LONDON (Alliance News) - Grand Group Investment PLC Friday said it generated a profit as it reported maiden results after listing on AIM in January, driven by a gain in the value of its investment in Victory China.
Grand Group, an investor in smaller businesses in Greater China, said it made a CNY276.0 million pretax profit between March 4, 2014 to the end of that year, as it revalued its investment in Victory China by CNY284 million to CNY480 million.
It said the increase in the fair value of its 33.33% stake in Victory China, which produces vocational training software and training videos for basic blue-collar jobs, was based on "a review of peer competitors".
In the notes to the accounts, Grand Group said the valuation was based on using a share price on a price to earnings ratio of 25. "A discount applied to the multiple of 60% reflects the lack of liquidity of the shares of Victory China, the age profile of the investment and the Chinese market," the notes said.
"The discount applied is considered to be a significant input in the valuation," the notes continued.
According to the notes to the financial statement, a 10% change in the discount would have had a corresponding loss or gain of CNY72 million at the end of 2014.
Grand Group said its CNY6.7 million net cash outflow from operating activities was partly because its initial public offering closed just after the end of the period covered by the earnings, but also due to the early stage of its business, adding that cash inflows will take place when it exits investments.
The GBP7.1 million raised on going public enabled Grand Group to take a 15% stake in Wuxi Jinxuntong Technology Ltd, which operates an online training website in the first quarter of its new financial year.
"Looking forward to 2015, the board is enthused by the opportunities that it is seeing for further investment. Victory China's business is developing rapidly which should position it well for a flotation in due course," Non-Executive Chairman James Newman said in a statement.
Grand Group shares last traded at 100 pence on Tuesday this week.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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