REG - Grand FortHigh Grade - Half-year Report
GRAND FORTUNE HIGH GRADE LIMITED
CONSOLIDATED REPORTS AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 OCTOBER 2019
CONTENTS
PAGES
Officers and professional advisors 1
Chairman's statement 2
Directors' report 3 - 7
Consolidated Statement of comprehensive income 8
Consolidated Statement of financial position 9
Consolidated Statement of changes in equity 10
Consolidated Cash flow statement 11
Notes to the consolidated financial statements 12 - 24
GRAND FORTUNE HIGH GRADE LIMITED
OFFICERS AND PROFESSIONAL ADVISORS
Officers and Directors
Kit Ling Law (Chairman and Chief Financial Officer)
Wong Lee Chun (Chief Executive Officer)
Angus Sigurd Irvine (Non-Executive Director)
Anthony Wonnacott (Non-Executive Director)
Registered Office
Willow House
Cricket Square
PO Box 709
Grand Cayman
KY1-117
Cayman Islands
Solicitors to the Group as to English Law
Fladgate LLP
16 Great Queen Street
London WC2B 5DG
Attorneys to the Group as to Cayman Island Law
Collas Crill
Floor 2, Willow House
PO Box 709
Cricket Square
Grand Cayman KY1-1107
Cayman Islands
Auditors and Reporting Accountants
Crowe U.K. LLP
St. Bride's House
10 Salisbury Square
London
EC4Y 8EH
Broker
Pello Capital Limited
7th Floor
10 Lower Thames Street
London
EC3R 6AF
Registrar
Computershare Investor Services (Cayman) Limited
The R&H Trust Co Ltd
Winward 1
Regatta Office Park
West Bay Road
Grand Cayman KY1-1103
Cayman Islands
Depositary
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 7NH
United Kingdom
Website
GRAND FORTUNE HIGH GRADE LIMITED
CHAIRMAN'S STATEMENT
FOR THE PERIOD ENDED 31 OCTOBER 2019
I am pleased to present the accounts for the period from 1 May 2019 to 31 October 2019. During the period, the Group reported a loss of £192,302 (loss of £251,936 for the period from 1 May 2018 to 31 October 2018) which arose from professional fees, rent, wages and general administration expenses in connection with the ongoing operations of the Group. As at the date of signing this report the Group has approximately £2.6 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 ended 30 April 2019.
Grand Fortune High Grade Limited held its shareholder meeting on 21 October 2019. 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), Angus Irvine (re-elected), Wong Lee Chun (re-elected) and Anthony Wonnacott (re-elected).
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
18 NOVEMBER 2019
GRAND FORTUNE HIGH GRADE LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2019
Directors' report
The directors present their report together with the consolidated financial statements for the period ended 31 October 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 period from 1 May 2019 to 31 October 2019 was of £192,302 (loss of £251,936 for the period from 1 May 2018 to 31 October 2018).
The Group had cash at bank and in hand of £2,651,979 at 31 October 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 period are detailed in note 16 to the accounts.
Dividends
The directors do not recommend the payment of a final dividend for the period.
GRAND FORTUNE HIGH GRADE LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2019
(CONTINUED)
Directors
The following directors served during the period to 31 October 2019:
KIT LING LAW - CHAIRMAN AND CHIEF FINANCIAL OFFICER
WONG LEE CHUN - CHIEF EXECUTIVE OFFICER
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 (other than the interests of the Directors) 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 21 October 2019.
GRAND FORTUNE HIGH GRADE LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2019
(CONTINUED)
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 Pello Capital Limited (previously 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 certain course offerings, currently has no income stream. Until the training business has been adequately developed and is generating revenue, it is therefore dependent on its cash reserves to fund ongoing costs. At 31 October 2019, the Group's cash position was £2,651,979.
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.
GRAND FORTUNE HIGH GRADE LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2019
(CONTINUED)
Principle Risks and Uncertainties Facing the Group
The principle 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 period ended 31 October 2019, apart from a small amount of interest receivable and a small amount of revenue from certain course offerings, the Group currently had limited revenue - there are no guarantees that the Group will develop a training business that will generate significant revenue; and (2) Until the training business has been adequately developed and generating 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".
GRAND FORTUNE HIGH GRADE LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2019
(CONTINUED)
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
18 NOVEMBER 2019
GRAND FORTUNE HIGH GRADE LIMITED
FOR THE PERIOD ENDED 31 OCTOBER 2019
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
1 May 2019
to 31 October 2019
£
1 May 2018
to 31 October 2018
£
Revenue
(26)
9,688
Administrative expenses
4
(192,465)
(261,784)
Operating Loss
(192,492)
(252,096)
Finance income
189
160
Loss before tax
(192,302)
(251,936)
Taxation
5
-
-
Total comprehensive loss for the period attributable to the equity holders of the Group
(192,302)
(251,936)
Loss per Ordinary Share:
Basic and diluted (pence)
6
(0.12)
(0.16)
The notes to the consolidated financial statements form an integral part of these consolidated financial statements.
GRAND FORTUNE HIGH GRADE LIMITED
FOR THE PERIOD ENDED 31 OCTOBER 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
At as
31 October 2019
£
As at
31 October 2018
£
Assets
Current assets
Other receivables
7
9,688
9,688
Cash and cash equivalents
2,651,979
3,118,011
Total assets
2,661,667
3,127,699
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
(2,314,972)
(1,856,219)
Total equity attributable to equity holders of the Group
2,643,365
3,102,118
Current liabilities
Amounts owing to Directors
12
18,302
19,981
Other payables
8
-
5,600
Total liabilities
18,302
25,581
Total equity and liabilities
2,661,667
3,127,699
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 18 November 2019 and signed on its behalf by;
……………………………………Kit Ling Law - Chairman
GRAND FORTUNE HIGH GRADE LIMITED
FOR THE PERIOD ENDED 31 OCTOBER 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
Balance on 30 April 2019
4,311,700
646,637
(2,122,670)
2,835,667
Loss for the period after taxation
(192,302)
(192,302)
Total comprehensive balances
4,311,700
646,637
(2,314,972)
2,643,365
Transactions with owners
-
-
-
-
Balance as at 31 October 2019
4,311,700
646,637
(2,314,972)
2,643,365
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 PERIOD ENDED 31 OCTOBER 2019
CONSOLIDATED CASH FLOW STATEMENT
1 May 2019
to 31 October 2019
£
1 May 2018
to 31 October 2018
£
Cash flows from operating activities
Loss for the period before taxation
(192,302)
(251,936)
Share based payment charge
-
-
Finance income
(180)
(159)
Adjustments for non-cash items:
Share based payment charge
-
-
Foreign currency loss/(gain)
(3,697)
(8,401)
Working capital adjustments:
Decrease in other receivables
(Decrease)/Increase in other payables
-
(11,647)
(9,688)
(14,733)
Foreign currency loss/gain (Bank Charges)
3,697
8,401
Net cash used in operating activities
(204,129)
(276,516)
Cash flows from investing activities
Interest received
180
159
Net cash flow from investing activities
180
159
Cash flows from financing
Receipt of Director's loan
-
-
Proceeds from the issue of Ordinary Shares
-
-
Net cash inflow from financing activities
0
0
Increase in cash
(203,949)
(276,357)
Cash and cash equivalents, beginning of the period
2,855,928
3,394,368
Cash and cash equivalents, end of the period
2,651,979
3,118,011
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 period 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 period from 1 May 2019 to 31 October 2019 and the financial information for the period from 1 May 2018 to 31 October 2018. These comparatives are comparable as they represent the same period lengths.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Accounting Policies (continued)
Adoption of new and revised International Financial Reporting Standards
This is the first interim 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 certain course offerings, currently has no income stream. Until the training business has been adequately developed and is generating revenue, it is therefore dependent on its cash reserves to fund ongoing costs. At 31 October 2019, the Group's cash position was £2,651,979.
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 period. 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Accounting Policies (continued)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Accounting Policies (continued)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Accounting Policies (continued)
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 to be 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 ended 30 April 2019. The cost related to this acquisition did not meet the criteria for capitalization. Hence, it was fully impaired during the year ended 30 April 2019.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. Administrative expenses
1 May 2019
to 31 October 2019
£
1 May 2018
to 31 October 2018
£
Directors remuneration
69,000
80,994
Key Management personnel
4,765
15,955
Rental Expenses
3,434
573
Salaries/Wages
71,312
13,651
Legal and professional fees
45,832
156,989
Bank charges
1,819
2,023
Foreign currency (gain) / loss
(3,697)
(8,401)
192,465
261,784
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 period ended 31 October 2019, it has not accrued any tax amount payable.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Loss per Ordinary Share
The calculation for earnings per Ordinary Share (basic and diluted) for the relevant period is based on the profit after income tax attributable to equity holder is as follows:
1 May 2019
to 31 October 2019
1 May 2018
to 31 October 2018
Loss attributable to equity holders (£)
(192,302)
(251,936)
Weighted average number of Ordinary Shares
160,000,000
160,000,000
Earnings per share (pence)
(0.12)
(0.16)
7. Other receivables
As at
31 October 2019
£
As at
31 October 2018
£
Accounts Receivable
9,688
9,688
Prepayments
-
-
9,688
9,688
8. Other payables
As at
31 October 2019
£
As at
31 October 2018
£
Accounts Payable
-
5,600
Accruals
-
-
-
5,600
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 paid in the periods below.
As at
31 October 2019
£
As at
31 October 2018
£
Zhao Zhijun
4,765
15,955
The Directors are also considered the key management personnel and the following directors' remuneration was accrued in the periods below.
As at
31 October 2019
£
As at
31 October 2018
£
Hong Lin Cao
-
-
Yan Wing Laurence Cheung
13
2,192
Wong Lee Chun
2,903
2,903
Angus Irvine
3,500
3,500
Sandy Jadeja
-
-
Kit Ling Law
1,500
4,500
Anthony Wonnacott
10,386
6,886
Yan Xu
-
-
Yong Yan
-
-
18,302
19,981
10. Share capital
As at
31 October 2019
£
As at
31 October 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 0) and as a line item in the consolidated cash flow statement:
Period Ended
31 October 2019
£
Period Ended
31 October 2018
£
Warrants
-
-
Total Share-Based Payments
-
-
On 17 May 2017 Grand Fortune High Grade Limited entered into warrant agreements with each of Alice Lau, Vincent Poon, Wai Man Hui and Pello Capital Limited (previously 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:
Period Ended
31 October 2019
Share Based
Payment Charge
£
Period Ended
31 October 2018
Share Based
Payment Charge
£
Opening Position
19,200,000
646,637
19,200,000
646,637
Granted
-
-
-
-
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
12. Amounts owing to Directors
As at
31 October 2019
£
As at
31 October 2018
£
Kit Ling Law
-
-
Directors Fees
18,302
19,981
18,302
19,981
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 period ended 30 April 2018 was £121,402, however the entire amount was repaid and there is no amount outstanding as of 31 October 2019. 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 April 2016 and the respective periods listed above. As of 31 October 2019, the only amounts owing to Directors are the amounts for fees accrued from August 2019 to October 2019 as all other outstanding amounts were paid during the period ended 31 October 2019.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. Financial instruments
Financial assets
As at
31 October 2019
£
As at
31 October 2018
£
Loans and receivables
Cash and cash equivalents
2,651,979
3,118,011
Total financial assets
2,651,979
3,118,011
Financial liabilities at amortised cost
Amounts owing to Directors
18,302
19,981
Other payables
-
5,600
Total financial liabilities
18,302
25,581
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. Financial risk management (continued)
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.
Period Ended
Period Ended
31 October 2019
31 October 2018
£
£
GBP Increases by 10%
HKD
1,622
1,675
USD
531
988
RMB
8,035
-
GBP Decreases by 10%
HKD
(1,058)
(3,857)
USD
(412)
(2,341)
RMB
(3,810)
-
Period end exchange rates applied in the above analysis are HKD 10.0963 (2018 - HKD 10.0051), USD 1.28782 (2018 - USD 1.27549) and RMB 9.08835 (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 £2,651,979 as at 31 October 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 period under review, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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. Historically, 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. Subsequent events
None
17. Related party transactions
All other amounts owing to directors relate to directors' remuneration accrued between April 2016 and the period ended 31 October 2019, see note 9 and 12 for a summary.
18. Ultimate controlling party
As at 31 October 2019, the Group did not have any one identifiable controlling party.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR BLBDBDBDBGCR
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