TIDMGIPO
RNS Number : 4702A
Grand Group Investment PLC
29 September 2015
29 September 2015
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 first set of Interim Results
for the period from 1 January 2015 to 30 June 2015 (the
"period").
Financial Highlights
-- Total assets stand at RMB 548 million, and net assets at RMB
463 million (approximately GBP56 million/ GBP47.2 million)
-- Of total assets, investments now total RMB500m after making a
cash investment of RMB 20 million into Jinxuntong, a Chinese online
learning solutions provider
-- Our cash position is RMB 48.4m (approximately GBP4.9m), with
net cash of RMB 35.04m (GBP3.5m)
-- There was a loss for the period of RMB 7.6 million (approximately GBP0.8 million)
-- NAV per share as at 30 June 2015 stood at RMB 18.54 (vs December 2014 RMB 16.04)
*The illustrative exchange rate as at 30 June 2015 was 1 GBP:
9.8 RMB
James Newman, Non-Executive Chairman of Grand Group Investment
PLC, said, "Our first six months as a quoted company have been
eventful indeed. In January 2015 the Group raised GBP7.1 million
and was admitted to AIM, which in turn allowed us to make our
second investment. In Q2/2015 we acquired a 15% stake in
Jinxuntong, an online learning solutions provider, for RMB 20
million. After paying IPO expenses and making our first investment,
we still have over RMB48 million for further investments and are
actively pursuing new opportunities."
For further information:
Grand Group Investment PLC
James Newman, Non-Executive Chairman Tel: +44 (0) 20 7398
7714
Yang Xiao, Executive Director www.grandgroupplc.com
ZAI Corporate Finance Limited
Ray Zimmerman / Ivy Wang (Nomad) Tel: +44 (0) 20 7060
2220
Steven Baird (Broker) www.zaicf.com
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.
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.
Chairman's Statement
Results
The loss and negative operating cash flow for the period reflect
the early stage of the Group's business: cash inflows will occur
primarily when Grand Group exits investments; profits only occur
during exits and marking up of assets. Thus this period's RMB 7.5
million loss is comprised almost completely of the company's
operating expenses during the period.
Shareholder loans increased by RMB 6.3 million after 31/12/14.
The Wuxi government offers incentives to local companies which
obtain listings on foreign stock exchanges, and during the first
half of 2015, the company worked with the government to satisfy
requirements to be eligible for that incentive. Part of those
requirements included leaving the IPO proceeds in the account as
visible proof of the successful IPO until approval was finalized.
Approval was reportedly obtained late in the first half, and as of
June 2015 the company is now using those proceeds rather than more
shareholder loans. These loans are payable on demand, but incur no
interest, and are not convertible into shares. (Please see Note
5.)
Portfolio
Victory China
Victory China produces vocational training software, and most
importantly training videos for blue collar jobs. Victory China
provides solutions to one of the fundamental social and industrial
issues in the PRC today: the migration of unskilled labour from the
countryside to urban areas and the need to train them for skilled
work. When Grand invested in Victory China, the vast majority of
its revenues came from training individuals in metal working.
During 2014 Victory China's management focused on diversifying its
revenues, and it now has five significant revenue sources.
Importantly, while expanding revenues so dramatically into other
sectors, margins were maintained. As of 30 June 2015, gross margin
still exceeded 90% and net margin exceeded 60%, steady from 2014.
Cash flow from operations reached RMB 88 million.
Wuxi Jinxuntong Technology Limited ("Jinxuntong" or "JXT")
In Q1 2015, Grand acquired a 15% stake in Jinxuntong for RMB 20
million. JXT 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 also developed an advanced data centre
that is supported by one of China Telecom's three five-star
internet data centres. This dedicated line for connectivity ensures
the stability of the system, speed of the website and security of
the data.
JXT's website currently has approximately five million
registered members, of which approximately 2.3million are paying
users who have already paid total membership fees of approximately
RMB 230 million. JXT's business is complementary with Victory
China's, and indeed Victory China distributes courseware through
JXT's website as well as Victory's own channels.
China's Economy
Grand Group is well established to capitalise on new
opportunities in the Chinese domestic market, especially in the
rapidly growing education sector. It is well known that China's
economy has been slowing as a result of structural transformation,
with the government encouraging an increase in domestic consumption
and reducing dependence on state investment. GDP growth fell to
7.4% in 2014 and 7.0% in the first quarter of 2015, and many
independent analysts believe this significantly understates the
slowdown. However, technology and scientific sectors continue to
expand, driven by national initiatives and improvements in
production quality; and anecdotal evidence suggests consumption is
holding up reasonably well. The same government initiatives also
encourage and even require investments in training of workers,
directly benefitting our first two investments, Victory China and
Jinxuntong.
Outlook
The Board has been very pleased with the Group's progress during
the first half of 2015, particularly with regards to operations at
its two investee companies and its successful IPO. Looking forward,
the Board is enthused by the opportunities that it is seeing for
further investment. Our own operations are quite simple, but as we
grow they naturally become more demanding, so we must now renew our
attention on internal structures, particularly the hiring of a
senior finance professional who can help take us to the next level
of growth and corporate governance.
James Newman
Non-Executive Chairman
29 September 2015
STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 June 2015
Note Period from Period from Period from
1 January 2015 incorporation incorporation
to 30 June on on
2015 RMB'000 4 March 2014 4 March 2014
to 30 June to 31 December
2014 2014
RMB'000 RMB'000
Administrative expenses (7,659) (4,519) (8,020)
Financial expenses 64 (1) (5)
Profit before tax (7,595) (4,520)
Unrealised gain on unquoted financial
assets 284,000
Taxation 12 - - (71,000)
Total comprehensive profit for
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:01 ET (06:01 GMT)
the financial period 11 (7,595) (4,520) 204,975
Earnings per share- basic and
diluted (0.30) (0.18) 8.2
(expressed as RMB per share)
STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
30 June 31 December
2015 2014
Note RMB'000 RMB'000
Assets
Non-current assets:
Unquoted financial assets at
fair value through profit or
loss 4 500,000 480,000
-------- ------------
500,000 480,000
-------- ------------
Current assets:
Cash and cash equivalents 48,446 10
-------- ------------
48,446 10
-------- ------------
Total assets 548,446 480,010
======== ============
Equity and liabilities
Shareholders' Equity:
Share capital 6 14 10
Retained earnings 197,380 204,975
Contributed capital 7 266,031 196,000
-------- ------------
Total equity 463,425 400,985
-------- ------------
Non-current liabilities:
Deferred tax liability 12 71,000 71,000
-------- ------------
71,000 71,000
Current liabilities:
Accruals 980 1,317
Amounts due to shareholders 5 13,041 6,708
-------- ------------
14,021 8,025
Total liabilities 85,021 79,025
Total equity and liabilities 548,446 480,010
======== ============
Signed and authorised for issue on behalf of the Board on:
Yang Xiao
- Director
STATEMENT OF CHANGES IN EQUITY
For the six month period ended 30 June 2015
Share Retained Contributed
capital earnings capital Total
RMB'000 RMB'000 RMB'000 RMB'000
On incorporation
(4 March 2014) 10 - - 10
Total comprehensive
income for the period - (4,520) - (4,519)
Capital contribution - - 196,000 196,000
----------------- ----------------- ----------------- --------
30 June 2014 10 (4,520) 196,000 191,491
================= ================= ================= ========
Share Retained Contributed
capital earnings capital Total
RMB'000 RMB'000 RMB'000 RMB'000
1 January 2015 10 204,975 196,000 400,985
Total comprehensive
income for the period - (7,595) - (7,595)
Capital obtain 4 - - 4
Capital contribution - - 70,031 70,031
----------------- ----------------- ----------------- --------
30 June 2015 14 197,380 266,031 463,425
================= ================= ================= ========
STATEMENT OF CASHFLOWS
For the six month period ended 30 June 2015
Period from Period from
1 January incorporation
2015 to 30 on
June 2015 4 March 2014
RMB'000 to 30 June
2014
RMB'000
Cashflows from operating activities
Loss before tax (7,595) (4,519)
Increase in other payables and accruals - 980
Decrease in other payables and accruals (337) -
Net cash outflow from operating activities (7,932) (3,539)
------------------------ --------------------------
Cashflows from financing activities
Cash proceeds from issue of shares 70,035 10
Loan from shareholders 6,333 3,539
Net cash inflow from financing activities 76,368 3,549
------------------------ --------------------------
Cashflows from investing activities
Invest to other company (20,000) -
Net cash inflow from investing activities (20,000) -
------------------------ --------------------------
Net increase in cash and cash equivalents 48,436 10
Cash and cash equivalents at the beginning 10
of period -
Cash and cash equivalents at the end
of period 48,446 10
======================== ==========================
NOTES TO THE FINANCIAL INFORMATION
For the six month period ended 30 June 2015
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 2015 to 30 June 2015 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 2014 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 2015. 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.
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:01 ET (06:01 GMT)
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 within 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
On incorporation -
Additions 196,000
Fair value changes through profit
or loss 284,000
Balance at 31 December 2014 (a) 480,000
Additions (b) 20,000
Fair value changes through profit
or loss -
Balance at 30 June 2015 500,000
(a) Wuxi Victory Media & Culture Co. Ltd ("Victory
China")
The Company holds 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 IAS 28 "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 VictoryChina.
Fair value
The valuation is based on a share price premised on a Price /
Earnings ratio of 25, as determined from a review of peer
competitors. A discount was applied (40%) that reflects the lack of
liquidity of the shares of Victory China, the age profile of the
investment and the Chinese market.
The discount applied is considered to be a significant input in
the valuation. At 31 December 2014, had the discount applied
increased/decreased by 10%, the effect in the results and equity
for the period would be a loss/gain of RMB 72m.
(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") 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
31 December
30 June 2015 2014
RMB'000 RMB'000
Shareholders' loan 13,041 6,708
13,041 6,708
The shareholders' loan for all periods discussed herein, has
been and remains unsecured, interest-free and repayable on
demand.
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 September2014, 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.
31 December
30 June 2015 2014
RMB'000 RMB'000
Capital reserve 266,031 196,000
8. RELATED PARTY TRANSACTIONS
a) No remuneration was 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 where by the
Company is required to pay a 0.5% finder's fee for any investment
introduced. This is included in other payables and accruals.
30 June 2015
&31December2014
RMB'000
Victory China finder's fee payable
per the Strategic Cooperation Agreement
(includes a non compete clause in
relation to investment activities) 980
9. FINANCIAL INSTRUMENTS
VIE agreement risk
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:01 ET (06:01 GMT)
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 2015 consisted
of shareholders' loans of RMB13.041m (Note5) less bank balances and
cash of RMB10,000 and equity attributable to the equity holders of
the Company, comprising capital contributions of RMB266m, paid in
capital of RMB14,000 and retained earnings of RMB197m (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, the percentages of which as at 30 June 2015 and 31 December
2014 were as follows:
30 June 15 31 December
14
Note RMB'000 RMB'000
Amounts due to shareholders 5 13,041 6,708
Less: bank balances and cash (48,446) (10)
----------- ------------
Net debt (35,405) 6,698
Equity 463,425 400,985
----------- ------------
Net debt to capital ratio (7.60%) 1.70%
11. PROFIT PER SHARE
30 June 2015 30 June 2014
Profit attributable to ordinary
shareholders (7,595,000) (4,520,000)
Weighted average number of shares 25,000,000 25,000,000
Profit per share (expressed as RMB
per share) (0.30) (0.18)
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
On incorporation -
Deferred tax charge to statement of
comprehensive income 71,000
Deferred tax balance as at 31 December 2014 and 30
June 2015 71,000
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 minimize 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.
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:01 ET (06:01 GMT)
Grand Grp (LSE:GIPO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Grand Grp (LSE:GIPO)
Historical Stock Chart
From Jul 2023 to Jul 2024
