the
Cabinet Office of the British Cayman Islands dated 25 March
2014.
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. Accordingly, Grand Group Investment Plc is
likely to be considered a Tax Resident Enterprise in China.
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 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 1 January 2015 71,000
Credit to statement of comprehensive
income (64,140)
---------
At 31 December 2015 6,860
Charge to statement of comprehensive
income 1,960
---------
At 30 June 2016 8,820
=========
13. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors there is no ultimate controlling
party.
14. LEGAL REPRESENTATIVE
Every business established in China, whether domestic or
foreign, is required to have a legal representative. He/she is the
main principal of the company and is the employee with the legal
power to represent - and enter into binding obligations on behalf
of - the company in accordance with the law or articles of
association of the company. The legal representative is authorised
to perform all acts regarding the general administration of a
company according to the company's aims and objectives, which
includes:
-- Acting to conserve the company's assets;
-- Executing powers of attorney on the company's behalf;
-- Authorizing legal representation of and litigation by the company; and
-- Executing any legal transactions that are within the nature
and scope of that company's business.
Chops (Company Seal)
In China, every company is required to have a "chop", or company
seal, which will be in the custody of the legal representative.
Control of the chop is important in order to minimise risks. The
legal representative's chop is required on numerous company
documents and is regarded as a signature. The legal representative
can, by using the chop, bind the company.
If a legal representative is to be changed, such a change has to
be chopped and approved by the outgoing legal representative. The
Company's legal representative in China is Mr. Wu Xiaoyong.
Mr. Wu Xiaoyong was a businessman in the media industry. Mr.
Yang Xiao hired him to work at Grand Group in 2014. Mr. Wu is
responsible for the administration of Grand Group.
15. RECENT ACCOUNTING PRONOUNCEMENTS
(a) New interpretations and revised standards effective for the
period ended 31 December 2015 and the period ended 30 June 2016
The Company has adopted new interpretations and revised
standards effective at 4 March 2014 and for the period ended 31
December 2014 and the period ended 30 June 2015.
(b) Standards and interpretations issued but not yet
effective
A number of new standards and amendments to existing accounting
standards (IFRS) have been published which are mandatory, but are
not effective for the period ended 30June 2015. The directors do
not anticipate that the adoption of these revised standards and
interpretations will have a significant impact on the figures
included in the financial statements in the period of initial
application other than the following:
IFRS 9: Financial Instruments
The standard makes substantial changes to the recognition and
measurement of financial assets and financial liabilities and
de-recognition of financial assets. There will only be three
categories of financial assets whereby financial assets are
recognised at either fair value through profit and loss, fair value
through other comprehensive income or measured at amortised cost.
On adoption of the standard, the Company will have to re-determine
the classification of its financial assets based on the business
model for each category of financial asset. This is not considered
likely to give rise to any significant reclassifications.
The principal change to the measurement of financial assets
measured at amortised cost or fair value through other
comprehensive income is that impairments will be recognised on an
expected loss basis compared to the current incurred loss approach.
As such, where there are expected to be credit losses these are
recognised in profit or loss. For financial assets measured at
amortised cost the carrying amount of the asset is reduced for the
loss allowance. For financial assets measured at fair value through
other comprehensive income the loss allowance is recognised in
other comprehensive income and does not reduce the carrying amount
of the financial asset.
Most financial liabilities will continue to be carried at
amortised cost, however, some financial liabilities will be
required to be measured at fair value through profit or loss, for
example derivative financial instruments, with changes in the
liabilities' credit risk recognised in other comprehensive
income.
The standard is effective for periods beginning on or after 1
January 2018.
About Grand Group
Grand Group was founded in 2014 by Mr 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 Group 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 Group's university-based research resources and Grand Group
financial backing.
Partnerships
Through its partnership with the TKK Society, the Group 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 Group 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. The
ability to bring these educational resources to bear in conjunction
with the firm's management oversight of investees and financial
resources provide the Group with a significant competitive
advantage in the China market.
For further information:
Grand Group Investment PLC
James Newman, Non-Executive Tel: +86 (0) 510 8329
Chairman 1718
Yang Xiao, Executive Director www.grandgroupplc.com
ZAI Corporate Finance Limited
Ray Zimmerman / Ruby Qu (Nomad) Tel: +44 (0) 20 7060
2220
Andrew Wilson (Broker) www.zaicf.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BUBDDGUDBGLD
(END) Dow Jones Newswires
December 23, 2016 02:00 ET (07:00 GMT)
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