Grand FortHigh Grade

Annual Financial Report

RNS Number : 6142K
Grand Fortune High Grade Limited
29 August 2019
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, WITHIN, INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

 

GRAND FORTUNE HIGH GRADE LIMITED (LSE: GFHG)

("Company")

Reports and financial statements for the period ended 30 April 2019

29 August 2019

 

The Company is pleased to announce its reports and financial statements for the period ended 30 April 2019.  The Annual Financial Report can be found on the Company's website at http://www.gf-hg.com.

 

 

GRAND FORTUNE HIGH GRADE LIMITED

 

CONSOLIDATED REPORTS AND FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 30 APRIL 2019

 

 

GRAND FORTUNE HIGH GRADE LIMITED

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 30 APRIL 2019

 

I am pleased to present the consolidated reports and financial statements for the year from 1 May 2018 to 30 April 2019. During the year, the Group reported a loss of £518,387 (loss of £1,295,565 for the period from 1 May 2017 to 30 April 2018) which arose from professional fees, rent and wages in connection with the ongoing operations of the Group (and the listing and general administration expenses as well as a share-based payment charge for warrants issued for the prior year period).  As at the date of signing this report the Group has approximately £2.75 Million of cash balances.

 

Following its listing on the London Stock Exchange on 22 May 2017, the Group has been focused on the development, by organic growth, of its financial training business in order to satisfy the significant demand for financial sector specialists in China.  To assist in that development, the Group has established a 100% owned subsidiary in Hong Kong - Grand Fortune High Grade (HK) Limited which in turn has a 100% owned subsidiary in mainland China - Shen Zhen Shi Ji Fu Education Information Consulting Co. Ltd. (and the consolidated financial statements presented herein comprise of the financial statements of Grand Fortune High Grade Limited, Grand Fortune High Grade (HK) Limited and Shen Zhen Shi Ji Fu Education Information Consulting Co. Ltd.).  Additionally, on 22 May 2018, the Group announced that it had acquired the exclusive perpetual rights to utilise and market all of the educational materials owned by Global Academy of Investment and Wealth Management in Asia and Europe.  As the cost related to the acquisition of these educational materials did not prove to generate future benefits, it was fully impaired during the year.

 

Additionally, Grand Fortune High Grade Limited held its shareholder meeting on 28 November 2018.  All items proposed were approved by 100% of the votes cast at the meeting.  Following the meeting, the Board of Directors was comprised of Kit Ling Law (re-elected), Yan Wing Laurence Cheung (re-elected), Angus Irvine (re-elected), Wong Lee Chun (re-elected) and Anthony Wonnacott (re-elected).  On 1 February 2019, the Group announced the resignation of Yan Wing Laurence Cheung from the Board of Directors and wishes to thank him for his services to the Group.

 

All of these efforts have resulted in the enrolment of students into courses offered by the Group and the Group being pleased to report revenue from these activities, albeit minimal, in these consolidated reports and financial statements.  As the business activities develop, the Group will keep shareholders advised of its activities.  We appreciate the assistance of our officers, directors and advisors as we work towards the development of our business.

 

KIT LING LAW

CHAIRMAN

29 August 2019

 

GRAND FORTUNE HIGH GRADE LIMITED

DIRECTORS' CONSOLIDATED REPORT

FOR THE YEAR ENDED 30 APRIL 2019

 

Directors' consolidated report

 

The directors present their consolidated report together with the audited consolidated financial statements for the year ended 30 April 2019.

 

Principal activity and future developments

 

Grand Fortune High Grade Limited (individually, or collectively with its subsidiary, Grand Fortune High Grade (HK) Limited ("GFHG HK") and GFHG HK's wholly owned subsidiary Shen Zhen Shi Ji Fu Education Information Consulting Co. Ltd. ("Ji Fu Education"), as applicable, the "Group") is focused on the development, by organic growth, of its financial training business in order to satisfy the significant demand for financial sector specialists in China.

 

Principles of consolidation

 

The consolidated financial statements comprise of the financial statements of Grand Fortune High Grade Limited, its wholly owned Hong Kong subsidiary, GFHG HK and GFHG HK's wholly owned Chinese subsidiary Ji Fu Education.

 

Subsidiaries

 

Subsidiaries consist of entities through which Grand Fortune High Grade Limited is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity.  Subsidiaries are fully consolidated from the date control is transferred to Grand Fortune High Grade Limited and are de-consolidated from the date control ceases.  The financial statements include all the assets, liabilities, revenues, expenses and cash flows of Grand Fortune High Grade Limited and its subsidiaries after eliminating inter-entity balances and transactions.

 

Business review and management report

 

The loss on ordinary activities for the year ended 30 April 2019 was £518,387 (loss of £1,295,565 for the year ended 30 April 2018)

 

The Group had cash at bank and in hand of £2,855,928 at 30 April 2019. The principal risks and uncertainties that the Group faces are in developing its financial training business in China, which is a new market. The Group is aiming to tailor and deliver courses that are appropriate for the market but there is no guarantee there will be a sufficient demand for the courses offered.

 

The Group has not carried out any activities in the field of research and development. 

 

Events that have occurred since the end of the financial year are detailed in note 17 to the accounts.

 

Dividends

 

The directors do not recommend the payment of a final dividend for the year.

 

Directors

 

The following directors served during the year to 30 April 2019:

 

KIT LING LAW                                  -           CHAIRMAN AND CHIEF FINANCIAL OFFICER    

WONG LEE CHUN                             -          CHIEF EXECUTIVE OFFICER

YAN WING LAURENCE CHEUNG   -    NON-EXECUTIVE DIRECTOR (CEASED AS                                                                                               DIRECTOR ON 31 JANUARY 2019)

ANGUS SIGURD IRVINE                  -         NON-EXECUTIVE DIRECTOR

ANTHONY WONNACOTT                -           NON-EXECUTIVE DIRECTOR

 

Substantial shareholdings

 

Except for the interests of those persons set out below, the Directors are not aware of any interest which, at the date of this document would amount to 3% or more of Grand Fortune High Grade Limited's issued share capital:

 

Name

Number of Ordinary Shares

Approximate % Holding

 

 

 

Kit Ling Law

46,800,000

29.25%

Hundred River Ltd. (Wong Lee Chun)

31,996,100

19.99%

Xia Ya Li

6,650,000

4.16%

Wu Mei Juan

6,650,000

4.16%

 

 

Directors' Remuneration

 

Directors' emoluments are detailed in Notes 9 and 12 to the accounts.

 

Auditors

 

A resolution re-appointing Crowe U.K. LLP as auditors of the Group was approved by shareholders at the annual general meeting held on 28 November 2018.

 

Share capital, Warrants and voting rights

 

On 17 May 2017, Grand Fortune High Grade Limited entered into warrant agreements with each of Alice Lau, Vincent Poon, Wai Man Hui and Cornhill Capital Limited conferring the right to subscribe for 4,800,000 ordinary shares each (a total of 19,200,000 ordinary shares).  Each Warrant Agreement is in an identical form and confers the right to subscriber for ordinary shares at £0.10.  The warrants were conditional on admission to the London Stock Exchange (which was completed on 22 May 2017) and the warrants can be exercised at any time until 22 May 2020.

 

On 22 May 2017, Grand Fortune High Grade Limited completed the placing of 43,000,000 ordinary shares issued at a price of £0.10 per ordinary share for gross proceeds of £4,300,000.  In connection with the placing, the ordinary shares of Grand Fortune High Grade Limited were admitted by the Financial Conduct Authority (FC) to a Standard Listing on the Official List in accordance with Chapter 14 of the Listing Rules and commenced trading on the London Stock Exchange's main market for listed securities.

 

 

 

 

Going concern

 

The Group is focused on the development, by organic growth, of a financial training business in China, and, apart from a small amount of interest receivable and a small amount of revenue from the offering of training courses, it currently has no significant income stream. Until the training business has been adequately developed and is generating significant revenue, it is therefore dependent on its cash reserves to fund ongoing costs.  At 30 April 2019, the Group's cash position was £2,855,928.

 

After reviewing the Group's budget for the period ending 31 October 2020 and its medium-term plans, the directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future.

 

For this reason, they continue to adopt the going concern basis in preparing the accounts.

 

Financial risk management

 

The Group's financial risk management objective is to minimise, as far as possible, the Group's exposure to such risk as detailed in note 14 to the accounts.

 

Principal Risks and Uncertainties Facing the Group

 

The principal risks and uncertainties facing the Group are: (1) The Group's success is dependent on the successful development of a financial training business in China, and for the year ended 30 April 2019, apart from a small amount of interest receivable, the Group only generated a small amount of revenue - there are no guarantees that the Group will develop a training business that will generate sufficient revenue to cover the expenses of the Group; and (2) Until the training business has been adequately developed and generating significant revenue, the Group is dependent on its cash reserves to fund ongoing costs - there are no guarantees that the Group will be successful in replenishing those cash reserves once depleted.

 

Corporate governance

 

As a company with a Standard Listing, the Group is not required to comply with the provisions of the Corporate Governance Code. Although, the Group does not comply with the UK Corporate Governance Code, the Group intends to adopt corporate governance procedures as are appropriate for the size and nature of the Group and the size and composition of the Board. These corporate governance procedures have been selected with due regard to for the provisions of the Corporate Governance Code insofar as is appropriate. A description of these procedures is set out below:

 

·        As the Group is a start-up it will not have separate audit, remuneration and nomination committees. The Board as a whole will instead review risk, compliance and nominations matters, as well as the Board's size, structure and composition, taking into account the interests of the Shareholders and the performance of the Group. Once the Group has achieved sufficient growth, the Board intends to put in place audit, remuneration and nomination committees.

 

·        One-third of Directors (or, where their number is not divisible by three, the nearest number not exceeding one-third) will be required to retire and seek re-elections on an annual basis.

 

Directors' responsibility statement

 

The Directors are responsible for preparing the management report, annual report and the non-statutory consolidated financial statements in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority ("DTR") and with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

 

International Accounting Standard 1 requires that consolidated financial statements present fairly for each financial year the Group's consolidated financial position, consolidated financial performance and consolidated cash flows. This requires the faithful representation of transactions, other events and conditions in accordance with the definitions and recognition criteria for the assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the Preparation and Presentation of Financial Statements".

 

In virtually all circumstances, a fair representation will be achieved by compliance with all IFRS. Directors are also required to:

 

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business

select suitable accounting policies and then apply them consistently;

present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and

provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's consolidated financial position and financial performance.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group.  They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The maintenance and integrity of the Grand Fortune High Grade Limited website is the responsibility of the Directors; work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website.

 

Legislation in the Cayman Islands governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.

 

The directors confirm, to the best of their knowledge that:

 

·    the consolidated financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the consolidated assets, liabilities, financial position and profit or loss of the Group;

·    the consolidated financial statements include a fair review of the development and performance of the business and the consolidated financial position of the Group, together with a description of the principal risks and uncertainties that it faces; and

·    the annual report and consolidated financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

By order of the board

 

KIT LING LAW

CHAIRMAN

29 August 2019

 

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF GRAND FORTUNE HIGH GRADE LIMITED

 

Opinion          

We have audited the financial statements of Grand Fortune High Grade Limited and its subsidiaries (the "Group") for the year ended 30 April 2019 which comprise consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statements of changes in equity, consolidated cash flow statements and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion, the financial statements:

·    give a true and fair view of the state of the group's affairs as at 30 April 2019 and of its loss for the year then ended;

·    have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. 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 group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, 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.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:

·    The directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

 

·    The directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

 

 

 

Overview of our audit approach

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.

Based on our professional judgement, we determined overall materiality for the financial statements as a whole to be £55,000 (FY18 £67,000), based on approximately 2% of the total assets.

We use a different level of materiality ('performance materiality') to determine the extent of our testing for the audit of the financial statements.  Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment. 

Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors' remuneration.

We agreed with the board to report to it all identified errors in excess of £2,850 (2018: £3,400). Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.

 

Overview of the scope of our audit

The group is in the early stages of its development and is currently administered from one central operating location, which is the Group's registered office. Our audit work was conducted on records held at that location.

 

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

 

Key audit matter

How the scope of our audit addressed the key audit matter

Disclosure of related party transactions

The business is controlled by a small number of individuals in different locations increasing the risk that related party transactions are not identified and disclosed.

We reviewed transactions for evidence of potential undisclosed related party transactions and challenged management's disclosure on related party transactions.  Where necessary we took specific representations from management to confirm that transactions were not with related parties.

Going concern

The business is not yet cash generative. Given this we considered the risk that there is a material uncertainty over the use of the going concern method of accounting.

 

We obtained management's assessment of going concern, including a cash flow forecast for the next 12 months. We produced a range of scenarios to stress test this assessment and to consider whether the company has the cash resources to continue for the next 12 months.

Treatment of acquired rights

We focused on this area as during the year the group has invested a significant amount to acquire the rights to training materials which were subsequently impaired.

Assessment of ability to generate future economic benefits through the use or sale of the asset is inherently judgemental. This results in a risk that the asset may be inappropriately capitalised or amortised.

 

We reviewed the management's assessment which concluded that the acquired material is unlikely to generate future benefits and was fully amortised during the year.

In considering this assessment, we challenged the management on treatment of the cost of acquiring the rights to training material by reviewing the following:

-     Copy of signed acquisition agreement and the existence of the acquired materials

-     Group's cash flow forecasts to assess the future economic benefits from running the associated training courses.

We have also discussed with the management if these materials will be used for training programmes offered beyond the period covered by the cash flow projections.

 

 

Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.        

 

Responsibilities of the directors for the financial statements

As explained more fully in the directors' responsibilities statement set out on pages 6 and 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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, the directors are 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 the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

 

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 (UK) 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

Use of our report

This report is made solely to the Group's members, as a body, in accordance with our agreed terms of engagement. Our audit work has been undertaken so that we might state to the Group'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 Group and the Group's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

 

Matthew Stallabrass

Senior Statutory Auditor

For and on behalf of

Crowe U.K. LLP

Statutory Auditor

London

 

29 August 2019

 

 

 

 

GRAND FORTUNE HIGH GRADE LIMITED

FOR THE YEAR ENDED 30 APRIL 2019

CONSOLIDATED FINANCIAL STATEMENTS

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

Note

Year Ended

30 April 2019

£

Year Ended

30 April 2018

£

 

 

 

 

Revenue

 

22,186

-

Administrative expenses

4

           (540,905)

           (1,295,930)

Operating Loss

 

(518,719)

(1,295,930)

Finance income

 

                         332

                       365

Loss before tax

 

(518,387)

(1,295,565)

Taxation

5

                            -

                           -

Total comprehensive loss for the period attributable to the equity holders of the Group

 

           (518,387)

           (1,295,565)

Loss per Ordinary Share:

 

 

 

Basic and diluted (pence)

6

(0.32)

(0.82)

 

 

 

 

The notes to the consolidated financial statements form an integral part of these consolidated financial statements.

 

 

GRAND FORTUNE HIGH GRADE LIMITED

FOR THE YEAR ENDED 30 APRIL 2019

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

Note

As at

30 April 2019

£

As at

30 April 2018

£

Assets

 

 

 

Current assets

 

 

 

Acquired rights

16

-

-

Other receivables

7

9,688

-

Cash and cash equivalents

 

            2,855,928

          3,394,368

Total assets

 

            2,865,616

          3,394,368

 

 

 

 

Equity and liabilities

 

 

 

Capital and reserves

 

 

 

Share Capital

10

4,311,700

4,311,700

Share Based Payment Reserve

11

646,637

646.637

Accumulated losses

 

            (2,122,670)

         (1,604,283)

Total equity attributable to equity holders of the Group

 

2,835,667

3,354,054

 

 

 

 

Current liabilities

 

 

 

Amounts owing to Directors

12

16,302

18,076

Other payables

8

                   13,647

                22,238

Total liabilities

 

29,949

40,314

 

   

            

 

 

Total equity and liabilities

 

            2,865,616

            3,394,368

             

 

The notes to the consolidated financial statements form an integral part of these consolidated financial statements.

 

This report was approved by the board and authorised for issue on 29 August 2019 and signed on its behalf by;

 

 

                                                            ……………………………………Kit Ling Law - Chairman

 

GRAND FORTUNE HIGH GRADE LIMITED

FOR THE YEAR ENDED 30 APRIL 2019

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

Share Based

 

 

 

Note

Share

Payment

Accumulated

 

 

 

Capital

Reserve

Losses

Total

 

 

£

£

£

£

Balance as at 30 April 2017

 

11,700

-

(308,718)

(297,018)

 

 

 

 

 

 

Balance on 30 April 2017

 

11,700

-

(308,718)

(297,018)

Loss for the year after taxation

 

-

-

(1,295,565)

(1,295,565)

Total comprehensive balances

 

11,700

-

(1,604,283)

(1,592,583)

 

 

 

 

 

 

Ordinary Shares Issued

10

4,300,000

-

-

4,300,000

Share Based Payments

11

 

646,637

-

646,637

Transactions with owners

 

4,300,000

-

-

-

Balance as at 30 April 2018

 

4,311,700

646,637

(1,604,283)

3,354,054

 

 

 

 

 

 

Balance on 30 April 2018

 

4,311,700

646,637

(1,604,283)

3,354,054

Loss for the year after taxation

 

-

-

(518,387)

(518,387)

Total comprehensive balances

 

4,311,700

646,637

(2,122,670)

2,835,667

 

 

 

 

 

 

Transactions with owners

 

-

-

-

-

Balance as at 30 April 2019

 

4,311,700

646,637

(2,122,670)

2,835,667

 

The share capital comprises the Ordinary Shares of Grand Fortune High Grade Limited.

 

Accumulated losses represent the aggregate retained loss of Grand Fortune High Grade Limited since incorporation.

 

The notes to the consolidated financial statements form an integral part of these consolidated financial statements.

 

GRAND FORTUNE HIGH GRADE LIMITED

FOR THE YEAR ENDED 30 APRIL 2019

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

Year Ended

30 April 2019

£

Year Ended

30 April 2018

£

Cash flows from operating activities

 

 

 

 

 

Loss for the period before taxation

(518,387)

(648,928)

Share based payment charge

-

(646,637)

Finance income

(332)

(365)

 

 

 

Adjustments for non-cash items:

 

 

Share based payment charge

-

646,637

Foreign currency loss/(gain)

(10,275)

2,190

 

 

 

Working capital adjustments:

 

 

Increase in accounts receivable

(9,688)

-

Decrease in other receivables

 

(Decrease)/Increase in other payables

-

 

              (10,365)

7,055

 

               (295,706)

Foreign currency loss/gain (Bank Charges)

                       10,275

                   (2,190)

Net cash used in operating activities

(538,772)

(937,944)

 

 

 

Cash flows from investing activities

 

 

Interest received

                          332

                        365

Net cash flow from investing activities

332

365

 

 

 

Cash flows from financing

 

 

Receipt of Director's loan

-

-

Proceeds from the issue of Ordinary Shares

                                -

               4,300,000

Net cash inflow from financing activities

-

4,300,000

 

 

 

Increase/(Decrease) in cash

                   (538,440)

               3,362,421

Cash and cash equivalents, beginning of the period

                 3,394,368

                    31,947

Cash and cash equivalents, end of the period

                  2,855,928

               3,394,368

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.             General Information

Grand Fortune High Grade Limited is incorporated under the laws of the Cayman Islands under the Companies Law. Grand Fortune High Grade Limited was incorporated on 10 November 2015 as an exempted company. Grand Fortune High Grade Limited's registered number is 305700 and its registered office is at Willow House, Cricket Square, PO Box 709, Grand Cayman KY1-1107, Cayman Islands

 

The Group's objective is to take advantage of opportunities to establish a financial training business.

 

This financial information has been prepared in accordance with IFRS as adopted by the European Union ("EU"). The standards have been applied consistently during the year under review.

 

2.             Accounting Policies

 

Basis of preparation

 

The principal accounting policies adopted by the Group in the preparation of the financial information are set out below.

 

The financial information has been presented in pound sterling, being the functional currency of the Group.

 

The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"), including interpretations made by the International Financial Reporting Interpretations Committee (IFRIC) issued by the International Accounting Standards Board (IASB). The standards have been applied consistently.

 

Comparative figures

 

The financial information presents the comparative figures for the year ended 30 April 2018 and the financial information for the year ended 30 April 2019. 

 

Adoption of new and revised International Financial Reporting Standards

 

This is the first set of Group financial statements in which IFRS 15 Revenue from Contract with Customers (in respect of revenue recognition for revenue) and IFRS 9 Financial Instruments (in respect of the impact of the expected loss model on the impairment of receivables) have been applied.

 

Standards and interpretations issued but not yet applied

 

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the European Union.

 

The directors do not expect that the adoption of these standards, specifically being the adoption of IFRS 16, will have a material impact on the consolidated financial statements of the Group in future periods.

 

Going concern

 

The Group is focused on the development, by organic growth, of a financial training business in China, and apart from a small amount of interest receivable and a small amount of revenue from the offering of training courses, it currently has no significant income stream. Until the training business has been adequately developed and is generating significant revenue, it is therefore dependent on its cash reserves to fund ongoing costs.  At 30 April 2019, the Group's cash position was £2,855,928.

 

After reviewing the Group's budget for the period ending 31 October 2020 and its medium-term plans, the directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future.

 

The financial information does not include any adjustments that would result if the Group were unable to continue as a going concern.

 

Taxation

 

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

 

Financial instruments

 

Financial assets and financial liabilities are recognised on the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

 

Financial assets

 

Under IFRS 9, financial assets are classified and measured at fair value, with changes in fair value recognized in profit and loss as they arise ("FVPL"), unless restrictive criteria are met for classifying and measuring the asset at either amortised cost or fair value through other comprehensive income ("FVOCI").  The classification depends on the basis on which assets are measured. 

 

The Group has classified cash and cash equivalents as FVPL.

 

As at the consolidated balance sheet date, the Group did not have any financial assets measured at amortised cost or FVOCI.

 

Financial liabilities and equity instruments

 

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

 

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

 

Financial liabilities

All financial liabilities are measured at amortised cost.

 

Other financial liabilities

 

The Director's loan is initially measured at amortised cost, net of transaction costs, and is subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.

 

Derecognition of financial liabilities

 

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

 

Foreign currencies

 

Profit and loss account transactions denominated in foreign currencies are translated into sterling and recorded at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

 

All differences are taken to the profit and loss account.

 

Cash and cash equivalents

 

The Group considers any cash on short-term deposits and other short-term investments to be cash equivalents.

 

Segment Information

 

In the Directors' opinion, the Group has only one operating segment - the development and operation of financial training courses in China.  The internal and external reporting is on a consolidated basis with transactions between Group companies eliminated on consolidation.  Therefore, the financial information of the single segment is the same as set out in the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of financial position and cash flows.

 

Revenue Recognition

 

Revenue from contracts with customers 

Revenue is recognised at an amount that reflects the consideration to which the Group expected to be entitled in exchange for transferring goods or services to a customer.

 

Rendering of services

Revenue is recognised on the provision of the financial training course in China.

 

Interest

Interest revenue is recognised as interest is received.

 

3.             Critical accounting estimates and judgement

The preparation of the financial information in conformity with IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of income, expenditure, assets and liabilities. Estimates and judgements are continually evaluated, including expectations of future events to ensure these estimates remain reasonable.

 

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 the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

The Group's nature of operations is to develop and run financial training courses in China.  The Group acquired the rights to training materials during the year.  The cost related to this acquisition did not meet the criteria for capitalization.  Hence, it was fully impaired during the year.

 

4.             Administrative expenses

 

Year Ended

30 April 2019

£

Year Ended

30 April 2018

£

Directors remuneration

155,752

183,171

Key Management personnel

28,756

19,535

Rental Expenses

47,444

-

Salaries/Wages

91,787

11,543

Legal and professional fees

106,907

428,408

Bank charges

4,235

4,446

Foreign currency (gain) / loss

(10,275)

2,190

Training materials impairment

116,299

-

Share based payments charge

                           -

              646,637

 

               540,905

           1,295,930

 

Audit fees of £13,000 (2018: £15,600) were recognised during the year.  The cost related to the  acquisition of training materials did not prove to be generating future benefits.  Hence, it was fully impaired during the year.

 

5.             Taxation

 

Grand Fortune High Grade Limited is incorporated in the Cayman Islands.  The operations of Grand Fortune High Grade Limited are, with the exception of regulatory filings, outside of the Cayman Islands.  Accordingly, the costs and revenues of Grand Fortune High Grade Limited are subject to Cayman Islands taxation legislation where the prevailing taxation rate is 0%. 

 

As GFHG HK is incorporated in Hong Kong it is subject to Hong Kong taxation legislation and as Ji Fu Education is incorporated in China it is subject to China taxation legislation.  Any revenue earned by GFHG HK would be subject to Hong Kong taxation and any revenue earned by Ji Fu Education would be subject to China taxation.  It is the intention of the Group to attempt to offset any revenue against historic costs incurred where such revenue is earned and a taxation reduction on such future revenue may be available.  As the Group's expenses exceeded its revenue for the year ended 30 April 2019, it has not accrued any tax amount payable.

 

 

6.             Loss per Ordinary Share

The calculation for earnings per Ordinary Share (basic and diluted) for the relevant year is based on the profit after income tax attributable to equity holder is as follows:

 

 

Year Ended

30 April 2019

£

Year Ended

30 April 2018

£

Loss attributable to equity holders (£)

(518,387)

(1,295,565)

Weighted average number of Ordinary Shares

     160,000,000

157,519,231

Earnings per share (pence)

            (0.32)

                 (0.82)

 

Potential dilutive warrants were issued during the year ended 30 April 2018 but have not been included because the Group was loss making (and thus it would have been antidilutive for the year ended 30 April 2018).

 

7.             Other receivables

 

As at

30 April 2019

£

As at

30 April 2018

£

Accounts Receivable

                      9,688

                               -

 

                      9,688

                               -

 

8.             Other payables

 

As at

30 April 2019

£

As at

30 April 2018

£

Accruals

                     13,647

                   22,238

 

                     13,647

                   22,238

 

9.             Key management personnel

 

Zhao Zhijun, the management director of GFHG HK, is considered a key management personnel and below is the remuneration that was accrued in the periods below.

 

 

Year Ended

30 April 2019

£

 

Year Ended

30 April 2018

£

Zhao Zhijun

28,756

19,535

 

The Directors are also considered the key management personnel and the following directors' remuneration was accrued in the periods below.

 

Year Ended

30 April 2019

£

 

Year Ended

30 April 2018

£

Hong Lin Cao

-

14,677

Yan Wing Laurence Cheung

17,752

24,300

Wong Lee Chun

36,000

18,387

Angus Irvine

42,000

42,000

Sandy Jadeja

-

20,548

Kit Ling Law

18,000

18,000

Anthony Wonnacott

42,000

21,452

Yan Xu

-

8,807

Yong Yan

                            -

                     15,000

 

 

 

 

                155,752

                   183,171

 

All directors' remuneration was categorized as short-term employee benefits and no amounts in the categories of post-employment benefits, other long-term benefits, termination benefits or share-based payment benefits.

10.          Share capital

 

As at

30 April 2019

£

 

As at

30 April 2018

£

 

117,000,000 Ordinary Shares of £0.001 each, fully paid

          11,700

             11,700

43,000,000 Ordinary Shares of £0.10 each, fully paid

          4,300,000

             4,300,000

 

          4,311,700

             4,311,700

 

On 22 May 2017, Grand Fortune High Grade Limited allotted a further 43,000,000 Ordinary Shares at £0.10 each for total cash consideration of £4,300,000. 

 

11.          Share based payments

The following share-based payment amounts are included in the consolidated statement of comprehensive income (included in Administrative Expenses - see Note 4) and as a line item in the consolidated cash flow statement:

 

Year Ended

30 April 2019

£

 

Year Ended

30 April 2018

£

Warrants

-

646,637

 

 

 

Total Share-Based Payments

-

646,637

    

On 17 May 2017 Grand Fortune High Grade Limited entered into warrant agreements with each of Alice Lau, Vincent Poon, Wai Man Hui and Cornhill Capital Limited conferring the right to subscribe for 4,800,000 Ordinary Shares each (a total of 19,200,000 Ordinary Shares) as remuneration for assistance with the admission on the London Stock Exchange. Each Warrant Agreement is in an identical form and confers the right to subscribe for Ordinary Shares at £0.10. The Warrants were conditional on admission on the London Stock Exchange (which was completed on 22 May 2017) and can be exercised at any time until 22 May 2020. 

 

The following table summarizes the Group's outstanding warrants:

 

 

Year Ended

30 April 2019

 

Share Based

Payment Charge

£

Year Ended

30 April 2018

 

Share Based

Payment Charge

£

Opening Position

19,200,000

646,637

-

-

Granted

-

-

19,200,000

646,637

Exercised

-

-

-

-

Closing Position

19,200,000

646,637

19,200,000

646,637

 

The aggregate fair value of the Warrants was estimated at £646,637 (fair value of individual warrant was £0.0337) using the Black-Scholes valuation model with the following assumptions: expected volatility of 50%, risk-free interest rate of 0.1799% and an expected life of 3 years. Calculation of volatility involves significant judgement by the Directors. Volatility number was estimated based on the range of 36-month end volatilities of the main market index

 

 

 

12.          Amounts owing to Directors

 

As at

30 April 2019

£

As at

30 April 2018

£

Kit Ling Law

            -

     -

Directors Fees

16,302

18,076

 

            16,302

               18,076

During the period from incorporation 10 November 2015 to the period ended 30 April 2018, Kit Ling Law loaned Grand Fortune High Grade Limited a total of £100,402.  During the year from 1 May 2017 to 30 April 2018 the Group repaid, in full, Kit Ling Law a total of £100,402. 

 

The maximum amount owing to Kit Ling Law during the year ended 30 April 2018 was £121,402, however the entire amount was repaid and there is no amount outstanding as of 30 April 2018.  Kit Ling Law is a related party by virtue of her being Chairman and shareholder of Grand Fortune High Grade Limited.

 

The above Directors fees payable relates to directors' remuneration between 1 May 2017 and the respective periods listed above.  As of 30 April 2019, the only amounts owing to Directors are the amounts for fees accrued in March and April 2019 as all other outstanding amounts were paid during the year ended 30 April 2019.

 

13.          Financial instruments

Financial assets

As at

30 April 2019

£

As at

30 April 2018

£

Loans and receivables

9,688

-

Cash and cash equivalents

           2,855,928

             3,394,368

Total financial assets

           2,865,616

             3,394,368

Financial liabilities at amortised cost

 

 

Amounts owing to Directors

16,302

18,076

Other payables

                13,647

                   22,238

Total financial liabilities

               29,949

                  40,314

           

 

14.          Financial risk management

The Group uses a limited number of financial instruments, comprising cash and amounts owing to Directors, which arise directly from operations. The Group does not trade in financial instruments.

 

General objectives, policies and processes

The Directors have overall responsibility for the determination of the Group's risk management objectives and policies. Further details regarding these policies are set out below:

 

Currency risk

As the Group operates internationally, its exposure to foreign exchange risk relates to transactions and balances that are denominated in currencies other than £.  The Directors manage the Group's exposure to currency risk by operating foreign currency bank accounts, being GBP, HKD, RMB and USD.  It is the Directors' view that the size and complexity of the Group's trade does not warrant financial hedging arrangements currently, although this view will be regularly reviewed as the Group develops.

 

The table below illustrates the hypothetical sensitivity of the Group's statement of comprehensive income to a 10% increase and decrease in the GBP/HKD and GBP/USD exchange rates at the year-end date, assuming all other variables remain unchanged.  The sensitivity rate of 10% represents the directors' assessment of a reasonably possible change, based on historic volatility.  Positive figures represent an increase in income.

 

Year Ended

Year Ended

 

30 April 2019

30 April 2018

 

£

£

GBP Increases by 10%

 

 

HKD

4,270

1,451

USD

2,865

4,954

RMB

10,683

-

 

 

 

GBP Decreases by 10%

 

 

HKD

(6,179)

(1,778)

USD

(3,937)

(3,575)

RMB

(15,119)

-

 

Period end exchange rates applied in the above analysis are HKD 10.14 (2018-HKD 10.81), USD 1.29 (2018-USD 1.38) and RMB 8.70 (2018 - no expenses in RMB).

 

Credit risk

Credit risk is the risk that a counter party will not meet its obligations under a contract, leading to a financial loss. The Group had cash and cash equivalents of £2,855,928 as at 30 April 2019. The credit risk from its liquid funds is limited as the counter parties are banks with high credit ratings which have not experienced any losses in such accounts.

 

Liquidity risk

Liquidity risk arises from the Directors' management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

 

The Directors' policy is to ensure that the Group will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, the Directors seek to maintain a cash balance sufficient to meet expected requirements.

 

The Directors have prepared cash flow projections on a monthly basis through to 31 October 2020. At the end of the year under review, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

 

15.          Capital risk management

 

The Directors' objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for Shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. During the year, the Group had been financed by equity and Directors' loans. In the future, the capital structure of the Group is expected to consist of equity attributable to equity holders of the Group, comprising issued share capital and reserves.

 

16.          Acquired rights

The following amounts relating to the costs incurred in the acquisition of rights to use training materials (as well as the amortisation of those costs) are included in the consolidated statement of comprehensive income (included in Administrative Expenses - see Note 4) and in the consolidated statement of financial position:

 

 

Year Ended

30 April 2019

£

Year Ended

30 April 2018

£

 

Opening Balance

-

-

Cost of Rights to Acquired Materials

116,299

-

Amortisation of Acquired Rights

116,299

-

Closing Balance

-

-

 

The Group classifies the cost to acquire the rights to use acquired materials as a capitalised asset (as the asset was acquired with the intention of current and future use) and that cost is amortised over the useful life of the asset.  During the year ended 30 April 2019, the Group acquired the exclusive perpetual rights to utilise and market all of the educational materials owned by Global Academy of Investment and Wealth Management in Asia and Europe.  As the cost related to the acquisition of these educational materials did not prove to generate future benefits, it was fully amortised during the year.

 

17.          Subsequent events

None

 

18.          Related party transactions

Kit Ling Law is a related party by virtue of her being Chairman and shareholder of Grand Fortune High Grade Limited.  There was no amount outstanding as of 30 April 2019, however the maximum amount owing to Kit Ling Law during the year ended 30 April 2018 was £121,402, with the entire amount having been repaid during the year ended 30 April 2018 (with no amount outstanding as of 30 April 2018). 

 

All other amounts owing to directors relate to directors' remuneration accrued between April 2016 and the year ended 30 April 2019, see note 9 and 12 for a summary.

 

19.          Ultimate controlling party

 

As at 30 April 2019, Grand Fortune High Grade Limited did not have any one identifiable controlling party.

 

 


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