REG - Grand FortHigh Grade - Annual Financial Report
GRAND FORTUNE HIGH GRADE LIMITED
CONSOLIDATED REPORTS AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2020
GRAND FORTUNE HIGH GRADE LIMITED
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 APRIL 2020
I am pleased to present the consolidated reports and financial statements for the year from 1 May 2019 to 30 April 2020. During the year, the Group reported a loss of £415,423 (loss of £518,387 for the period from 1 May 2018 to 30 April 2019) which arose from professional fees, salaries, wages, rent and office and general expenses in connection with the ongoing operations of the Group. As at the date of signing this report the Group has approximately £2.3 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.).
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).
This past year has been a challenging one. Despite our best efforts, the Group was not able to generate any revenue from its financial training business. As part of its ongoing review, the Group has been evaluating the way the financial training courses are both marketed and offered. In the midst of the review by our team (which now includes advisors retained during the year), the world was confronted with challenges of the COVID-19 pandemic. The impact of COVID-19 has had a devastating effect on the global economy and on the ability of the Group to offer financial training courses in person. While the timing of the return to normalized economic activity remains a question, the Group has been developing an online training platform as a different potential revenue stream. The implementation and success of this online training platform is one of the biggest tests for the Group for the upcoming year.
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
20 October 2020
GRAND FORTUNE HIGH GRADE LIMITED
DIRECTORS' CONSOLIDATED REPORT
FOR THE YEAR ENDED 30 APRIL 2020
Directors' consolidated report
The directors present their consolidated report together with the audited consolidated financial statements for the year ended 30 April 2020.
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.
Business review and management report
The loss on ordinary activities for the year ended 30 April 2020 was £415,423 (loss of £518,387 for the year ended 30 April 2019).
The Group had cash at bank and in hand of £2,461,234 at 30 April 2020. 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 2020:
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 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
33,509,084
20.94%
Hundred River Ltd. (Wong Lee Chun)
31,996,100
19.99%
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.
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, 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 2020, the Group's cash position was £2,416,234.
After reviewing the Group's budget for the period ending 31 October 2021 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 2020, apart from a small amount of interest receivable, the Group did not generate any revenue and 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.
COVID-19 Risks
The worldwide emergency measures taken to combat the COVID-19 pandemic may continue, could be expanded, and could also be reintroduced in the future following relaxation. As governments implement monetary and fiscal policy changes aimed to help stabilize economies and capital markets, we cannot predict legal and regulatory responses to concerns about the COVID-19 pandemic and related public health issues and how these responses may impact our business. The COVID-19 pandemic, actions taken globally in response to it, and the ensuing economic downturn has caused significant disruption to business activities and economies. The depth, breadth and duration of these disruptions remain highly uncertain at this time. Furthermore, governments are developing frameworks for the staged resumption of business activities. As a result, it is difficult to predict how significant the impact of the COVID-19 pandemic, including any responses to it, will be on the global economy and our business.
The impact of COVID-19 has significantly reduced the ability of the Group to currently provide its training programs in a face to face setting and the ability to provide face to face training programs in the future is uncertain. As a result the Group is currently developing an online training platform for its offered programs. The implementation and success of this online training platform is uncertain.
Corporate governance
Due to the size and nature of the Group, it does not comply with the UK Corporate Governance Code. However it has adopted 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 UK Corporate Governance Code insofar as is appropriate. A description of these procedures is set out below:
· Due to the nature and size of the Group, it does 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.
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
20 October 2020
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 2020 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 2020 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 £50,000 (FY19 £55,000), 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 £2,500 (2019: £2,850). 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 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.
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"
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
22 October 2020
GRAND FORTUNE HIGH GRADE LIMITED
FOR THE YEAR ENDED 30 APRIL 2020
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note
Year Ended
30 April 2020
£
Year Ended
30 April 2019
£
Revenue
-
22,186
Administrative expenses
4
(415,780)
(540,905)
Operating Loss
(415,780)
(518,719)
Finance income
357
332
Loss before tax
(415,423)
(518,387)
Taxation
5
-
-
Total comprehensive loss for the period attributable to the equity holders of the Group
(415,423)
(518,387)
Loss per Ordinary Share:
Basic and diluted (pence)
6
(0.26)
(0.32)
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 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
As at
30 April 2020
£
As at
30 April 2019
£
Assets
Current assets
Acquired rights
16
-
-
Other receivables
7
-
9,688
Cash and cash equivalents
2,451,546
2,855,928
Total assets
2,451,546
2,865,616
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
(2,538,093)
(2,122,670)
Total equity attributable to equity holders of the Group
2,420,244
2,835,667
Current liabilities
Amounts owing to Directors
12
18,302
16,302
Other payables
8
13,000
13,647
Total liabilities
31,302
29,949
Total equity and liabilities
2,451,546
2,865,616
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 20 October 2020 and signed on its behalf by
"Kit Ling Law"
CHAIRMAN
GRAND FORTUNE HIGH GRADE LIMITED
FOR THE YEAR ENDED 30 APRIL 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Based
Note
Share
Payment
Accumulated
Capital
Reserve
Losses
Total
£
£
£
£
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
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 year after taxation
-
-
(415,423)
(415,423)
Total comprehensive balances
4,311,700
646,637
(2,538,093)
2,420,244
Balance as at 30 April 2020
4,311,700
646,637
(2,538,093)
2,420,244
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 2020
CONSOLIDATED CASH FLOW STATEMENT
Year Ended
30 April 2020
£
Year Ended
30 April 2019
£
Cash flows from operating activities
Loss for the period before taxation
(415,423)
(518,387)
Adjustments for non-cash items:
Finance income
(357)
(332)
Impairment of Acquired Rights
-
116,299
Foreign currency (gain)
(13,544)
(10,275)
Working capital adjustments:
(Increase)/Decrease in accounts receivable
9,688
(9,688)
Increase/(Decrease) in other payables
1,353
(10,365)
Foreign currency loss/gain (Bank Charges)
13,544
10,275
Net cash used in operating activities
(404,739)
(422,473)
Cash flows from investing activities
Acquired Rights
-
(116,299)
Interest received
357
332
Net cash flow from investing activities
357
(115,967)
(Decrease) in cash
(404,382)
(538,440)
Cash and cash equivalents, beginning of the period
2,855,928
3,394,368
Cash and cash equivalents, end of the period
2,451,546
2,855,928
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.
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.
Adoption of new and revised International Financial Reporting Standards
Effective on May 1, 2019, the Group adopted IFRS 16 Leases ("IFRS 16"). IFRS 16 specified how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months of less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, International Accounting Standard 17.
There was no impact on the Group's consolidated financial statements upon the adoption of this new standard as the Group does not have any applicable leases.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Accounting Policies (continued)
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 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 2020, the Group's cash position was £2,451,546.
After reviewing the Group's budget for the period ending 31 October 2021 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. In making this assessment, the directors have considered current and developing impact on the business as a result of the COVID-19 virus. Whilst this has not had an immediate impact on the Group's operations, it is not anticipated to have any significant impact given the relatively limited activities of the Group. The directors are aware that if the current situation becomes prolonged then this may need to be re-evaluated.
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.
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 measured at amortised cost or fair value through other comprehensive income ("FVOCI") depending on the business model and contractual cash flow characteristics. The classification depends on the basis on which assets are measured and if either criteria is not met, then the financial assets are held at fair value through profit or loss ("FVPL").
The Group holds cash and cash equivalents at amortised cost.
As at the consolidated balance sheet date, the Group did not have any financial assets measured at FVPL 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 and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Accounting Policies (continued)
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.
Leases/Rentals
The only leases the Group has entered into are short term leases. As permitted by IFRS 16 the Group has taken advantage of the exemption not to apply the requirements of IFRS 16 to short term leases and is recognising the expense in profit and loss evenly over the lease contract. The total expense incurred on short term leases is disclosed as rental expenses in note 4 to these financial statements.
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)
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 ended 30 April 2019. The cost related to this acquisition did not meet the criteria for capitalization. Hence, it was fully impaired during that year.
4. Administrative expenses
Year Ended
30 April 2020
£
Year Ended
30 April 2019
£
Directors remuneration
138,000
155,752
Key Management personnel
8,282
28,756
Rental Expenses
20,004
53,497
Salaries/Wages
103,759
69,549
Office/General Expenses
22,182
15,890
Legal and professional fees
123,695
107,202
Bank charges
3,715
4,235
Bad Debt Expense
9,688
-
Foreign currency (gain) / loss
(13,544)
(10,275)
Training materials impairment
-
116,299
Share based payments charge
-
-
415,780
540,905
Audit fees of £13,000 (2019: £13,000) were recognised during the year. The Group acquired the rights to training materials in the year ended 30 April 2019 at a cost £116,229. As the acquisition of training materials did not prove to be generating future benefits, the cost was fully impaired during the year ended 30 April 2019.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 2020, 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 2020
£
Year Ended
30 April 2019
£
Loss attributable to equity holders (£)
(415,423)
(518,387)
Weighted average number of Ordinary Shares
160,000,000
160,000,000
Earnings per share (pence)
(0.26)
(0.32)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. Other receivables
As at
30 April 2020
£
As at
30 April 2019
£
Accounts Receivable
-
9,688
-
9,688
In the year ended 30 April 2020, the Group incurred bad debt expense of £9,688 to write off the accounts receivable that was deemed uncollectable.
8. Other payables
As at
30 April 2020
£
As at
30 April 2019
£
Accruals
13,000
13,647
13,000
13,647
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 accrued in the periods below.
Year Ended
30 April 2020
£
Year Ended
30 April 2019
£
Zhao Zhijun
8,282
28,756
The Directors are also considered the key management personnel and the following directors' remuneration was accrued in the periods below.
Year Ended
30 April 2020
£
Year Ended
30 April 2019
£
Yan Wing Laurence Cheung
-
17,752
Wong Lee Chun
36,000
36,000
Angus Irvine
42,000
42,000
Kit Ling Law
18,000
18,000
Anthony Wonnacott
42,000
42,000
138,000
155,752
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 2020
£
As at
30 April 2019
£
160,000,000 Ordinary Shares
4,311,700
4,311,700
4,311,700
4,311,700
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Share based payments
The Group has recognized NIL in respect of share-based payment amounts in each of the years ended 30 April 2020 and 30 April 2019.
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 (see Note 17).
The following table summarizes the Group's outstanding warrants:
Year Ended
30 April 2020
Share Based
Payment Charge
£
Year Ended
30 April 2019
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
30 April 2020
£
As at
30 April 2019
£
Directors Fees
18,302
16,302
18,302
16,302
The above Directors fees payable relates to directors' remuneration between 1 May 2018 and the respective periods listed above. As of 30 April 2020, the only amounts owing to Directors are the amounts for fees accrued in March and April 2020 as all other outstanding amounts were paid during the year ended 30 April 2020.
13. Financial instruments
Financial assets at amortised cost
As at
30 April 2020
£
As at
30 April 2019
£
Other receivables
-
9,688
Cash and cash equivalents
2,451,546
2,855,928
Total financial assets
2,451,546
2,865,616
Financial liabilities at amortised cost
Amounts owing to Directors
18,302
16,302
Other payables
13,000
13,647
Total financial liabilities
31,302
29,949
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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, GBP/USD and GBP/RMB exchange rates at the year-end date, assuming all expenses incurred in currencies other than GBP were incurred at the year-end exchange rate date (with a 10% increase or decrease to such exchange rate) as opposed to the actual exchange rate on the date that the expense was incurred. 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 2020
30 April 2019
£
£
GBP Increases by 10%
HKD
2,487
4,270
USD
826
2,865
RMB
11,518
10,683
GBP Decreases by 10%
HKD
(5,548)
(6,179)
USD
(1,931)
(3,937)
RMB
(16,332)
(15,119)
Period end exchange rates applied in the above analysis are HKD 9.65 (2019-HKD 10.14), USD 1.24 (2019-USD 1.29) and RMB 8.81 (2019 - 8.70).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. Financial risk management (continued)
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 £2,451,546 as at 30 April 2020. 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 2021. 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. In the future, it is expected that the capital structure of the Group will continue to be financed in this manner with equity attributable to equity holders of the Group, comprising issued share capital and reserves.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 2020
£
Year Ended
30 April 2019
£
Opening Balance
-
-
Cost of Rights to Acquired Materials
-
116,299
Impairment 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 impaired during that year.
17. Subsequent events
On 22 May 2020, the 19,200,000 warrants that were exercisable into ordinary shares at an exercise price of £0.10 all expired unexercised.
18. Related party transactions
During the year ended 30 April 2020, Grand Fortune High Grade Limited entered into an employment agreement with Derek Law. Derek Law is a related party by virtue of being the brother of Kit Ling Law (the Chairman and shareholder of Grand Fortune High Grade Limited). Under the terms of the employment agreement, Derek Law was employed on a continuous basis as an Executive Deputy Director of Grand Fortune High Grade Limited effective 1 December 2019 and entitled to a monthly salary of HKD 20,000 and a monthly housing allowance of HKD 5,000.
All other amounts owing to directors relate to directors' remuneration accrued between May 2018 and the year ended 30 April 2020, see note 9 and 12 for a summary.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
19. Ultimate controlling party
As at 30 April 2020, Grand Fortune High Grade Limited did not have any one identifiable controlling party.
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