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Grand Vision Media #GVMH – Final Results for year to 31 Dec 2018
In the year to 31 December 2018, The Company made a total comprehensive loss in the period of HK$ 32,291K which was mainly due to the costs relating to the acquisition of GVC Holdings Limited and admission to trading on the main market.
Cash in hand at the period end was HK$ 2,552K.
Background
The Company successfully completed the acquisition of GVC Holdings Limited (“GVC”) on 19 June 2018, and Jonathan Lo was appointed to the Board as Chief Executive Officer. The Company changed its name to Grand Vision Media Holdings Plc and raised £1,010,000 by the issue of new shares. The new combined group (the “Group”) is now focussed on the development of the GVC business.
This exciting achievement will provide the resources and profile to build out the business by furthering our penetration of the Chinese market and enhancing our products and services.
As an integrated out-door digital media company we are deploying innovative display and marketing technologies at strategic, high-traffic locations. Our glasses-free 3D technology in digital out-of-home media is enabling advertisers to engage with affluent consumers with a new visual experience. Our “space management” approach utilising the cinema space for events and exhibitions offers a total solution to our advertisers, with the potential of direct conversion to sales.
The digital out of home (OOH) advertising market is growing, and will continue to grow in the foreseeable future, and we want to be at the forefront of that growth by providing our customers ( both domestic Chinese companies and international brands) with the ability to reach Chinese as they become more affluent and seek access to quality products and services. Our network now covers over consumers locations covering provinces in China and we strive to continue our expansion in China and beyond.
Summary of Trading Results
GVMH Consolidated Results
The accounts for GVMH for the 12 months ended 31 December 2018 have been prepared under the reverse acquisition accounting principle. Revenue in the period was HKD18,026K. The group had a loss before tax of HKD 33,063K. The expenses in the period included the costs of the reverse takeover transaction.
GVMH Results for the 12 Months to 31 December 2018
Revenue in the period was HKD18,026K (2017 : HKD9,514K), representing an increase of 89%. This was mainly as a result of the increased locations in the period resulting in more advertising revenue as well as the growth in digital marketing and ecommerce. The number of panels increased to over 180, representing a growth of over 55% 2017. We also had an increase in advertising revenue from overseas clients as we appoint strategic partners in countries like Japan and Korea. GVC had a loss before tax in the period of HKD 15,886K (H1 2017 : HKD11,814K).
Outlook
The digital signage market globally is expected to reach almost $30bn by 2024, compared to approximately $15bn in 2015*. We believe that this growth will be driven not only by new, higher resolution displays and new types of technology, but also by interacting digital displays with customers’ smart phones. We believe that we are well placed to benefit from this growth and will continue to develop our business in line with our strategy.
Two significant trends that are benefitting our growth are outbound travel and the Chinese appetite for foreign products. The Group is well positioned to take advantage of this trend, acquiring many international brands and travel destinations as direct customers.
Principal Risks and Uncertainties
The Directors consider the following risk factors to be of relevance to the Group’s activities. It should be noted that the list is not exhaustive and that other risk factors not presently known or currently deemed immaterial may apply. The risk factors are summarised below:
i. Development Risk
The Group’s development will be, in part, dependent on the ability of the Directors to continue to expand the current business and identify suitable investment opportunities and to implement the Group’s strategy. There is no assurance that the Group will be successful in the expansion of the business, which is dependent on raising sufficient capital.
ii. Sector Risk
The OOH media sector is subject to competition from other marketing channels and technologies, particularly the impact of digital marketing.
We also compete with other OOH media locations, such as traffic hubs, elevators and other locations, which are more established.
There is a risk of 3D technology not being well received, given that it is a new media platform in the OOH sector.The Company is continuously looking for new and innovative platforms to differentiate itself, and there is no guarantee that these new platforms will be effective.
iii. Political and Regulatory Risk
Furthermore, prior to distributing advertisements for certain commodities, advertising distributors and advertisers are obligated to ensure compliance to relevant regulations.Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. In circumstances involving serious violations, the SAIC or its local branches may revoke violators’ licenses or permits for advertising business operations. In addition, advertisers, advertising operators or advertising distributors may be subject to civil liability if they infringe on the legal rights and interests of third parties in the course of their advertising business. TheGroup has implemented procedures to ensure the content of our advertisement are properly reviewed and the advertisement would only be published upon the receipt of content approval from the relevant administrative authorities. However, the Group can provide no assurance that all the content of the advertisements is true and in full compliance with applicable laws.
In the event that theGroup was in violation of such regulations the business, financial condition, results of operations and the prospects of theGroup could be materially and adversely affected.
iv. Environmental Risks and Hazards
All phases of the Group’s operations are subject to environmental regulation in the areas in which it operates. Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees.
There is no assurance that existing or future environmental regulation will not materially adversely affect the Group’s business, financial condition and results of operations. Environmental hazards may exist on the properties on which the Group holds interests that are unknown to the Group at present. The Board manages this risk by working with environmental consultants and by engaging with the relevant governmental departments and other concerned stakeholders.
v. Internal Control and Financial Risk Management
The Board has overall responsibility for the Group’s systems of internal control and for reviewing their effectiveness. The Group maintains systems which are designed to provide reasonable but not absolute assurance against material loss and to manage rather than eliminate risk.
The key features of the Group’s systems of internal control are as follows:
o Management structure with clearly identified responsibilities;
o Production of timely and comprehensive historical management information presented to the Board;
o Detailed budgeting and forecasting;
o Day to day hands on involvement of the Executive Directors and Senior Management; and
o Regular board and meetings and discussions with the Non-executive directors.
The Group’s activities expose it to several financial risks including cash flow risk, liquidity risk and foreign currency risk.
vi. Environmental Policy
The Group is aware of the potential impact that its subsidiary and associate companies may have on the environment. The Group ensures that it complies with all local regulatory requirements and seeks to implement a best practice approach to managing environmental aspects.
vii. Health and Safety
The Group’s aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective, the Group provides ongoing training and support to employees and sets demanding standards for workplace safety.
viii. Financing Risk
The development of the Group’s business may depend upon the Group’s ability to obtain financing primarily through the raising of new equity capital or debt. The Group’s ability to raise further funds may be affected by the success of existing and acquired investments. The Group may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Group may be required to reduce the scope of its investments or the anticipated expansion. Further, Shareholders’ holdings of Ordinary Shares may be materially diluted if debt financing is not available.
ix. Credit Risk
The Group does not have bank loans or other borrowings except for shareholder loans.The Group has benefitted from further shareholder loans, although there is no guarantee that these will continue in the future. We have reviewed the accounts receivable and have made adequate provisions as appropriate.
x. Liquidity Risk
The Directors have reviewed the working capital forecasts for the Group and believe that there is sufficient working capital to fund the business as it progresses to break even. The group is reliant on raising new capital for expansion, which is not guaranteed.
xi. Market Risk
The group’s investments is in its subsidiary, GVC Holdings Ltd. The shares are not readily tradable.
xii. Capital Risk
The Group manages its capital resources to ensure that entities in the Group will be able to continue as a going concern, while maximising shareholder return.
The capital structure of the Group consists of equity attributable to shareholders, comprising issued share capital and reserves. The availability of new capital will depend on many factors including a positive operating environment, positive stock market conditions, the Group’s track record, and the experience of management. There are no externally imposed capital requirements.The Directors are confident that adequate cash resources exist or will be made available to finance operations but controls over expenditure are carefully managed.
Going Concern
The day to day working capital requirements and investment objectives are met by existing cash resources and the issue of equity. At 31 December 2018 the Group had cash balance of HKD2,552k. The Group’s forecasts and projections, taking into account reasonably possible changes in the level of overhead costs, show that the company should be able to operate within its available cash resources but only with shareholder help. The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in existence for the foreseeable future. They therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
On behalf of the board
Jonathan Lo
Chief Executive Officer
30 April 2019
The full accounts are published below and will be posted on the Company’s website and to shareholders this week.
For more information:
| Grand Vision Media Holdings plc | http://gvmh.co.uk/ |
| Edward Kwan-Mang Ng, Director | Tel: +44 (0) 20 7866 2145 or info@gvmh.co.uk |
| Alfred Henry Corporate Finance Ltd | |
| Nick Michaels / Jon Isaacs | Tel: +44 (0) 20 3772 0021 or enquiries@alfredhenry.com |
GRAND VISION MEDIA HOLDINGS PLC
(Formerly SIMIAN GLOBAL PLC)
DIRECTORS’ REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
COMPANY INFORMATION
Directors and Advisers
| Directors: | Edward Kwan-Mang NG- Executive Director Ajay Kumar Rajpal – Non-Executive Director Jonathan Yat Pang Lo – Chief Executive Officer |
| Company Number:Company Secretary | 10028625International Registrars Limited Finsgate 5-7 Cranwood Street London EC1V9EE |
| Registered Address: | Finsgate 5-7 Cranwood Street London EC2M 7LD |
| Principal Banker: | Metro Bank 227 Tottenham Court Road London W1T 7QF |
| Financial Adviser: | Alfred Henry Corporate Finance Limited Finsgate 5-7 Cranwood Street London EC1V 9EE |
| Auditors: | Jeffreys Henry LLP Finsgate 5-7 Cranwood Street London EC1V 9EE |
| Legal Adviser to the Company: | Bracher Rawlins 77 Kingsway London WC2B 6SR |
| Registrar: | SLC Registrars Limited Ashley Park House 42-50 Hersham Road Walton-on-Thames Surrey KT12 1RZ |
GRAND VISION MEDIA HOLDINGS PLC
CONTENTS
| Strategic review report | 4 | |
| Directors’ report | 8 | |
| Independent auditors’ report | 13 | |
| Statement of comprehensive income | 19 | |
| Statement of financial position | 20 | |
| Statement of cash flows | 21 | |
| Statement of changes in equity | 23 | |
| Notes to the financial statements | 24 | |
STRATEGIC REVIEW REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The CEO Report
In the year to 31 December 2018, The Company made a total comprehensive loss in the period of HK$ 32,291K which was mainly due to the costs relating to the acquisition of GVC Holdings Limited and admission to trading on the main market.
Cash in hand at the period end was HK$ 2,552K.
Background
The Company successfully completed the acquisition of GVC Holdings Limited (“GVC”) on 19 June 2018, and Jonathan Lo was appointed to the Board as Chief Executive Officer. The Company changed its name to Grand Vision Media Holdings Plc and raised £1,010,000 by the issue of new shares. The new combined group (the “Group”) is now focussed on the development of the GVC business.
This exciting achievement will provide the resources and profile to build out the business by furthering our penetration of the Chinese market and enhancing our products and services.
As an integrated out-door digital media company we are deploying innovative display and marketing technologies at strategic, high-traffic locations. Our glasses-free 3D technology in digital out-of-home media is enabling advertisers to engage with affluent consumers with a new visual experience. Our “space management” approach utilising the cinema space for events and exhibitions offers a total solution to our advertisers, with the potential of direct conversion to sales.
The digital out of home (OOH) advertising market is growing, and will continue to grow in the foreseeable future, and we want to be at the forefront of that growth by providing our customers ( both domestic Chinese companies and international brands) with the ability to reach Chinese as they become more affluent and seek access to quality products and services. Our network now covers over consumers locations covering provinces in China and we strive to continue our expansion in China and beyond.
Summary of Trading Results
GVMH Consolidated Results
The accounts for GVMH for the 12 months ended 31 December 2018 have been prepared under the reverse acquisition accounting principle. Revenue in the period was HKD18,026K. The group had a loss before tax of HKD 33,063K. The expenses in the period included the costs of the reverse takeover transaction.
GVMH Results for the 12 Months to 31 December 2018
Revenue in the period was HKD18,026K (2017 : HKD9,514K), representing an increase of 89%. This was mainly as a result of the increased locations in the period resulting in more advertising revenue as well as the growth in digital marketing and ecommerce. The number of panels increased to over 180, representing a growth of over 55% 2017. We also had an increase in advertising revenue from overseas clients as we appoint strategic partners in countries like Japan and Korea. GVC had a loss before tax in the period of HKD 15,886K (H1 2017 : HKD11,814K).
Outlook
The digital signage market globally is expected to reach almost $30bn by 2024, compared to approximately $15bn in 2015*. We believe that this growth will be driven not only by new, higher resolution displays and new types of technology, but also by interacting digital displays with customers’ smart phones. We believe that we are well placed to benefit from this growth and will continue to develop our business in line with our strategy.
Two significant trends that are benefitting our growth are outbound travel and the Chinese appetite for foreign products. The Group is well positioned to take advantage of this trend, acquiring many international brands and travel destinations as direct customers.
Principal Risks and Uncertainties
The Directors consider the following risk factors to be of relevance to the Group’s activities. It should be noted that the list is not exhaustive and that other risk factors not presently known or currently deemed immaterial may apply. The risk factors are summarised below:
xiii. Development Risk
The Group’s development will be, in part, dependent on the ability of the Directors to continue to expand the current business and identify suitable investment opportunities and to implement the Group’s strategy. There is no assurance that the Group will be successful in the expansion of the business, which is dependent on raising sufficient capital.
xiv. Sector Risk
The OOH media sector is subject to competition from other marketing channels and technologies, particularly the impact of digital marketing.
We also compete with other OOH media locations, such as traffic hubs, elevators and other locations, which are more established.
There is a risk of 3D technology not being well received, given that it is a new media platform in the OOH sector.The Company is continuously looking for new and innovative platforms to differentiate itself, and there is no guarantee that these new platforms will be effective.
xv. Political and Regulatory Risk
Furthermore, prior to distributing advertisements for certain commodities, advertising distributors and advertisers are obligated to ensure compliance to relevant regulations.Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. In
circumstances involving serious violations, the SAIC or its local branches may revoke violators’ licenses or permits for advertising business operations. In addition, advertisers, advertising operators or advertising distributors may be subject to civil liability if they infringe on the legal rights and interests of third parties in the course of their advertising business. TheGroup has implemented procedures to ensure the content of our advertisement are properly reviewed and the advertisement would only be published upon the receipt of content approval from the relevant administrative authorities. However, the Group can provide no assurance that all the content of the advertisements is true and in full compliance with applicable laws.
In the event that theGroup was in violation of such regulations the business, financial condition, results of operations and the prospects of theGroup could be materially and adversely affected.
xvi. Environmental Risks and Hazards
All phases of the Group’s operations are subject to environmental regulation in the areas in which it operates. Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees.
There is no assurance that existing or future environmental regulation will not materially adversely affect the Group’s business, financial condition and results of operations. Environmental hazards may exist on the properties on which the Group holds interests that are unknown to the Group at present. The Board manages this risk by working with environmental consultants and by engaging with the relevant governmental departments and other concerned stakeholders.
xvii. Internal Control and Financial Risk Management
The Board has overall responsibility for the Group’s systems of internal control and for reviewing their effectiveness. The Group maintains systems which are designed to provide reasonable but not absolute assurance against material loss and to manage rather than eliminate risk.
The key features of the Group’s systems of internal control are as follows:
o Management structure with clearly identified responsibilities;
o Production of timely and comprehensive historical management information presented to the Board;
o Detailed budgeting and forecasting;
o Day to day hands on involvement of the Executive Directors and Senior Management; and
o Regular board and meetings and discussions with the Non-executive directors.
The Group’s activities expose it to several financial risks including cash flow risk, liquidity risk and foreign currency risk.
xviii. Environmental Policy
The Group is aware of the potential impact that its subsidiary and associate companies may have on the environment. The Group ensures that it complies with all local regulatory requirements and seeks to implement a best practice approach to managing environmental aspects.
xix. Health and Safety
The Group’s aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective, the Group provides ongoing training and support to employees and sets demanding standards for workplace safety.
xx. Financing Risk
The development of the Group’s business may depend upon the Group’s ability to obtain financing primarily through the raising of new equity capital or debt. The Group’s ability to raise further funds may be affected by the success of existing and acquired investments. The Group may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Group may be required to reduce the scope of its investments or the anticipated expansion. Further, Shareholders’ holdings of Ordinary Shares may be materially diluted if debt financing is not available.
xxi. Credit Risk
The Group does not have bank loans or other borrowings except for shareholder loans.The Group has benefitted from further shareholder loans, although there is no guarantee that these will continue in the future. We have reviewed the accounts receivable and have made adequate provisions as appropriate.
xxii. Liquidity Risk
The Directors have reviewed the working capital forecasts for the Group and believe that there is sufficient working capital to fund the business as it progresses to break even. The group is reliant on raising new capital for expansion, which is not guaranteed.
xxiii. Market Risk
The group’s investments is in its subsidiary, GVC Holdings Ltd. The shares are not readily tradable.
xxiv. Capital Risk
The Group manages its capital resources to ensure that entities in the Group will be able to continue as a going concern, while maximising shareholder return.
The capital structure of the Group consists of equity attributable to shareholders, comprising issued share capital and reserves. The availability of new capital will depend on many factors including a positive operating environment, positive stock market conditions, the Group’s track record, and the experience of management. There are no externally imposed capital requirements.The Directors are confident that adequate cash resources exist or will be made available to finance operations but controls over expenditure are carefully managed.
Going Concern
The day to day working capital requirements and investment objectives are met by existing cash resources and the issue of equity. At 31 December 2018 the Group had cash balance of HKD2,552k. The Group’s forecasts and projections, taking into account reasonably possible changes in the level of overhead costs, show that the company should be able to operate within its available cash resources but only with shareholder help. The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in existence for the foreseeable future. They therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
On behalf of the board
Jonathan Lo
Chief Executive Officer
30 April 2019
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The directors present their report together with the accounts of Grand Vision Media Holdings Plc (the company) and its subsidiary undertakings (together ‘the group’) for the year ended 31 December 2018.
Investing Policy
The company was established as a mean to make an acquisition in the technology, media and telecommunications sector via a reverse takeover. The reverse takeover was completed in June 2018.
Results and dividends
The trading results for the year are set out in the consolidated statement of comprehensive income and the company’s financial position at the end of the year.
The directors have not recommended a dividend.
Strategic Report
In accordance with section 414C(11) of the Companies Act 2006 the company chooses to report the review of the business, the future outlook and the risks and uncertainties faced by the company in the Strategic Report.
Directors
The following directors have held office during the period:
Edward Kwan-Mang Ng
Ajay Kumar Rajpal
Jonathan Yat Pang Lo (appointed 18 June 2018)
Directors’ interests
At the date of this report the directors held the following beneficial interest in the ordinary share capital and share options of the company:
| Director | Beneficial Shareholding (Held through Cyber Lion Limited) |
Beneficial Shareholding | Percentage of the Company’s ordinary Share Capita |
| Edward Kwan-Mang Ng | 3,664,000 | 3.81% | |
| Ajay Kumar Rajpal | 3,664,000 | 3.81% | |
| Jonathan Yat Pang Lo | 22,438,842 | 23.3% |
Substantial Interests
The company has been informed of the following shareholdings that represent 3% or more of the issued ordinary shares of the company as at 31 December 2018.
| Investor | Shareholding (Ordinary shares of 10p) |
Percentage of the Company’s ordinary Share Capita |
| Jonathan Lo | 22,438,842 | 23.3% |
| Pentwood Limited | 12,439,779 | 12.92% |
| Stephen lo | 12,439,779 | 12.92% |
| Magic Carpet | 8,064,486 | 8.38% |
| Cyber Lion Ltd | 7,328,000 | 7.61% |
| Timenow Ltd | 4,499,016 | 4.67% |
| Vaiatrax Holdings Ltd | 3,936,639 | 4.09% |
| Tamperzem Holding Ltd | 3,374,262 | 3.50% |
Dividends
No dividends will be distributed for the current period.
Financial risk and management of capital
The major balances and financial risks to which the company is exposed to and the controls in place to minimise those risks are disclosed in Note 18.
A description of how the company manages its capital is also disclosed in Note 17.
The Board considers and reviews these risks on a strategic and day-to-day basis in order to minimise any potential exposure.
Financial instruments
The company has not entered into any financial instruments to hedge against interest rate or exchange rate risk.
Auditors
Jeffreys Henry LLP were appointed auditors to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of directors’ responsibilities
The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent company financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the group’s profit or loss for that period. In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with IFRS as adopted by the European Union
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Corporate Governance
The Board recognizes that good standards of corporate governance help the Company to achieve its strategic goals and is vital for the success of the Company. The Company adopts proper standards of corporate governance and follows the principles of best practice set out in Corporate Governance Code (2016) , as far as is appropriate for the size and nature of the Company and the Group. These principles are disclosed on our website in the Corporate Governance section
Application of principles of good governance by to board of directors
The board currently comprises the three directors: Edward Kwan-Mang Ng, Ajay Kumar Rajpal and Jonathan Yat Pang Lo.
There are regular board meetings each year and other meetings are held as required to direct the overall Company strategy and operations. Board meetings follow a formal agenda covering matters specifically reserved for decision by the board. These cover key areas of the company’s affairs including overall strategy, acquisition policy, approval of budgets, major capital expenditure and significant transactions and financing issues.
The board undertakes a formal annual evaluation of its own performance and that of its committees and individual directors, through discussions and one-to-one reviews with the chairman and the senior independent director.
Directors’ Remuneration Report
The information included in this section is not subject to audit other than where specifically indicated.
The remuneration committee consists of Andrew Monk and George Roach. This committee’s primary function is to review the performance of executive directors and senior employees and set their remuneration and other terms of employment.
| 2018 | 2017 | |||
| Director | Options | Options | ||
| Edward Ng | 3,000,000 | – | ||
| Ajay Rajpal | 3,000,000 | – | ||
| Jonathan Lo | 6,000,000 | – | ||
| Totals | 12,000,000 | – |
The Company has one executive director.
The remuneration policy
It is the aim of the committee to remunerate executive directors competitively and to reward performance. The remuneration committee determines the company’s policy for the remuneration of executive directors, having regard to the UK Corporate Governance Code and its provisions on directors’ remuneration.
Service agreements and terms of appointment
The directors have service contracts with the company.
Directors’ interests
The directors’ interests in the share capital of the company are set out in the Directors’ report.
Directors’ emoluments
| Salaries and Fees | Group | Company | ||
| 2018 | 2017 | 2018 | 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Edward Ng | 286 | – | 286 | – |
| Ajay Rajpal | 286 | – | 286 | – |
| Jonathan Lo | 863 | – | 245 | – |
| 1,435 | – | 817 | – | |
No pension contributions were made by the company on behalf of its directors apart for Jonathan Lo of HKD18K.
Approval by shareholders
At the next annual general meeting of the company a resolution approving this report is to be proposed as an ordinary resolution.
This report was approved by the board on 30th April 2019.
Statement of disclosure to auditors
Each person who is a Director at the date of approval of this Annual Report confirms that:
· So far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and
· Each Director has taken all the steps that he ought to have taken as Director in order to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
· Each Director is aware of and concurs with the information included in the Strategic Report.
Post Balance Sheet Events
Further information on events after the reporting date is set out in note 23.
Branches Outside the UK
The Group head office is in Hong Kong and the subsidiaries are located in Hong Kong and China.
The Directors’ have chosen to produce a Strategic Report that discloses a fair review of the Group’s business, the key performances metrics that the Directors review along with a review of the key risks to the business.
In accordance with Section 414C (1) of the Companies Act 2006, the group chooses to report the review of the business, the future outlook and the risks and uncertainties faced by the Company in The Strategic Report on page 4.
On behalf of the board
__________________
Jonathan Lo
Director
30 April 2019
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF GRAND VISION MEDIA HOLDINGS PLC
Opinion
We have audited the financial statements of Grand Vision Media Holdings Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2018 which comprise the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of cash flows, the consolidated and company statements of changes in equity and notes to the financial statements, including a summary of significant accounting policies.
In our opinion:
· the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2018 and of the group’s loss for the year then ended;
· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
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 company 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 as applied to listed entities, 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.
Material uncertainty related to going concern
We draw attention to note 2.3 in the financial statements, which explains that the Group has incurred significant operating losses and negative cash flows from operations. The Group forecasts include additional funding requirements upon which the Group is dependent. The directors are satisfied that these funding requirements will be met. These events or conditions, along with other matters as set out in note 2.3 indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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) we identified, including 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.
· Accounting for the reverse acquisitionGoing concern issues
· Carrying value of investments and recoverability of intercompany loans
· Accounting for the reverse acquisition
These are explained in more detail below:
| Key audit matter | How our audit addressed the key audit matter |
| Possible impairment of long-term investment and loans to subsidiaries (Parent) During the year the Company had Investment in subsidiary of HK$114,572K and Loans of HK$ 11,412k. The directors have assessed whether the investment and loans shows any indicators of impairment. |
We have reviewed the consolidated financials of the subsidiary and having reviewed the performance to date the subsidiary is profit making and is continuing to grow. We reviewed the latest management accounts post year end for the subsidiary. We have reviewed the long term cashflow forecasts prepared and understood and assessed the methodology used by the directors in this analysis and determined it to be reasonable. We tested management’s assumption that no impairment existed by carrying out sensitivity analysis through changing the assumptions used and re- running the cash flow forecast. |
| Going concern assumptionThe Group is dependent upon its ability to generate sufficient cash flows to meet continued operational costs and hence continue trading. Although the current loss-making status is as expected due its relative newness, given the scale of cash outflows, the Group needs to be generating sufficient revenues to sustain its position. The going concern assumptions is dependent on future growth of the current business. No future capital raises were being considered to maintain the business. |
Our audit procedures: · We obtained and reviewed the directors’ assessment, including challenging the liquidity position; · We agreed the assumed cash flows to the business plan, walked through the business planning process and tested the central assumptions and external data; · We audited the key assumptions; · We assessed the sensitivities of the underlying assumptions. |
| Accounting for the reverse acquisition of GVC Holdings LimitedOn 19 June 2018, Grand Vision Media Plc, a cash shell acquired GVC Holdings Limited, which operates as out-of-home media group as a reverse takeover under AIM rules. The total consideration for the acquisition of the entire issued share capital of GVC Holdings Limited was through the issuance of shares.
As the legal subsidiary is reversed into the Company, which originally was a publicly listed cash shell company, this transaction cannot be considered a business combination, as the Company, the accounting acquire does not meet the definition of a business, under IFRS 3 ‘Business Combinations’. However, the accounting for such capital transaction should be treated as a share-based payment transaction and therefore accounted for under IFRS 2 ‘Share-based payment’. |
We evaluated management’s assessment that it is the shareholders of GVC Holdings Limited.We evaluated the methodology and tested the mathematical accuracy of the calculations of the Group for the deemed consideration paid in the form of shares to GVC Holdings Limited shareholders. We corroborated the underlying information inputs, including the share prices, exchange ratios with independent data sources and we checked the contractual agreements.
We obtained the signed contractual agreements relating to the reverse acquisition and read significant contract terms relevant to the accounting and disclosures in the financial statements. We substantively tested journal entries and supporting workings and evidence relating to the accounting for the exchange of shares and internal restructuring steps, agreeing them to the contracts and to the terms of the scheme of arrangement. We evaluated the capital and equity movements of both Grand Vision Media Holdings Plc and GVC Holdings Limited, for accuracy by comparison to the terms of the scheme of arrangement. |
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
| Group financial statements | Company financial statements | |
| Overall materiality | HKD 1,512,000. | HKD 1,154,000. |
| How we determined it | 5% of Net Loss. | 1% of gross assets |
| Rationale for benchmark applied |
We believe that loss before tax is a primary measure used by shareholders in assessing the performance of the Group whilst gross asset values and revenue are a representation of the size of the Group; all are generally accepted auditing benchmarks. | We believe that gross asset values are a representation of the size of the Company and is a generally accepted auditing benchmark. |
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality allocated across components was between HK$75,000 and HK$388,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above HK$30,000 as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgments, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
The Group financial statements are a consolidation of 8 reporting units, comprising the Group’s operating businesses and holding companies.
We performed audits of the complete financial information of Grand Vision Media Holdings Plc, and GVC Holdings Ltd reporting units, which were individually financially significant and accounted for 100% of the Group’s revenue and 100% of the Group’s absolute profit before tax (i.e. the sum of the numerical values without regard to whether they were profits or losses for the relevant reporting units). We also performed specified audit procedures over goodwill and other intangible assets, as well as certain account balances and transaction classes that we regarded as material to the Group at 8 reporting units.
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.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
· the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
· the parent company financial statements [and the part of the directors’ remuneration report to be audited] are not in agreement with the accounting records and returns; or
· certain disclosures of directors’ remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement [set out on page xx], 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.
Matters on which we are required to report by exception
In preparing the financial statements, the directors are responsible for assessing the group’s and parent company’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 the parent company 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.
Other matters which we are required to address
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of this report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’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 company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Sanjay Parmar (Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP (Statutory Auditors)
Finsgate
5-7 Cranwood Street
London EC1V 9EE
30 April 2019
Statements of Comprehensive Income
| Group | Group | Company | Company | ||
| For the year | For the year | For the year | For the year | ||
| ended | ended | ended | ended | ||
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | ||
| Note | HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Revenue | 4 | 18,026 | 9,514 | – | – |
| Cost of sales | (12,140) | (4,460) | – | – | |
| Gross profit | 5,886 | 5,054 | – | – | |
| Other income | 4 | 79 | 62 | – | – |
| 5,965 | 5,116 | – | – | ||
| Administrative expenses | 6 | (38,711) | (16,634) | (12,258) | (2,917) |
| (Loss)/profit for the period from operations | (32,746) | (11,518) | (12,258) | (2,917) | |
| Finance costs | 5 | (316) | (296) | – | – |
| (Loss)/profit for the period before tax | (33,062) | (11,814) | (12,258) | (2,917) | |
| Income tax expense | 7 | – | – | – | – |
| (Loss)/profit for the period | (33,062) | (11,814) | (12,258) | (2,917) | |
| Other comprehensive income (loss)/income | |||||
| Items that are or may be reclassified subsequently to profit or loss | – | – | – | – | |
| Exchange differences arising on translation of foreign operations | 772 | 127 | 672 | – | |
| Total comprehensive (loss)/ income for the period | (32,290) | (11,687) | (11,586) | (2,917) | |
| (Loss)/ profit attributable to | |||||
| Equity holders of parent company | (33,069) | (11,784) | (11,586) | (2,917) | |
| Non-controlling interests | 7 | (30) | – | – | |
| (33,062) | (11,814) | (11,586) | (2,917) | ||
| Total comprehensive (loss) / income attributable to: |
|||||
| Equity holders of the parent company | (33,297) | (11,657) | (11,586) | (2,917) | |
| Non-controlling interests | 7 | (30) | – | – | |
| (32,290) | (11,687) | (11,586) | (2,917) | ||
| Earnings/(loss) per shares – Basic and diluted HK$ | 8 | (0.34) | (944) | (0.12) | (0.48) |
Statements of financial position
| Group | Group | Company | Company | ||
| As at | As at | As at | As at | ||
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | ||
| Notes | HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Assets | |||||
| Non-current assets | |||||
| Property, plant and equipment | 9 | 2,183 | 6,165 | – | – |
| Investment in Subsidiaries | – | – | 114,572 | – | |
| Total non-current assets | 2,183 | 6,165 | 114,572 | – | |
| Current assets | |||||
| Inventories | 10 | 1,707 | 2,826 | – | – |
| Trade and other receivables | 11 | 5,104 | 3,821 | 48 | – |
| Deposits and prepayments | 11 | 1,036 | 672 | – | – |
| Amount due from subsidiaries | 11 | – | – | 11,412 | 2,637 |
| Cash and cash equivalents | 12 | 2,552 | 1,136 | 783 | 2,785 |
| Total current assets | 10,399 | 8,455 | 12,243 | 5,422 | |
| Total assets | 12,582 | 14,620 | 126,815 | 5,422 | |
| Equity and liabilities | |||||
| Equity | |||||
| Share capital | 17 | 96,017 | 97 | 96,017 | 6,572 |
| Share premium | 44,106 | 18,707 | 44,106 | 2,706 | |
| Group Re-organization Reserve | (96,631) | (9,060) | – | – | |
| Capital Contribution arising from Shareholder’s Loan | – | 844 | – | – | |
| Other Reserves | 1,447 | – | 1,447 | – | |
| Exchange Reserves | 449 | 133 | – | – | |
| Accumulated deficit | (54,215) | (21,918) | (15,571) | (3,985) | |
| Equity attributable to owners of the parent | (3,676) | (11,197) | 125,999 | 5,292 | |
| Non-controlling interests | (3,410) | (3,417) | – | – | |
| Total equity | (12,237) | (14,614) | 125,999 | 5,292 | |
| Liabilities | |||||
| Non-current liabilities | |||||
| Shareholder loans | 16 | 8,676 | 5,860 | – | – |
| Total non-current liabilities | 8,676 | 5,860 | – | – | |
| Current liabilities | |||||
| Trade and other payables | 13 | 15,728 | 7,601 | 816 | 130 |
| Convertible bonds | 15 | – | 11,670 | – | – |
| Amount due to a director | 304 | 55 | – | – | |
| Deposits received | 111 | 4,048 | – | – | |
| Total current liabilities | 16,143 | 23,374 | 816 | 130 | |
| Total liabilities | 24,819 | 29,234 | 816 | 130 | |
| Total equity and liabilities | 12,582 | 14,620 | 126,815 | 5,422 |
Approved by the Board and authorised for issue on 30 April 2019
Jonathan Lo
Director
? Company Registration No. 10028625
Statements of Changes in Equity
| Attributable to the Company | |||||||||
| Share capital | Share premium | Group reorganisation reserve | Other reserves | Capital contribution reserves | Retained earnings | Total | Non-controlling interests | Total equity | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Balance at 1 January 2017 | 1,162 | (1,068) | 94 | – | 94 | ||||
| (Loss) for the year | – | – | – | – | – | (2,917) | (2,917) | – | (4,079) |
| Other comprehensive income | – | – | – | – | – | – | – | – | – |
| Total comprehensive income | 1,162 | – | – | – | – | (3,985) | (2,823) | – | (2,823) |
| Acquisition of subsidiaries with non-controlling interests | – | – | – | – | – | – | – | – | – |
| Issue of share capital | 5,409 | 2,706 | – | – | – | – | 8,115 | – | 8,116 |
| Balance at 31 December 2017 | 6,571 | 2,706 | – | – | – | (3,985) | 5,292 | – | 5,292 |
| Change in equity for 2018 | |||||||||
| (Loss) for the year | – | – | – | 1,447 | – | (12,258) | (10,811) | – | (10,811) |
| Other comprehensive income | – | – | – | – | – | 672 | 672 | – | 672 |
| Total comprehensive income | – | – | – | 1,447 | – | (11,586) | (10,139) | – | (10,139) |
| Issue of share capital | 89,446 | 41,400 | – | – | – | – | 130,846 | – | 130,846 |
| Balance at 31 December 2018 | 96,017 | 44,106 | – | 1,447 | – | (15,571) | 125,999 | – | 125,999 |
The reorganisation reserve before 1 January 2017 primarily arises from the 100% merger of GV Communication Limited on 1 November 2015 whereby the excess of the fair value of the issued ordinary shares over the book value of the net assets was transferred to this reserve.
Statements of Changes in Equity
Attributable to the Group
| Share capital | Share premium | Reverse Acquisition reserve | Other reserve | Exchange reserve | Capital contribution reserves | Retained earnings | Total | Non-controlling interests | Total equity | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| GVC | ||||||||||
| Balance at 1 January 2017 | 97 | 18,707 | (9,060) | – | 5 | 844 | (10,134) | 459 | (3,388) | (2,928) |
| (Loss) for the period | – | – | – | – | – | – | (11,784) | (11,784) | (29) | (11,814) |
| Other comprehensive income | – | – | – | – | 127 | – | – | 127 | – | 127 |
| Total comprehensive income | – | – | – | – | 127 | – | (11,784) | (11,784) | (29) | (11,687) |
| Balance at 31 December 2017 | 97 | 18,707 | (9,060) | – | 132 | 844 | (21,918) | (11,197) | (3,417) | (14,614) |
| GVMH PLC | ||||||||||
| Balance at 19 June 2018 | 99,782 | 45,835 | – | – | – | – | (21,918) | 123,699 | – | 123,699 |
| Capital Contribution | – | 844 | – | – | (844) | – | – | – | – | |
| Share issue | (3,765) | – | – | – | – | – | – | (3,765) | – | (3,765) |
| Share Premium | – | (1,729) | – | – | – | – | – | (1,729) | – | (1,729) |
| Re-Organization Reserve | – | – | (97,475) | – | – | – | – | (97,475) | – | (97,475) |
| Exchange Reserve | – | – | – | – | 449 | – | – | 449 | – | 449 |
| Share based payment | – | – | – | 1,447 | – | – | – | 1,447 | – | 1,447 |
| Non-Controlling Interest | – | – | – | – | – | – | – | – | 7 | 7 |
| Loss for the period | – | – | – | – | – | – | (32,297) | (32,297) | – | (32,297) |
| Balance at 31 December 2018 | 96,017 | 44,106 | (96,631) | 1,447 | 449 | – | (54,215) | (8,827) | (3,410) | (12,237) |
Share capital is the amount subscribed for shares at nominal value.
The share premium has arisen on the issue of shares at a premium to their nominal value.
Share-based payments reserve relate to the charge for share-based payments in accordance with IFRS 2.
Retained earnings represent the cumulative loss of the Group attributable to equity shareholders.
The reverse acquisition reserve arose in June 2018 on the reverse acquisition by GVC.
Statements of Cash flows
| Group For the year |
Group For the year |
Company For the year | Company For the year |
|
| ended | ended | ended | ended | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Operating activities | ||||
| (Loss)/ profit before taxation | (33,062) | (11,814) | (12,258) | (2,917) |
| Adjustments for: | ||||
| Depreciation | 3,982 | 6,972 | – | 970 |
| Loss on disposal of property, plant and equipment | – | 5 | – | – |
| Share based payment | 1,447 | – | 1,447 | – |
| Premium on reverse acquisition | 5,259 | |||
| Cyber Lion Limited – Non Cash success fee | 7,024 | – | 7,024 | – |
| Finance costs | 316 | 291 | – | 364 |
| Capitalisation of shareholders’ loan | – | – | – | 51 |
| Share of non-controlling interests | – | – | – | (2,399) |
| Merger of subsidiaries | – | – | – | (9,041) |
| Operating loss before changes in working capital | (15,034) | (4,546) | (3,787) | (12,972) |
| Increase/(decrease) in inventories | 1,119 | (2,422) | – | – |
| Increase in trade and other receivables | 1,270 | (2,299) | (8,823) | (1,119) |
| Decrease/ (increase) in amount due from related companies | 257 | – | – | 11,946 |
| Decrease/ (increase) in deposits and prepayments | 7,857 | 4,247 | – | (799) |
| Increase in convertible bonds | – | 11,670 | – | – |
| Increase in trade and other payables | 2,848 | (6,025) | 688 | 2,705 |
| Cash generated from/(used in) operating activities | (17,397) | 625 | (11,922) | (239) |
| Investing activities | ||||
| Payment for purchase of property, plant and equipment | (47) | (245) | – | (2,543) |
| Acquisition net of bank balance | 6,032 | |||
| Net cash (outflow)/ inflow from investing activities | 5,985 | (245) | – | (2,543) |
| Financing activities | ||||
| Net proceeds from issue of shares | 6,714 | – | 6,714 | – |
| Net proceeds from share premium | 3,357 | – | 3,357 | – |
| (Repayment of) /proceeds from shareholder loans | 2,500 | 500 | – | 3,600 |
| Net cash generated from Financing activities | 12,571 | 500 | 10,071 | 3,600 |
| Net increase/(decrease) in cash and cash equivalents | 1,159 | 880 | (1,851) | 818 |
| Cash and cash equivalents at 1 January | 1,136 | 129 | 2,785 | 2 |
| Effect of foreign exchange rate changes | 257 | 127 | (151) | 12 |
| Cash and cash equivalents at 31 December | 2,552 | 1,136 | 783 | 832 |
| Represented by: | ||||
| Bank balance and cash | 2,552 | 1,136 | 783 | 832 |
Notes to the financial statements
1. Reporting entities
The Company is a UK incorporated entity with a registered number of 10028625. GVMH’s head office is in Honk Kong from where it is managed. These consolidated financial statements comprise GVMH and its subsidiaries. GVMH and its subsidiaries are primarily involved in social media marketing.
2. Accounting policies
2.1. Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU.
2.2. Basis of preparation of the financial statements
The consolidated financial statements consolidate those of the Company and its subsidiaries (together the “Group” or “Grand Vision Media Holdings Plc”). The consolidated financial statements of the Group and the individual financial statements of the Company are prepared in accordance with applicable UK law and International Financial Reporting Standards (“IFRS”) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The Directors consider that the financial information presented in these Financial Statements represents fairly the financial position, operations and cash flows for the period, in conformity with IFRS.
The consolidated financial statements include the financial statements of the Company and its subsidiaries and associated undertakings. All of the subsidiaries have the same reporting date of 31 December.
2.3. Application of new and revised International Financial Reporting Standards (IFRSs)
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
The Group has applied any applicable new standards, amendments to standards and interpretations that are mandatory for the financial year beginning on or after 1 January 2018 including IFRS 15 and IFRS 9.
The nature and impact of amendment is described below:
IFRS 15 Revenue from Contracts with Customers
IFRS 15 supersedes 1AS 11 Construction Contracts, lAS 18 Revenue and related Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with its customers. IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
IFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.
The major sources of revenue of the Group arc provision of services. Under IFRS 15, revenue is recognised for each of the performance obligations when control over a good or service is transferred to a customer. The directors of the Group have assessed each type of the performance obligations and consider that the performance obligations are similar to the previous identification of separate revenue components under IAS 18 Revenue. Furthermore, IFRS 15 requires the transaction price to be allocated to each performance obligation on a relative standalone selling price basis, which may affect the timing and amounts of revenue recognition, and results in more disclosures in the consolidated financial statements. However, the directors of the Group consider that the adoption of IFRS 15 do not have a material impact on the timing and amounts of revenue recognised based on the previous business model of the Group.
(b) New, amended standards, interpretations not adopted by the Group
A number of new standards, amendments to standards and interpretations to existing standards have been published that are mandatory for the Group’s accounting periods beginning after 1 January 2018, or later periods, where the Group intends to adopt these standards, if applicable, when they become effective. The Group has disclosed below those standards that are likely to be applicable to the Group and is currently assessing the impact of these standards.
• IFRS 16 Lease, effective date 1 January 2019 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 completes the IASB’s project to improve the financial reporting of leases and replaces the previous leases Standard, IAS 17 Leases, and related Interpretations.
• IFRIC 23 “Uncertainty over Income Tax Treatments”, effective date 1 January 2019 clarifies application of recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments.
Management has not yet fully assessed the impact of these standards but does not believe they will have a material impact on the financial statements.
New and revised IFRSs in issue but not yet effective
GVMH PLC and its subsidiaries has not applied the following new and revised IFRSs that have been issued but are not yet effective:
| Reference | Title | Summary | Application date of standard (Periods commencing on or after) |
|---|---|---|---|
| IFRS 2 | Leases | Original issue | 01 January 2019 |
| IFRS 9 | Prepayment features with Negative Compensation | 01 January 2019 | |
| IFRS 11 | Joint Arrangements | Annual Improvements 2015-2017 Cycle | 01 January 2019 |
| IAS 12 | Income Taxes | Annual Improvements 2015-2017 Cycle | 01 January 2019 |
| IAS 19 | Plan Amendment, Curtailment or settlement | 01 January 2019 | |
| IAS 23 | Borrowing Costs | Annual Improvements 2015-2017 Cycle | 01 January 2019 |
| IAS 28 | Long term interests in associates and joint ventures | 01 January 2019 |
Foreign currency
The functional currency of the Group is Hong Kong Dollars (HKD), its subsidiaries are also in HKD. The presentational currency of the Group is HKD because a significant amount of its transactions are in HKD.
Transactions entered by the Group’s entities in a currency other than the reporting currency are recorded at the rates ruling when the transaction occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the statement of financial position date. Exchange differences arising on the re-translation of outstanding monetary assets and liabilities are also recognised in the income statement.
Going concern
The Group meets its day to day working capital requirement through use of cash reserves and existing shareholder loans. The Directors have considered the applicable of the going concern basis in the preparation of the financial statements. This included the review of internal budgets and financial results which show, taking into account reasonable provide chance in the financial performance that the Group should be able to operate within the level of its current funding arrangement. The Directors have reasonable expectation that the Group has adequate resources to continue operation for the foreseeable future for the reason they have adopted to going concern basis in the preparation of financial statement.
The Group incurred a loss of HK 32,290,000 for the year ended 31 December 2018. This condition indicates the existence of a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern. Therefore, the Company may be unable to realise its assets. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.
2.4. Subsidiaries and non-controlling interests and GVMH PLC and its subsidiaries reorganisation accounting
Subsidiaries are all entities over which Grand Vision Media Holdings Plc has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.
In June 2018, Grand Vision Media Holdings Plc (“Company”) acquired the entire issued share capital of GVC Holdings Limited (“legal subsidiary”) in exchange of issuance of shares to GVC Holdings Limited. As the legal subsidiary is reversed into the Company (the legal parent), which originally was a publicly listed cash shell company, this transaction cannot be considered a business combination, as the Company, the accounting acquiree does not meet the definition of a business, under IFRS 3 ‘Business Combinations’. However, the accounting for such capital transaction should be treated as a share- based payment transaction and therefore accounted for under IFRS 2 ‘Share-based payment’. Any difference in the fair value of the shares deemed to have been issued by the GVC Holdings Limited (accounting acquirer) and the fair value of Grand Vision Media Holdings PLC’s (the accounting acquiree) identifiable net assets represents a service received by the accounting acquirer.
Although the consolidated financial information has been issued in the name of Grand Vision Media Holdings PLC, the legal parent, it represents in substance continuation of the financial information of the legal subsidiary.
The assets and liabilities of the legal subsidiary are recognized and measured in the Group financial statements at the pre-combination carrying amounts and not re-stated at fair value.
The retained earnings and other reserves balances recognized in the Group financial statements reflect the retained earnings and other reserves balances of the legal subsidiary immediately before the business combination and the results of the period from June 2018 to the date of the business combination are those of the legal subsidiary only.
The equity structure (share capital and share premium) appearing in the Group financial statements reflects the equity structure of Grand Vision Media Holdings PLC the legal parent. This includes the shares issued in order to effect the business combination.
2.5. Available-for-sale investments
Available-for-sale investments represent an investment in the securities. At the end of each reporting period the fair value is remeasured, with any resultant gain or loss being recognised in other comprehensive income and accumulated separately in equity in the fair value reserve. As an exception to this, investments in equity securities that do not have a quoted price in an active market for an identical instrument and whose fair value cannot otherwise be reliably measured are recognised in the statement of financial position at cost less impairment losses. Dividend income from equity securities and interest income from debt securities calculated using the effective interest method are recognised in profit or loss in accordance with the policies. Foreign exchange gains and losses resulting from changes in the amortised cost of debt securities are also recognised in profit or loss.
When the investments are derecognised or impaired, the cumulative gain or loss recognised in equity is reclassified to profit or loss. Investments are recognised/derecognised on the date GVMH PLC and its subsidiaries commits to purchase/sell the investments or they expire.
2.6. Property, plant and equipment
The property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:
| Display panels and CMS | 30% – 33.33% |
| Computer equipment | 30% – 33.33% |
| Furniture’s and fixtures | 30% – 33.33% |
| Leasehold improvements | 30% – 50% |
Both the useful life of an asset and its residual value, if any, are reviewed annually.
The carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell the asset, then the asset is impaired and its value reduced by recognising an impairment provision.
2.7. Impairment of non-financial assets, other than inventories
At the end of each reporting period, property, plant and equipment and investments in a subsidiary are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset (or GVC Holdings Ltd and its subsidiaries of related assets) is estimated and compared with its carrying amount. If an estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.
If an impairment loss subsequently reverses, the carrying amount of the asset (or GVC Holdings Ltd and its subsidiaries of related assets) is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (GVC Holdings Ltd and its subsidiaries of related assets) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.8. Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
2.9. Trade and other receivables
The Group classifies all its financial assets as trade and other receivables. The classification depends on the purpose for which the financial assets were acquired.
Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss.
The Group’s loans and receivables financial assets comprise other receivables (excluding prepayments) and cash and cash equivalents included in the Statement of Financial Position.
2.10. Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balance. Bank overdrafts that are repayable on demand and form an integral part of GVMH PLC’s cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement.
2.11. Trade and other payables
Trade and other payables are initially recognised at fair value. They are subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.
2.12. Shareholders loan
Shareholders loans are initially recognised at fair value. They are subsequently measured at amortised cost using the effective interest method. The difference between the fair value and the carrying amortised cost (i.e. the effective interest portion) is first recognized in equity as capital contribution reserve.
2.13. Employee benefits
Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.
2.14. Taxation
(i) Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from ‘profit before tax’ as reported in the statement of profit or loss because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. Grand Vision Media Holding Plc’s current tax is calculated using rates that have been enacted during the reporting period
(ii) Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base, except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities.
The Group is entitled to a tax deduction on the exercise of certain employee share options. A share-based payment expense is recorded in the income statement over the period from the grant date to the vesting date of the relevant options. As there is a temporary difference between the accounting and tax bases, a deferred tax asset may be recorded. The deferred tax asset arising on share option awards is calculated as the estimated amount of tax deduction to be obtained in the future (based on the Group’s share price at the balance sheet date) pro-rated to the extent that the services of the employee have been rendered over the vesting period. If this amount exceeds the cumulative amount of the remuneration expense at the statutory rate, the excess is recorded directly in equity, against retained earnings. Similarly, current tax relief in excess of the cumulative amount of the Share-based payments expense at the statutory rate is also recorded in retained earnings.
2.15. Provision and contingent liabilities
Provisions are recognised for other liabilities of uncertain timing or amount when GVMH PLC and its subsidiaries or GVMH PLC has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
2.16. Revenue recognition
After the adoption of IFRS 15, the company recognise revenue from contracts with customers when (or as) the company satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred When (or as) the customer obtains control of that asset. When (or as) a performance obligation is satisfied, the company recognises as revenue the amount of the transaction price (which includes estimates of variable consideration that are constrained in accordance with IFRS 15) that is allocated to that performance obligation. Further details of the company’s revenue and other income recognition policies are as follows:
(i) Service income is recognised as income on a straight-line based over the term, unless another systematic basis is more representative of the time pattern of the user’s benefit.
(ii) Barter revenueis recognised only when the goods or services being exchanged are of a dissimilar nature. Barter revenue is measured at the fair value of goods or services rendered, adjusted by the amount of cash or cash equivalents received or paid. If the fair value of the goods or services rendered cannot be relaibly measured, the revenue is measured at the fair value of the goods or services received, again adjusted by the amount of cash or cash equivalents received
(iii) Interest income is recognised on a time-proportion basis using the effective interest method. When a loan and receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.
2.17. Translation of foreign currencies
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the end of the reporting period. Exchange gains and losses are recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates.
Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was measured.
The results of foreign operations are translated into Hong Kong dollars at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Statement of financial position items, including goodwill arising on consolidation of foreign operations, are translated into Hong Kong dollars at the closing foreign exchange rates at the end of the reporting period. The resulting exchange differences are recognised in other comprehensive income and accumulated separately in equity in the exchange reserve.
On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognised.
2.18. Borrowing costs
Borrowing costs represented a notional interest on shareholders’ loan, which is accrued on time proportion basis taking into account of the shareholder loan outstanding and the interest applicable.
2.19. Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments which are not subject to significant changes in value and have original maturities of less than three months. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position.
2.20. Related parties
a) A person, or a close member of that person’s family, is related to GVMH PLC and its subsidiaries if that person:
(i) has control or joint control over GVMH PLC and its subsidiaries;
(ii) has significant influence over GVMH PLC and its subsidiaries; or
(iii) is a member of the key management personnel of GVMH PLC and its subsidiaries or GVMH PLC and its subsidiaries’ parent.
b) An entity is related to GVMH PLC and its subsidiaries if any of the following conditions applies:
(i) The entity and GVMH PLC and its subsidiaries are members of the same GVMH PLC and its subsidiaries (which means that each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a GVMH PLC and its subsidiaries of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either GVMH PLC and its subsidiaries or an entity related to GVMH PLC and its subsidiaries.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a GVMH PLC and its subsidiaries of which it is a part, provides key management personnel services to GVMH PLC and its subsidiaries or to GVMH PLC and its subsidiaries’ parent
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
Operating leases
All leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.
2.21. Segmental analysis
GVMH PLC has two segments of advertising and digital marketing and operates in People’s Republic of China.
3. Summary of Critical Accounting Estimates and judgements
The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise their judgement in the process of applying the accounting policies which are detailed above. These judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The key estimates and underlying assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities, as well as the recognition of revenue, within the next financial year are discussed below:
• Recognising appropriate revenue in line with performance obligations
Management identifies the performance obligations associated with each contract and then exercises judgement to establish an appropriate percentage of the total transaction price to recognise once each identified performance obligation is successfully completed.
• Useful lives of depreciable assets
Management reviews the useful lives and residual value of depreciable assets at each reporting date to ensure that the useful lives represent a reasonable estimate of likely period of benefit to the Group. Tangible fixed assets are depreciated over their useful lives taking into account of residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
4. Revenue
Analysis of GVMH PLC and its subsidiaries’ revenue is as follows:
| Year ended | Year ended | Year ended | Year ended | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Revenue | ||||
| Advertising fee income | 8,985 | 5,106 | – | – |
| Digital marketing income | 8,575 | 4,365 | ||
| Other | 466 | 43 | ||
| 18,026 | 9,514 | |||
| Other income | ||||
| Other income | 79 | 62 | – | – |
| 79 | 62 | – | – | |
| 18,105 | 9,576 | – | – |
5. Finance costs
| Year ended | Year ended | Year ended | Year ended | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Finance costs | ||||
| Interest on shareholder loans | 316 | 296 | – | – |
| 6. Administrative expenses | ||||
| Year ended | Year ended | Year ended | Year ended | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Audit fees | 417 | 260 | 165 | – |
| Business development and marketing | 464 | 470 | 42 | – |
| Depreciation | 3,982 | 4,364 | – | – |
| Premium on reverse | 5,259 | – | – | – |
| RTO, Legal and professional fee | 9,672 | 272 | 14,488 | 2,149 |
| Office rental | 2,124 | 2,233 | 47 | 107 |
| Overseas travelling | 786 | 516 | 219 | – |
| Other | 7,061 | 2,358 | 1,739 | 661 |
| Administrative expenses | 29,765 | 10,473 | 16,700 | 2,917 |
| Directors fees and emoluments | 1,435 | 618 | 816 | – |
| Wages and Salaries | 7,511 | 5,543 | – | – |
| 38,711 | 16,634 | 17,516 | 2,917 |
| Employee numbers | No. | No. | No. | No. |
| Management | 5 | 5 | 3 | 2 |
| Operations | 30 | 27 | – | – |
| 35 | 32 | 3 | 2 |
7. Income tax expense
No Hong Kong profits tax provision made in the accounts as GVMH PLC and its subsidiaries’ do not have any assessable profits for the period.
Reconciliation between tax expenses and accounting profit at applicable tax rates of 16.5%:
| Year ended | Year ended | Year ended | Year ended | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| (Loss) / profit before tax | (33,062) | (11,814) | (17516) | (2,917) |
| Notional tax on (loss) / profit before taxation, calculated at the rates applicable to (loss) / profit in the countries concerned | (5,455) | (1,949) | (36,328) | (583) |
| Tax effect of non-taxable income | – | – | – | – |
| Tax effect of not recognised tax loss | 5,455 | 1,949 | 3,328 | 583 |
| Actual tax expenses | – | – | – | – |
GVMH PLC and its subsidiaries’ has not recognised deferred tax assets of HK$2,559,994 in respect of accelerated depreciation over capital allowances. No deferred tax asset has been recognised on the accumulated tax losses of HK$15,515,116 as the availability of future taxable profits against which the assets can be utilised is uncertain at 31 December 2018.
The tax losses can be carried forward to offset against the taxable profits of subsequent years for up to five years from the year in which they were incurred or there is no restriction on their expiry, depending on the tax jurisdiction concerned.
8. Earnings/ (Loss) per share
The calculation of basic earnings per share is based on GVMH PLC and its subsidiaries’ loss attributable to shareholders of GVMH PLC and weighted average number of shares in issue during the year, details are as follows:
| From | ||||
| Year ended | Year ended | Year ended | Year ended | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Profit/loss attributable to GVMH PLC | (33,069) | (11,784) | (11,586) | (2,917) |
| Weighted average number of shares | 96,287,079 | 12,486 | 96,287,079 | 6,103,507 |
| Basic and diluted loss per share HK$ | (0.34) | (944) | (0.12) | (0.48) |
There were no potential dilutive ordinary shares in existence during the period ended 31 December 2018 or the years ended 31 December 2017, and hence diluted earnings per share is the same as the basic earnings per share.
9. Property, plant and equipment
| Displays panels and CMS | Computer equipment | Furniture, fixtures & equipment | Leasehold improvement | Total | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Cost | |||||
| At 31 December 2017 | 16,405 | 246 | 296 | 82 | 17,029 |
| Additions during the year 2018 | – | 43 | 5 | – | 48 |
| Disposals during the year 2018 | (127) | (1) | – | – | (128) |
| At 31 December 2018 | 16,278 | 288 | 301 | 82 | 16,949 |
| Accumulated depreciation | |||||
| At 31 December 2017 | 10,331 | 185 | 292 | 56 | 10,864 |
| Charge for the year 2018 | 3,923 | 35 | 4 | 20 | 3,982 |
| Written back on disposal | (80) | – | – | – | (80) |
| At 31 December 2018 | 14,173 | 220 | 296 | 76 | 14,765 |
| Net carrying amount | |||||
| At 31 December 2018 | 2,105 | 68 | 5 | 6 | 2,183 |
| At 31 December 2017 | 6,075 | 61 | 4 | 26 | 6,166 |
10. Inventories
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Inventories | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Goods | 537 | 589 | – | – |
| Online resources | 1,170 | 2,237 | ||
| 1,707 | 2,826 | – | – |
As at 31 December 2018, provision for impairment on goods of HK$205,000 for the group has been made.
11. Trade and other receivables
Note: Amounts due from related companies is unsecured, interest-free and repayable on demand.
Receivable that were not impaired was as follows:
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| HK$’000 | HK$’000 | HK$’000 | HK$’000 | |
| Prepayments | 1,036 | 672 | – | – |
| Amount due from Subsidiaries | 11,412 | 2,637 | ||
| Neither past due or nor impaired | 5,104 | 3,821 | 48 | – |
| 6,140 | 4,493 | 11,460 | 2,637 |
12. Cash and cash equivalents
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Cash and cash equivalents | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Cash at bank and in hand | 2,552 | 1,136 | 783 | 2,785 |
| 2,552 | 1,136 | 783 | 2,785 |
13. Trade and other payables
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Trade and other payables | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Trade payable | 10,577 | 7,601 | 816 | 130 |
| Other payables | 5,151 | – | – | – |
| Total trade and other payables | 15,728 | 7,601 | 816 | 130 |
14. Share based payments
The Group has a share ownership compensation scheme for Directors and Senior employees of the Group. In accordance with the provisions of the plan, Directors and Senior employees may be granted options to purchase ordinary shares in the Company.
The company issued options on 12,000,000 ordinary shares on 19 June 2018. The options vest annually over a 3 year period to 31 December 2020 and can be exercised at 15p per share during this period .
The fair value of equity-based share options granted is estimated at the date of grant using the Black-Scholes pricing model, taking into account the terms and conditions upon which the options have been granted. The calculated fair value of share options charged to the Group and Company financial statements in the year is HK$ 1,446,658.
The following are the inputs to the model for the options granted during the prior year:
| Share Options 2018 |
|
| Exercise price | 0.15p |
| Share price at date of grant | 0.15p |
| Risk free rate | 1.04% |
| Volatility | 50% |
| Expected Life | 3 Years |
| Fair Value | 0.03626798 |
15. Convertible bonds
On 24 January 2017, the GVC holding’s Limited issued convertible bonds with an aggregate principal amount of US$1,500,000. As of 31 December 2017, the aggregate amount received was US$1,500,000. The maturity date should be on 31 March 2018. The bonds were convertible at the option of the bondholders into ordinary shares on the basis of 8.3%.
During the year on 9 May 2018, the convertible bonds were automatically converted to the fully paid Conversion Shares (1,134 Ordinary Shares).
16. Shareholder loans
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Shareholders’ loan | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Shareholders’ loan at fair value | 8,750 | 6,250 | – | – |
| Capital contribution reserve arising from effective interest portion | (390) | (686) | – | – |
| Accrued effective interest paid to shareholders | 316 | 296 | – | – |
| Shareholder’s loan at amortised cost | 8,676 | 5,860 | – | – |
The shareholders’ loan is unsecured, interest-free and repayable on demand.
As the shareholders’ loan is unsecured, interest-free and repayable on demand, the directors assumes that the shareholder’s loan is expected to repay in year 2019 and the available market interest rate for shareholder’s loan of the same kind is at the best landing rate in Hong Kong plus 1% per annum which is also used to calculate the effective interest portion of such.
17. Share Capital
(a) Issued share capital
| Allotted, called up and fully paid ordinary shares of 10p each | Number of shares | Share Capital | Share Capital |
Share Premium |
Share Premium |
| £ | HK$ | £ | HK$ | ||
| Balance at 31 December 2017 | 6,230,000 | 623,000 | 6,578,413 | 256,500 | 2,713,727 |
| After Acquisition Share 19 June 2018 | 90,057,079 | 9,005,708 | 89,438,773 | 4,166,454 | 41,391,838 |
| Balance at 31 December 2018 | 96,287,079 | 9,628,708 | 96,017,186 | 4,422,954 | 44,105,565 |
(b) Capital management
GVMH PLC and its subsidiaries’ objective when managing capital are to safeguard GVMH PLC and its subsidiaries’ ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefit for other stakeholders, and to provide an adequate return to shareholders.
GVMH PLC and its subsidiaries’ manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, GVMH PLC and its subsidiaries’ may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. No changes were made in the objectives, policies and processes during the year/period of 2017 and 2018.
GVMH PLC and its subsidiaries’ monitors’ capital using a gearing ratio, which are calculated by dividing consolidated debts by consolidated total shareholder’s equity. The Group’s policy is to keep the gearing ratio at a reasonable level. The Group’s gearing ratio was 122%, and 120% as 31 December 2018 and 2017 respectively.
18. Financial instruments
GVMH PLC and its subsidiaries has classified its financial assets in the following categories:
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Loans and receivables | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Accounts and other receivables | 5,104 | 3,821 | 48 | – |
| Amounts due from related companies | – | – | 11,412 | 2,637 |
| Deposits and prepayments | 1,036 | 672 | – | – |
| Cash and cash equivalents | 2,552 | 1,136 | 783 | 2,785 |
| Loans and receivables | 8,692 | 5,629 | 12,243 | 5,422 |
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Financial liabilities at amortised cost | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Trade and other payables | 15,728 | 7,601 | 816 | 130 |
| Deposits received | 111 | 4,048 | – | – |
| Shareholders’ loan | 8,676 | 5,860 | – | – |
| Convertible bonds | – | 11,670 | – | – |
| Amount due to a director | 304 | 55 | – | – |
| Financial liabilities at amortised cost | 24,819 | 29,234 | 816 | 130 |
GVMH PLC and its subsidiaries are exposed to credit risk, liquidity risk and market risk arising in the normal course of its business and financial instruments. GVMH PLC and its subsidiaries’ and GVMH PLC’s risk management objectives, policies and processes mainly focus on minimising the potential adverse effects of these risks on its financial performance and position by closely monitoring the individual exposure.
(a) Credit risk
GVMH PLC and its subsidiaries are exposed to credit risk on financial assets, mainly attributable to trade and other receivables. It sets credit limits on each individual customer and prior approval is required for any transaction exceeding that limit. The customer with sound payment history would accumulate a higher credit limit. In addition, the overseas customers would normally be required to transact with GVMH PLC and its subsidiaries’ and GVMH PLC by letter of credit in order to minimise GVMH PLC and its subsidiaries’ credit risk exposure.
At 31 December 2018, GVMH PLC and its subsidiaries has no concentration of risk and the maximum exposure to credit risk is represented by the carrying amount of each financial asset.
(b) Liquidity risk
GVMH PLC and its subsidiaries is exposed to liquidity risk on financial liabilities. It manages its funds conservatively by maintaining a comfortable level of cash and cash equivalents in order to meet continuous operational need. Various banking facilities and credit lines have also been arranged with different banks in order to fund any emergency liquidity requirements.
| Liquidity risk | Not later than one month | Later than one month and not later than 5 years | Carrying amount | |
| As at 31 December 2018 | ||||
| Trade and other payables | 15,728 | – | 10,577 | |
| Deposits received | 111 | – | 111 | |
| Shareholders’ loan | – | 8,676 | 8,676 | |
| Amount due to Director | 304 | – | 304 | |
| 16,143 | 8,676 | 24,819 | ||
| As at 31 December 2017 | ||||
| Trade and other payables | 7,601 | – | 7,601 | |
| Deposits received | 4,048 | – | 4,048 | |
| Shareholders’ loan | – | 5,860 | 5,860 | |
| Amount due to Director | 55 | – | 55 | |
| Convertible bonds | 11,670 | 11,670 | ||
| 23,374 | 5,860 | 29,234 | ||
| GVMH PLC | ||||
| As at 31 December 2018 | ||||
| Trade and other payables | (816) | – | (816) | |
| (816) | – | (816) | ||
| As at 31 December 2017 | ||||
| Trade and other payables | (130) | – | (130) | |
| (130) | – | (130) |
(c) Interest rate risk
The Group has no exposure on fair value interest rate risk. It also has exposure on cash flow interest rate risk which is mainly arising from its deposits with banks.
GVMH PLC and its subsidiaries mainly holds fixed deposits with banks with maturity within 3 months and the exposure is considered not significant. In consequence, no material exposure on fair value interest rate risk is expected. Even that, GVMH PLC closely monitors the fair value fluctuation of the investments and disposes of them in case of significant increase in interest rate is foreseen.
Sensitivity analysis
At 31 December 2018, if interest rates as that date had been 100 basis points lower/higher with all other variables held constant, GVMH PLC loss for the year would have been HK$25,090 (2017: HK$1,288) higher/lower.
(d) Currency risk
GVMH PLC and its subsidiaries purchases and sells in various foreign currencies, mainly US dollars and RMB that expose it to currency risk arising from such purchases and sales and the resulting receivables and the payables.
GVMH PLC and its subsidiaries closely and continuously monitors the exposure on currency risk. Since HK dollars are pegged to US dollars, there is no significant exposure expected on US dollars transactions and balances.
In respect of purchases and payables, GVMH PLC and its subsidiaries controls its volume of purchase orders to a tolerable level and avoids concentrating the purchases in a single foreign currency by diversifying such foreign currency risk exposure.
In respect of sales and receivables, GVMH PLC and its subsidiaries sets a prudent credit limit to individual customers who transact with it in other foreign currencies. The directors’ approval is required on the exposure to an individual customer or transaction that exceeds the limit.
19. Capital commitments
Capital commitments outstanding at the end of the reporting period not provided for in the financial statements were as follows:
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Capital commitments | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Contracted for | – | – | – | – |
| Authorised but not contracted for | – | – | – | – |
| Capital commitments | – | – | – | – |
20. Operating lease commitments
At the end of the reporting period, the total future minimum lease payments under non-cancellable operating leases are payable as follows:
| As at | As at | As at | As at | |
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Operating lease commitments | HK$’000 | HK$’000 | HK$’000 | HK$’000 |
| Within 1 year | 1,568 | 1,123 | – | – |
| After 1 year but within 5 years | 41 | 644 | – | – |
| Operating lease commitments | 1,609 | 1,767 | – | – |
21. Contingent liabilities
At 31 December 2018, GVMH PLC and its subsidiaries did not have any significant contingent liabilities.
22. Material related party transactions
Save as those transactions and balances disclosed elsewhere in these financial statements with sharholders abd director and Cyber Lion Limited a company controlled by Edward Ng and Ajay Rajpal, GVMH PLC and its subsidiaries had no material transactions with related parties.
23. Non-adjusting events after the reporting period
At 31 December 2018, GVMH PLC and its subsidiaries did not have material non-adjusting events after the report period that have significant impact on the financial position and operation of the Group.
24. List of subsidiaries
| Proportion of ownership interest | |||||||
| Name of GVMH PLC | Place of incorporation/ operation | Particulars of issued and paid up capital | GVMH PLC and subsidiaries effective interest | Held by GVMH PLC | Held by the subsidiary | Principal activities | |
| GVC Holdings Ltd | BVI/Hong Kong | US$13,620 | 100% | 100% | 100% | Investment holdings | |
| Billion Wise Investment Ltd | BVI / Hong Kong | US$10,862 | 100.0% | – | 100% | Investment holdings | |
| Founding Technology (Int’l) Ltd | Hong Kong | HK$10,000 | 70.0% | – | 70% | Social Media Marketing | |
| Grand Vision Communication Ltd | BVI / Hong Kong | US$10,843 | 79.9% | – | 79.9% | Investment holdings | |
| Grand Vision Media Limited | Hong Kong | HK$1,000,000 | 79.9% | – | 79.9% | Advertising | |
| Grand Vision Media Network Limited | Hong Kong | HK$7,824,268 | 100.0% | – | 100.0% | 3D panel advertising | |
| Grand Vision Media (Technology) (Shenzhen) Ltd | PRC/Hong Kong | RMB832,987 | 79.9% | – | 79.9% | Advertising | |
| Ying Interactive Marketing Services Ltd | Hong Kong | HK$4,900,000 | 55.0% | 55% | – | Social Media Marketing | |
| *?????? ?????? | PRC | RBM5,874,000 | 100.0% | – | 100.0% | 3D panel advertising | |
As at 31 December 2018 the following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of GVMH PLC and its subsidiaries.
*not audited by IBC CPA Ltd
25. Control
At 31 December 2018, there is no one controlling party.
Grand Vision Media Holdings #GVMH signs partnership agreement with Rakuten Bank KK (Rakuten) in Japan
Grand Vision Media Holdings Plc (GVMH) is pleased to announce that it has signed a partnership agreement with Rakuten Bank KK (Rakuten) in Japan. Rakuten is one of the leading internet banking products and service provider in Japan. Through this agreement, Rakuten will actively promote GVMH’s marketing services to its retail and hospitality customers seeking to capture a bigger share of the Chinese tourist spending. Together with the WechatPay services offered by Rakuten, GVMH can offer an integrated marketing and payment solution to Japanese clients.
The services will initially cover the following:
- Assisting overseas brands establish or enhance their Social Media presence in China
- Using GVMH’s OOH capabilities to broadcast 3D videos of travel destinations and organize off-line marketing events in cinemas in China to promote Japanese products and services.
According to the Japan National Tourism Organisation, Chinese visitors were the largest visitor group in 2018, with 8.4 million visitors, an increase of 13.9% over 20171, 2.
Jonathan Lo, CEO, said“Tourism marketing will be one of our key revenue drivers and core competencies as Chinese tourists now make up 21% of the total tourism spending worldwide3. With Rakuten Bank as our partner, we are well placed to increase our reach to potential advertisers in Japan, the top destination for Chinese tourists. We have already started providing our service to our first Japanese client, Narita Airport.
Our agreement with Rakuten Bank follows on from the recent agreement which we signed with the CY Group in Korea. We shall continue to develop partnerships in the other travel destinations frequented by Chinese travellers. ”
1 Japan National Tourism Organisation – Breakdown of Country/Area
https://statistics.jnto.go.jp/en/graph/#graph–latest–figures
2 Nikkei Asian Review, September 29 2018
(https://asia.nikkei.com/Economy/China-s-7m-Golden-Week-shoppers-head-to-Japan-Thailand-and-Korea)
3 Hospitality Net, 16 May 2018
(https://www.hospitalitynet.org/performance/4088453.html)
**ENDS**
For further information, photos and enquiries please contact:
| Grand Vision Media Holdings plc | Jonathan Lo / Ajay Rajpal info@gvmh.co.uk |
Tel: +44 (0) 20 7866 2145 |
| Alfred Henry Corporate Finance Ltd | Nick Michaels / Jon Isaacs enquiries@alfredhenry.com |
Tel: +44 (0) 20 3772 0021 |
| Alexander David Securities Ltd | David Scott david.scott@ad-securities.comJames Dewhurst james.dewhurst@ad-securities.com |
Tel: +44 (0) 20 7448 9820 |
| PEIR | Siu Fun Hui ir@peir.info |
Tel: +44 (0) 7730 051867 |
Notes to Editors
Grand Vision Media Group is an integrated out-door digital media company deploying innovative display and marketing technologies at strategic, high-traffic locations. Its glasses-free 3D technology in digital out-of-home (OOH) media is enabling advertisers to engage with affluent consumers in important and growing markets such as China and elsewhere around the world.
The company deploys glasses-free 3D technology in cinemas to take advantage of the growth in audiences in China in terms of box office, number of cinemas and number of viewers. In addition to traditional advertising revenue, we set out to monetise the benefits generated by user interaction with 3D panels by targeted social media advertising and, also by profit sharing from transactions.
In June 2018 the Company listed on The London Stock Exchange helping it to attract further investment to build out our business within China itself; the company’s current footprint in China represents less than 5% of the market there.
The digital signage market globally is expected to reach almost $30bn by 2024, compared to approximately $15bn in 2015. We believe that this growth will be driven not only by new, higher resolution displays and new types of technology, but also by integrating digital displays with customers’ smart phones.
Company web site: www.gvmh.co.uk
Rakuten Bank, Ltd. provides Internet banking products and services in Japan. It offers electronic financial settlement services.
Rakuten Bank, Ltd. was formerly known as eBANK Corporation and changed its name to Rakuten Bank, Ltd. in May 2010. The company was founded in 2000 and is based in Tokyo, Japan. It has operations in Grand Cayman, the British West Indies. As of February, 2009 Rakuten Bank, Ltd. operates as a subsidiary of Rakuten, Inc.