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30 Jun 2008 10:34
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30 June 2008
GruppeM Investments PLC
(LSE: GRP, 'GruppeM' or the 'Company')
Final results for the year ended 31 December 2007
GruppeM Investments PLC, the Aston Martin importer for the People's Republic of China and retailer of Porsche cars in the country's Shandong region, announces its final results for the year ended 31 December 2007.
Operational highlights:
419 Porsche cars ordered (17 months to 31 December 2006: 278) and 392 cars delivered (17 months to 31 December 2006: 222) by the Qingdao dealership in the year
Second Porsche dealership planned to open in August in Jinan - the capital of the Shandong region
Strong demand for Aston Martin cars in China
Financial highlights:
Revenues of £23.6 million (17 months to 31 December 2006: £12.1 million)
Profit before tax of £0.46 million (17 months to 31 December 2006: £0.95 million loss)
Basic earnings per share 0.5p (2006: 3.27p loss per share)
Commenting on the results, Kenny Chen, Chief Executive Officer, said:
"These results demonstrate that the Company's strategy is proving successful. We have consolidated our position and the Company has moved into profit. The significant investment that has been made is now providing the firm foundation on which the business will grow. The market is continuing to expand at a fast rate and the Company is now in a position to gain maximum benefit from the opportunities that are being presented. The only limiting factor will be the Company's ability to rapidly raise sufficient funds to take advantage of those opportunities. Demand for luxury cars is still very strong despite some downturn in markets elsewhere in the world. The downturn is an advantage for Chinese based businesses as manufacturers are supporting them with more cars to satisfy the growing demand. We intend to add an additional dealership with the opening of the Jinan Porsche Centre in August 2008 which will enable the Company to reach further into the Shandong Province. The relationship with Aston Martin is very strong both on a business and a personal level. The Company represented Aston Martin at the Beijing and Qingdao auto shows with great success and it will continue to work very closely with them at future events. Demand for Aston Martin cars is increasing and we are confident of satisfying that demand as soon as official type approval is granted by the Chinese authorities."
Enquiries:
| GruppeM Investments PLC Kenny Chen Tel: +44 (0) 207 233 2952 | Shore Capital and Corporate Limited Alex Borrelli Tel: +44 (0) 207 408 4090 |
CHIEF EXECUTIVE OFFICER'S STATEMENT
Results
The Group continued to grow strongly in the year to 31 December 2007. Turnover increased to £23.6 million (17 month period to 31 December 2006: £12.1 million). The pre-tax profit from operations for the year was £0.46 million against a loss of £0.95 million for the 17 month period to 31 December 2006. Basic earnings per share were 0.5p (17 month period to 31 December 2006: 3.27p loss).
The directors will not be recommending the payment of a dividend.
Porsche car sales, from our Qingdao dealership in the Shandong province in East China, remained strong with 419 cars ordered and 392 cars delivered in the year with healthy margins earned. We are experiencing continuing demand for the larger model, the Porsche Cayenne, with sales of this product accounting for 85% of total sales, a trend repeated for Porsche throughout China where Porsche delivered 4,119 cars in the year to 31 July 2007 and stated that demand is continuing to outstrip supply. There has been an increase in demand for sports cars with the percentage of total sales rising from 9% in the previous period to 15% in the current year, while the average waiting period is between six and nine months, depending upon the model.
Board Changes
There have been several Board changes in the year. As previously announced, Don McCrickard and Stephanie Wong both left the Company and Paul McIlwaine assumed the role of Company Secretary.
Peter Kent has resigned as non-executive director of the Company. We would like to thank Peter for the guidance and support he has provided to the Company, and give him our very best wishes in the future.
Market Prospects
China's economy continues to grow with an increase in GDP of 11.4% in 2007. In 2007 China's automobile sales increased to 8.79 million units - an increase of 21.8% over the previous year. This consolidates China's position as the second largest car market in the world and it is predicted to surpass the USA to become number one. According to the Xinhua News Agency "Vehicle ownership in China is currently 44 cars per 1000 people whereas the world average is 120 cars per 1000 and in the USA there are 750 cars per 1000 people". Despite a worldwide slow down in car sales in the first half of 2008, China sales have continued to increase with a year-on-year increase of 25.3% in the first five months.
Current trading
Trading in the first half of 2008 remains strong and our additional Porsche dealership in Jinan, the capital city of the Shandong Province, is due for completion in August 2008 and will provide further growth opportunities. It has received a quota allocation from Porsche of 198 cars for the period between August 2008 and the end of July 2009 which should provide a good platform to grow the business.
The relationship with Aston Martin Lagonda Ltd, ("Aston Martin"), continues to strengthen with several jointly organised events being hosted by the manufacturer in China, following the Company being appointed as the importer for Aston Martin in China.
De-Listing
The Chinese auto market is expanding at such a fast rate that many excellent business opportunities exist. In order to take advantage of these opportunities, it is necessary to raise funds very quickly to avoid losing out to competitors. However, with the prevailing conditions within the financial markets, the Board believes it is not practicable for the Company to raise the funds required while maintaining trading on AIM within the desired time frame and in the light of the limited trading liquidity in the Company's shares. Therefore, the Directors have concluded that it is no longer in the best interests of the Company, or its Shareholders as a whole, to maintain its AIM listing.
Annual General Meeting and General Meeting
The report and accounts will be sent to shareholders today. A circular containing the notice of AGM and a notice for a general meeting with a resolution to de-list the Company's shares from AIM will be sent to shareholders within the next few weeks.
I would like to thank all our employees and advisers for their hard work and contribution to the continued success of the Company.
Kenny ChenChief Executive Officer30 June 2008
GRUPPEM INVESTMENTS PLCConsolidated income statement for the YEAR ended 31 December 2007
| Year ended 31 December 2007 (Audited) | 17 months ended 31 December 2006 (Audited) | ||||
| Note | £ | £ | |||
| Revenue | 23,634,551 | 12,099,616 | |||
| Cost of sales | (21,069,615) | (11,239,678) | |||
| Gross Profit | 2,564,936 | 859,938 | |||
| Administrative expenses | (2,087,631) | (1,823,174) |
| ||
| Operating Profit/(Loss) | 477,305 | (963,236) | |||
| Finance income and expense (net) | (18,552) | 13,628 | |||
| Profit/(Loss) for the Period before Taxation | 458,753 | (949,608) | |||
| Taxation | 41,480 | (13,172) | |||
| Profit/(Loss) for the Period | 4 | 500,233 | (962,780) | ||
| Profit/(Loss) per share expressed in pence per share | |||||
| - Basic | 2 | 0.50p | (3.27)p | ||
| - Diluted | 2 | 0.50p | n/a |
Statement of recognised income and expense for the YEAR ended 31 December 2007
| Year ended 31 December 2007 (Audited) | 17 months ended 31 December 2006 (Audited) | |||
| £ | £ | |||
| Profit/(Loss) for the financial period | 500,233 | (962,780) | ||
| Exchange adjustments | (16,005) | 46,650 | ||
| Total Recognised Income and Expense for the Period | 484,228 | (916,130) |
All amounts relate to continuing activities.
GRUPPEM INVESTMENTS PLCConsolidated balance sheet as at 31 December 2007
|
|
As at 31 December 2007 (Audited) | As at 31 December 2006 (Audited) | ||
| £ | £ | |||
| Assets | ||||
| Non-Current Assets | ||||
| Property, plant and equipment | 3,199,022 | 499,850 | ||
| Deferred taxation | 41,480 | - | ||
| 3,240,502 | 499,850 | |||
| Current Assets | ||||
| Inventories | 970,447 | 836,672 | ||
| Trade and other receivables | 2,161,373 | 2,791,348 | ||
| Cash and cash equivalents | 92,838 | 126,556 | ||
| 3,224,658 | 3,754,576 | |||
| Total Assets | 6,465,160 | 4,254,426 | ||
| Liabilities | ||||
| Current Liabilities | ||||
| Trade and other payables | 2,292,684 | 2,433,149 | ||
| 2,292,684 | 2,433,149 | |||
| Non-Current Liabilities | ||||
| Director's loan account | 5,280,018 | 3,414,011 | ||
| Convertible loan | 100,366 | 99,402 | ||
| Related party loan | 182,000 | 182,000 | ||
| 5,562,384 | 3,695,413 | |||
| Total Liabilities | 7,855,068 | 6,128,562 | ||
| Capital and Reserves | ||||
| Share capital | 1,000,000 | 1,000,000 | ||
| Merger reserve | (1,392,156) | (1,392,156) | ||
| Foreign operation translation reserve | 28,710 | 44,715 | ||
| Retained deficit | (1,026,462) | (1,526,695) | ||
| (1,389,908) | (1,874,136) | |||
| Total Equity and Liabilities | 6,465,160 | 4,254,426 |
GRUPPEM INVESTMENTS PLCConsolidated cash flow statement for the YEAR ended 31 December 2007
|
| Year ended31 December 2007 (Audited) | 17 months ended31 December 2006 (Audited) | ||
| £ | £ | |||
| Cash flow from operating activities | ||||
| Profit/(Loss) from operating activities | 477,305 | (963,236) | ||
| Adjustments for: | ||||
| Depreciation | 163,054 | 176,334 | ||
| Exchange adjustment on property, plant and equipment | (18,358) | 6,616 | ||
| Net cash flow from operating activities before changes in working capital | 622,001 | (780,286) | ||
| Increase in inventories | (133,775) | (836,672) | ||
| (Decrease)/Increase in payables | (129,113) | 2,045,882 | ||
| Decrease/(Increase) in receivables | 629,975 | (2,496,638) | ||
| Net cash flow from operating activities before interest and taxation paid | 989,088 | (2,067,714) | ||
| Interest paid | (9,327) | (2,046) | ||
| Taxation paid | (11,352) | (1,820) | ||
| Net cash flow from operating activities | 968,409 | (2,071,580) | ||
| Investing activities | ||||
| Purchase of property, plant and equipment | (92,918) | (598,863) | ||
| Sale of property, plant and equipment | - | 24,555 | ||
| Assets under construction | (2,750,950) | - | ||
| Interest received | 388 | 76 | ||
| Net cash flow from investing activities | (2,843,480) | (574,232) | ||
| Financing activities | ||||
| Cost of share issue | - | (592,156) | ||
| Issue of convertible loan notes | - | 115,000 | ||
| Director's loan | 1,857,358 | 3,067,141 | ||
| Net cash flow from financing activities | 1,857,358 | 2,589,985 | ||
| Net decrease in cash and cash equivalents in the period | (17,713) | (55,827) | ||
| Cash and cash equivalents at the beginning of the period | 126,556 | 135,733 | ||
| Effect of foreign exchange rate changes | (16,005) | 46,650 | ||
| Cash and cash equivalents at the end of the period | 92,838 | 126,556 |
NOTES TO THE ANNOUNCEMENT
1. Basis of preparation
The Financial Statements have been prepared in accordance with EU Endorsed International Financial Reporting Standards ("IFRS"), International Financial Reporting Interpretations Committee ("IFRIC") interpretations and the Companies Act 1985 applicable to companies reporting under IFRS. The Group has adopted all of the standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee that are relevant to its operations. As at the date of approval of these consolidated Financial Statements, the following standards and interpretations were in issue but not yet effective:
IFRS 8, Operating Segments;
IFRIC 13, Customer Loyalty Programmes; and
IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
The Directors do not anticipate that the adoption of these interpretations in future reporting periods will have a material impact on the Group's results, except for additional disclosures on segregated results, when the relevant standards come into effect for periods commencing on or after 1 January 2008.
Basis of Consolidation
The consolidated Financial Statements consist of GruppeM Investments PLC and its subsidiaries made up to 31 December 2007. The consolidated Financial Statements of GruppeM Investments PLC have been prepared under merger accounting rules. This means that the Financial Statements of GruppeM Investments PLC and its wholly owned subsidiary, GruppeM Hong Kong Limited have been aggregated and presented as if the two companies have always formed a group.
Accordingly, although GruppeM Investments PLC acquired the entire share capital of GruppeM Hong Kong Limited on 31 October 2006, the results for both companies are reflected in comparatives for the whole of the 17 month period ended 31 December 2006, the reason being that due to common ownership and control of the respective entities both before and after the business combination, the business combination falls outside the scope of IFRS 3.
2. Earnings per Ordinary Share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares in the convertible loan notes. The convertible loan notes are assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the interest expense.
As the Company was loss-making in the 17 months ended 31 December 2006, the convertible loan notes were anti-dilutive, and in accordance with IAS 33 were ignored for the purposes of calculating diluted earnings per share.
| 2007 | 2006 | |||||
| Profit | Weighted average number of shares | Per share amount | Loss | Weighted average number of shares | Per share amount | |
| £ | pence | £ | pence | |||
| Basic EPS | ||||||
| Profit/(Loss) attributable to ordinary shareholders | 500,233 | 100,000,000 | 0.50 | (962,780) | 29,411,765 | (3.27) |
| 500,233 | 100,000,000 | 0.50 | (962,780) | 29,411,765 | (3.27) | |
| 2007 | ||||||
| Profit | Weighted average number of shares | Per share amount | ||||
| £ | pence | |||||
| Diluted EPS | ||||||
| Profit attributable to ordinary shareholders | 500,233 | 100,000,000 | ||||
| Interest expense on convertible loan notes and assumed conversion of convertible loan notes | 8,649 | 1,840,000 | ||||
| Profit and weighted average number of shares for diluted EPS | 508,882 | 101,840,000 | 0.50 | |||
3. Share capital
| 2007 | 2007 | 2006 | 2006 | ||||
| No. | £ | No. | £ | ||||
| Authorised: | |||||||
| Ordinary shares of 1p each | 200,000,000 | 2,000,000 | 200,000,000 | 2,000,000 | |||
| Issued and Fully Paid: | |||||||
| Ordinary shares of 1p each | 100,000,000 | 1,000,000 | 100,000,000 | 1,000,000 |
4. Movement on reserves
The merger reserve represents a reserve arising on consolidation, being the share capital and share premium account balances of GruppeM Hong Kong Limited at 16 July 2004 less the nominal value of the shares issued by the Company to acquire the shares, reflecting the position as if the merger had occurred on 16 July 2004.
| Group | Merger reserve | Foreign currency translation reserve | Retained losses |
| £ | £ | £ | |
| At 31 December 2006 | (1,392,156) | 44,715 | (1,526,695) |
| Profit for the period | - | - | 500,233 |
| Foreign exchange loss on translation | - | (16,005) | - |
| At 31 December 2007 | (1,392,156) | 28,710 | (1,026,462) |
Circulation to shareholders
The annual report and accounts will be posted to shareholders today and will be available to the public from the Company's registered office at GruppeM Investments PLC, Suite 1.3 Buckingham Court, 78 Buckingham Gate, London, SW1E 6PD and on the Company's website: www.gruppemplc.com.
For more information please contact:
GruppeM Investments PLCKenny Chen
Tel: +44 (0) 207 233 2952
Shore Capital and Corporate LimitedAlex Borrelli
Tel: +44 (0) 207 408 4090
Further information on GruppeM Investments PLC can be found on the Company's website: www.gruppemplc.com.