RNS Number:6588G
GruppeM Investments PLC
31 October 2007
31 October 2007
GruppeM Investments PLC
(LSE: GRP, 'GruppeM' or the 'Company')
Final results for the 17 months ended 31 December 2006
GruppeM, the Aston Martin Importer for China and retailer of Porsche cars in the
country's Shandong region, today announces its audited final results for the 17
months ended 31 December 2006. GruppeM previously reported its unaudited
preliminary results for the 17 months ended 31 December 2006 on 15 August 2007.
The Chairman's Statement and financial information below has been extracted from
the report and accounts of the Company for the 17 months ended 31 December 2006
which are being despatched to shareholders today: these will be available to the
public from the Company's registered office at GruppeM Investments PLC, Suite
1.3 Buckingham Court, 78 Buckingham Gate, London, SW1E 6PD.
Enquiries:
GruppeM Investments PLC Shore Capital and Corporate Limited
Kenny Chen Alex Borrelli
Tel: +44 (0) 207 233 2952 Tel: +44 (0) 207 408 4090
Further information on GruppeM Investments PLC can be found on the Company's
website: www.gruppemplc.com.
CHAIRMAN'S STATEMENT
Background
GruppeM Investments PLC's initial annual report covered the period from its
incorporation on 16 July 2004 to 31 July 2005. The comparative period shown in
the Financial Statements below is therefore from 16 July 2004 to 31 July 2005.
We have since changed our accounting reference date from 31 July to 31 December,
to bring it into line with our Chinese trading operations. This means that the
results below are for a 17-month accounting period from 1 August 2005 to 31
December 2006.
GruppeM Investments PLC was floated on the Alternative Investment Market of the
London Stock Exchange ("AIM") market in February 2005 and remained a cash shell
until the reverse takeover of GruppeM Hong Kong Limited in October 2006.
GruppeM Hong Kong Limited is a Hong Kong based holding company with two Chinese
based subsidiaries operating a Porsche franchise in the Shandong region of
China. It was incorporated on 1 February 2005 and was wholly owned and
controlled by Pinocelle S.A. - a nominee company of Kenny Chen. Therefore, the
reverse acquisition was deemed a related-party transaction as both GruppeM
Investments PLC and GruppeM Hong Kong Limited were under the common control of
Kenny Chen. Accordingly, the consolidated figures presented below have been
prepared under merger accounting rules, i.e., the Financial Statements of
GruppeM Investments PLC and GruppeM Hong Kong Limited have been aggregated and
presented as if the two companies had been part of the same group since
incorporation.
Financial Timetable
Further to our announcement on 15 August 2007, the audited results for the
17-month period to 31 December 2006 have been delayed due to a combination of
the Company changing auditors and the audit of our Chinese subsidiaries being
interrupted by a routine audit by the Chinese tax authority from which no
material issues arose. The delay in the completion of the statutory Financial
Statements has had the knock-on effect of delaying the announcement of the
interim results for the six months to 30 June 2007. However, the interim
results have been released today.
Results
The Group has grown rapidly in the 17-month start-up period to 31 December 2006.
Turnover increased significantly to #12.1 million (period to 31 July 2005:
#0.12 million). The pre-tax loss from operations for the period was #0.95
million against a loss of #0.56 million for the period to 31 July 2005. Losses
per share were 3.27 pence (2005: 5.70 pence). The Directors will not be
recommending the payment of a dividend until such time as the Group reaches an
appropriate level of profitability.
Porsche car sales from our Qingdao dealership were strong with 278 cars ordered
and 222 cars delivered in the period. Of the 222 cars delivered, 91% were the
large four-wheel-drive Cayenne model, however, demand for the sports cars range
is strengthening as the market becomes more aware of the Porsche brand and
heritage. Sales of Porsche cars remain strong with no signs of slowing. Demand
continues to outstrip supply, with a waiting time of approximately 6 months from
the customer placing the order to receiving the car.
We are delighted that GruppeM Hong Kong Limited has now signed a formal
dealership agreement with Porsche China. This replaces the letter of intent
under which the Qingdao dealership was operating until March 2007.
Trading in the first half of 2007 has been brisk with the strong demand seen at
the end of 2006 continuing into this period.
Market Prospects
China's economy continues to grow strongly - recording annual double digit
growth (11.9%) for the fifth year in a row: it is poised to overtake Germany as
the third largest economy in the world within the next year.
In 2006 the Chinese automobile market became the second largest in the world
with sales of 7.2 million. Sales of luxury cars increased by 25.1% over the
previous year to 320,000 (China Association of Auto Manufacturers). According
to China View, "sales of luxury cars are booming and top luxury automakers see
China as an increasingly important market".
The latest statistics released by the Chinese Ministry of Public Security on 4
June 2007 show that, in the first 5 months of 2007, the number of private cars
increased by 16 per cent to 13.4 million. It is anticipated that sales volume
in the Chinese market will overtake the USA by 2010.
Board Changes
There have been several Board changes in the period. I took over from Lord
Marsh as Chairman, following the reverse acquisition of GruppeM Hong Kong
Limited in October 2006 and Peter Kent joined the Board shortly afterwards.
Julian Hardy also joined us as sales director at the time of the acquisition.
Marvin Tien resigned during the period. In June this year we were all saddened
by the news that Stephen Chen had passed away after a long illness. We send our
condolences to his wife and family.
Strategy
The Board is aiming to expand the business both organically, by increasing our
Porsche retailing footprint in the Shandong region, and by partnering other
premium brand manufacturers in order to distribute luxury cars throughout China.
The Shandong region, with a population of approximately 92 million, is located
on the burgeoning east coast of China between Beijing and Shanghai. In Q1 2008
the Company is planning to open a further Porsche dealership in the region's
capital Jinan. Jinan has a population of 5.9 million, compared to Qingdao with
7.2 million, and its information technology related economic output ranks number
4 in China.
As far as other partnerships are concerned, the Group is also in high-level
discussions with other luxury car manufacturers with a view to diversifying our
geographical market (to include the whole of China); our operations (to include
luxury car importation and distribution as well as retail); and our brand
offering.
Indeed, I am delighted to confirm the recent appointment of the Group as the
only importer and distributor of Aston Martin motor cars to dealerships in
China. This represents a fantastic opportunity for both parties to take full
advantage of this exciting marketplace. We are confident that the combination
of Britain's finest luxury sporting cars manufacturer, and our expertise in the
Chinese car market, will pay great dividends and we look forward to a long and
successful future together.
The Board believes that the Group is in a position of strength to capitalise on
the current opportunities within the Chinese luxury car market in order to grow
the business and shareholder value.
I would like to thank all our employees for their support and contribution to
our success during the Group's early high-growth stage.
Don McCrickard
Chairman
30 October 2007
GRUPPEM INVESTMENTS PLC
Consolidated income statement for the 17 months ended 31 December 2006
17 months ended Period from 16
31 December July 2004 to
2006 31 July 2005
(Restated)
Note # #
Revenue 12,099,616 121,130
Cost of sales (11,239,678) (193,425)
Gross Profit/(Loss) 859,938 (72,295)
Administrative expenses (1,823,174) (349,102)
Exceptional item - (142,512)
Operating Loss (963,236) (563,909)
Finance income and expense (net) 13,628 (6)
Loss for the Period before Taxation (949,608) (563,915)
Taxation (13,172) -
Loss for the Period (962,780) (563,915)
Loss per share expressed in pence per share
- Basic and diluted 3 (3.27)p (5.70)p
Statement of recognised income and expense for the 17 months ended 31 December
2006
17 months ended Period from 16
31 December 2006 July 2004 to 31
July 2005
(Restated)
# #
Loss for the financial period (962,780) (563,915)
Exchange adjustments (46,650) 1,935
Total Recognised Income and Expense for the Period (1,009,430) (561,980)
All amounts relate to continuing activities.
GRUPPEM INVESTMENTS PLC
Consolidated balance sheet as at 31 December 2006
Note As at As at
31 31 July
December 2005
2006 (Restated)
# #
Assets
Non-Current Assets
Property, plant and equipment 499,850 108,492
499,850 108,492
Current Assets
Inventories 836,672 -
Trade and other receivables 2,791,348 294,710
Cash and cash equivalents 126,556 135,733
3,754,576 430,443
Total Assets 4,254,426 538,935
Liabilities
Current Liabilities
Trade and other payables 2,433,149 375,915
2,433,149 375,915
Non-Current Liabilities
Director's loan account 3,414,011 346,870
Convertible loan 99,402 -
Related party loan 182,000 182,000
3,695,413 528,870
Total Liabilities 6,128,562 904,785
Capital and Reserves
Share capital 1 1,000,000 200,000
Merger reserve 2 (1,392,156) -
Foreign operation translation reserve 2 44,715 (1,935)
Retained deficit 2 (1,526,695) (563,915)
(1,874,136) (365,850)
Total Equity and Liabilities 4,254,426 538,935
GRUPPEM INVESTMENTS PLC
Consolidated cash flow statement for the 17 months ended 31 December 2006
17 months Period from
ended 16 July 2004
31 December to 31 July
2006 2005
(Restated)
# #
Cash flow from operating activities
Loss from operating activities (963,236) (563,909)
Adjustments for:
Depreciation 176,334 125
Exchange adjustment on property, plant and equipment 6,616 -
Net cash flow from operating activities before changes in working (780,286) (563,784)
capital
Increase in inventories (836,672) -
Increase in payables 2,045,882 375,915
Increase in receivables (2,496,638) (294,710)
Net cash flow from operating activities before interest and taxation (2.067,714) (482,579)
paid
Interest paid (2,046) (6)
Taxation paid (1,820) -
Net cash flow from operating activities (2,071,580) (482,585)
Investing activities
Purchase of property, plant and equipment (598,863) (7,834)
Sale of property, plant and equipment 24,555 -
Assets under construction - (100,783)
Interest received 76 -
Net cash flow from investing activities (574,232) (108,617)
Financing activities
Proceeds from issue of ordinary shares - 200,000
Cost of share issue (592,156) -
Issue of convertible loan notes 115,000 -
Director's loan 3,067,141 346,870
Related party loan - 182,000
Net cash flow from financing activities 2,589,985 728,870
Net (decrease) / increase in cash and cash equivalents in the period (55,827) 137,668
Cash and cash equivalents at the beginning of the period 135,733 -
Effect of foreign exchange rate changes 46,650 (1,935)
Cash and cash equivalents at the end of the period 126,556 135,733
NOTES TO THE FINAL RESULTS ANNOUNCEMENT
GruppeM Investments PLC is a limited liability company incorporated and
domiciled in England and Wales. The address of the registered office is Suite
1.3 Buckingham Court, 78 Buckingham Gate, London, SW1E 6PD.
The principal accounting policies applied in the preparation of these Financial
Statements are set out below. These policies have been consistently applied to
all the periods presented, unless otherwise stated.
Adoption of IFRS for the 17 months ended 31 December 2006
The Company and Group have adopted IFRS for the first time in their respective
Financial Statements. The date of transition to IFRS was 16 July 2004 and all
comparative information in these Financial Statements has been restated where
applicable to reflect the Company's and Group's adoption of IFRS.
Going Concern
United Kingdom company law requires the Directors to consider whether it is
appropriate to prepare the Financial Statements on the basis that the Company
and Group is a going concern. In considering this matter, the Directors have
reviewed the Group's budget and working capital requirements for 2008 which
included consideration of the cash flow implications of the operating plan. In
addition, Kenny Chen has given a letter of support to the Group stating that he
will provide the necessary capital to make up any shortfall in funding over the
next 12 months, if required. The Directors see no reason why the Company and the
Group should not continue in operational existence for the foreseeable future.
For this reason they have adopted the going concern basis in preparing these
Financial Statements.
Basis of Preparation
The Financial Statements have been prepared in accordance with EU Endorsed
International Financial Reporting Standards ("IFRS"), International Financial
Reporting Interpretations Committee ("IFRIC") interpretations and the Companies
Act 1985 applicable to companies reporting under IFRS. The Group has adopted
all of the standards and interpretations issued by the International Accounting
Standards Board and the International Financial Reporting Interpretations
Committee that are relevant to its operations. As at the date of approval of
these consolidated Financial Statements, the following standards and
interpretations were in issue but not yet effective:
* IFRS 7, Financial Instruments: Disclosures and the complementary amendments
to IAS 1: Presentation of Financial Statements;
* IFRS 8, Operating Segments;
* IFRIC 8, Scope of IFRS 2;
* IFRIC 9, Reassessment of embedded derivatives;
* IFRIC 10, Interim Financial Reporting and Impairment;
* IFRIC 11, IFRS 2: Group and Treasury share transactions;
* IFRIC 12, Service concession arrangements;
* IFRIC 13, Customer Loyalty Programmes; and
* IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements
and their Interaction
The Directors do not anticipate that the adoption of these interpretations in
future reporting periods will have a material impact on the Group's results.
Basis of Consolidation
The consolidated Financial Statements consist of GruppeM Investments PLC and its
subsidiaries made up to 31 December 2006. The consolidated Financial Statements
of GruppeM Investments PLC have been prepared under merger accounting rules.
This means that the Financial Statements of GruppeM Investments PLC and its
wholly owned subsidiary, GruppeM Hong Kong Limited have been aggregated and
presented as if the two companies have always formed a group.
Accordingly, although GruppeM Investments PLC acquired the entire share capital
of GruppeM Hong Kong Limited on 31 October 2006, the results for both companies
are reflected in the consolidated Financial Statements for the whole of the 17
month period ended 31 December 2006 and the comparatives are presented on the
same basis, the reason being that due to common ownership and control of the
respective entities both before and after the business combination, the business
combination falls outside the scope of IFRS 3.
Where necessary, adjustments are made to the Financial Statements of
subsidiaries to bring their accounting policies into line with those used by
other members of the Group. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
The Company has taken advantage of the exemption provided under section 230 of
the Companies Act 1985 not to publish its individual income statement and
related notes.
1. Share Capital
2006 2006 2005 2005
No. # No. #
Authorised:
Ordinary shares of 1p each 200,000,000 2,000,000 100,000,000 1,000,000
Issued and Fully Paid:
Ordinary shares of 1p each 100,000,000 1,000,000 20,000,000 200,000
Shares issued during the Period
Ordinary Shares
No. Exercise/ #
share issue
price
At 31 July 2005 20,000,000 200,000
Acquisition of subsidiary 80,000,000 1p 800,000
At 31 December 2006 100,000,000 1,000,000
On 25 October 2006 the Company issued 80,000,000 new ordinary shares of 1p each
to Pinocelle S.A. for GruppeM Hong Kong Limited. The reverse acquisition has
been recognised under the principles of merger accounting.
2. Movement on Reserves
The merger reserve represents a reserve arising on consolidation, being the
share capital and share premium account balances of GruppeM Hong Kong Limited at
16 July 2004 less the nominal value of the shares issued by the Company to
acquire the shares, reflecting the position as if the merger had occurred on 16
July 2004.
Group Merger reserve Foreign currency
translation
reserve
Retained losses
# # #
At 16 July 2004 - - -
Loss for the period - - (563,915)
Foreign exchange loss on translation - (1,935) -
At 1 August 2005 - (1,935) (563,915)
Loss for the period - - (962,780)
Foreign exchange gain on translation - 46,650 -
Share issue expenses (592,156) - -
Arising on share issue 3,200,000 - -
Reversal of investment (4,000,000) - -
At 31 December 2006 (1,392,156) 44,715 (1,526,695)
3. Loss per Ordinary Share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
As the Company is loss-making, the convertible loan notes are anti-dilutive, and
in accordance with IAS 33 have been ignored for the purposes of calculating
diluted earnings per share.
2006 2005
Weighted Per share Weighted Per share
average amount average amount
number of number of
shares shares
Loss Loss
# pence # Pence
Basic and diluted EPS
Loss attributable to ordinary (962,780) 29,411,765 (3.27) (563,915) 9,895,350 (5.70)
shareholders
(962,780) 29,411,765 (3.27) (563,915) 9,895,350 (5.70)
END
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The company news service from the London Stock Exchange
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