Final Results

RNS Number : 8215X

GruppeM Investments PLC

30 June 2008

 

Embargoed until 9.00 a.m.

30 June 2008

GruppeM Investments PLC

(LSE: GRP, 'GruppeM' or the 'Company')

Final results for the year ended 31 December 2007

GruppeM Investments PLC, the Aston Martin importer for the People's Republic of China and retailer of Porsche cars in the country's Shandong region, announces its final results for the year ended 31 December 2007.

Operational highlights:

• 419 Porsche cars ordered (17 months to 31 December 2006: 278) and 392 cars delivered (17 months to 31 December 2006: 222) by the Qingdao dealership in the year

• Second Porsche dealership planned to open in August in Jinan - the capital of the Shandong region

• Strong demand for Aston Martin cars in China

Financial highlights:

• Revenues of £23.6 million (17 months to 31 December 2006: £12.1 million)

• Profit before tax of £0.46 million (17 months to 31 December 2006: £0.95 million loss)

• Basic earnings per share 0.5p (2006: 3.27p loss per share)

Commenting on the results, Kenny Chen, Chief Executive Officer, said:

'These results demonstrate that the Company's strategy is proving successful. We have consolidated our position and the Company has moved into profit. The significant investment that has been made is now providing the firm foundation on which the business will grow. The market is continuing to expand at a fast rate and the Company is now in a position to gain maximum benefit from the opportunities that are being presented. The only limiting factor will be the Company's ability to rapidly raise sufficient funds to take advantage of those opportunities. Demand for luxury cars is still very strong despite some downturn in markets elsewhere in the world. The downturn is an advantage for Chinese based businesses as manufacturers are supporting them with more cars to satisfy the growing demand. We intend to add an additional dealership with the opening of the Jinan Porsche Centre in August 2008 which will enable the Company to reach further into the Shandong Province. The relationship with Aston Martin is very strong both on a business and a personal level. The Company represented Aston Martin at the Beijing and Qingdao auto shows with great success and it will continue to work very closely with them at future events. Demand for Aston Martin cars is increasing and we are confident of satisfying that demand as soon as official type approval is granted by the Chinese authorities.'

Enquiries:

GruppeM Investments PLC Kenny Chen Tel: [phone]

Shore Capital and Corporate Limited Alex Borrelli Tel: [phone]

 
 CHIEF EXECUTIVE OFFICER'S STATEMENT

Results

The Group continued to grow strongly in the year to 31 December 2007. Turnover increased to £23.6 million (17 month period to 31 December 2006: £12.1 million). The pre-tax profit from operations for the year was £0.46 million against a loss of £0.95 million for the 17 month period to 31 December 2006.  Basic earnings per share were 0.5p (17 month period to 31 December 2006: 3.27p loss).  

The directors will not be recommending the payment of a dividend. 

Porsche car sales, from our Qingdao dealership in the Shandong province in East China, remained strong with 419 cars ordered and 392 cars delivered in the year with healthy margins earned. We are experiencing continuing demand for the larger model, the Porsche Cayenne, with sales of this product accounting for 85% of total sales, a trend repeated for Porsche throughout China where Porsche delivered 4,119 cars in the year to 31 July 2007 and stated that demand is continuing to outstrip supply. There has been an increase in demand for sports cars with the percentage of total sales rising from 9% in the previous period to 15% in the current year, while the average waiting period is between six and nine months, depending upon the model.  

Board Changes

There have been several Board changes in the year. As previously announced, Don McCrickard and Stephanie Wong both left the Company and Paul McIlwaine assumed the role of Company Secretary.  

Peter Kent has resigned as non-executive director of the Company.  We would like to thank Peter for the guidance and support he has provided to the Company, and give him our very best wishes in the future.

Market Prospects

China's economy continues to grow with an increase in GDP of 11.4% in 2007. In 2007 China's automobile sales increased to 8.79 million units - an increase of 21.8% over the previous year. This consolidates China's position as the second largest car market in the world and it is predicted to surpass the USA to become number one. According to the Xinhua News Agency 'Vehicle ownership in China is currently 44 cars per 1000 people whereas the world average is 120 cars per 1000 and in the USA there are 750 cars per 1000 people'. Despite a worldwide slow down in car sales in the first half of 2008, China sales have continued to increase with a year-on-year increase of 25.3% in the first five months.

Current trading

Trading in the first half of 2008 remains strong and our additional Porsche dealership in Jinan, the capital city of the Shandong Province, is due for completion in August 2008 and will provide further growth opportunities. It has received a quota allocation from Porsche of 198 cars for the period between August 2008 and the end of July 2009 which should provide a good platform to grow the business.  

The relationship with Aston Martin Lagonda Ltd, ('Aston Martin'), continues to strengthen with several jointly organised events being hosted by the manufacturer in China, following the Company being appointed as the importer for Aston Martin in China.  

De-Listing

The Chinese auto market is expanding at such a fast rate that many excellent business opportunities exist. In order to take advantage of these opportunities, it is necessary to raise funds very quickly to avoid losing out to competitors. However, with the prevailing conditions within the financial markets, the Board believes it is not practicable for the Company to raise the funds required while maintaining trading on AIM within the desired time frame and in the light of the limited trading liquidity in the Company's shares. Therefore, the Directors have concluded that it is no longer in the best interests of the Company, or its Shareholders as a whole, to maintain its AIM listing.  

Annual General Meeting and General Meeting

The report and accounts will be sent to shareholders today. A circular containing the notice of AGM and a notice for a general meeting with a resolution to de-list the Company's shares from AIM will be sent to shareholders within the next few weeks.

I would like to thank all our employees and advisers for their hard work and contribution to the continued success of the Company.

Kenny Chen
Chief Executive Officer
30 June 2008

  GRUPPEM INVESTMENTS PLC
Consolidated income statement for the YEAR ended 
31 December 2007

		Year ended  31 December  2007 (Audited)		17 months ended  31 December  2006 (Audited)
	Note	£		£
Revenue		23,634,551		12,099,616
Cost of sales		(21,069,615)		(11,239,678)
Gross Profit		2,564,936		859,938
Administrative expenses		(2,087,631)		(1,823,174)
Operating Profit/(Loss)		477,305		(963,236)
Finance income and expense (net)		(18,552)		13,628
Profit/(Loss) for the Period before Taxation		458,753		(949,608)
Taxation		41,480		(13,172)
Profit/(Loss) for the Period	4	500,233		(962,780)
Profit/(Loss) per share expressed in pence per share
- Basic	2	0.50p		(3.27)p
- Diluted	2	0.50p		n/a

Statement of recognised income and expense for the YEAR ended 31 December 2007

		Year ended  31 December 2007 (Audited)		17 months ended  31 December 2006 (Audited)
		£		£
Profit/(Loss) for the financial period		500,233		(962,780)
Exchange adjustments		(16,005)		46,650
Total Recognised Income and Expense for the Period		484,228		(916,130)

All amounts relate to continuing activities.

  GRUPPEM INVESTMENTS PLC
Consolidated balance sheet as at 31 December 2007

		As at  31 December 2007 (Audited)		As at  31 December 2006 (Audited)
		£		£
Assets
Non-Current Assets
Property, plant and equipment		3,199,022		499,850
Deferred taxation		41,480		-
		3,240,502		499,850
Current Assets
Inventories		970,447		836,672
Trade and other receivables		2,161,373		2,791,348
Cash and cash equivalents		92,838		126,556
		3,224,658		3,754,576
Total Assets		6,465,160		4,254,426
Liabilities
Current Liabilities
Trade and other payables		2,292,684		2,433,149
		2,292,684		2,433,149
Non-Current Liabilities
Director's loan account		5,280,018		3,414,011
Convertible loan		100,366		99,402
Related party loan		182,000		182,000
		5,562,384		3,695,413
Total Liabilities		7,855,068		6,128,562
Capital and Reserves
Share capital		1,000,000		1,000,000
Merger reserve		(1,392,156)		(1,392,156)
Foreign operation translation reserve		28,710		44,715
Retained deficit		(1,026,462)		(1,526,695)
		(1,389,908)		(1,874,136)
Total Equity and Liabilities		6,465,160		4,254,426

  GRUPPEM INVESTMENTS PLC
Consolidated cash flow statement for the YEAR ended 
31 December 2007

		Year ended 31 December 2007 (Audited)		17 months ended 31 December 2006 (Audited)
		£		£
Cash flow from operating activities
Profit/(Loss) from operating activities		477,305		(963,236)
Adjustments for:
Depreciation		163,054		176,334
Exchange adjustment on property, plant and equipment		(18,358)		6,616
Net cash flow from operating activities before changes in working capital		622,001		(780,286)
Increase in inventories		(133,775)		(836,672)
(Decrease)/Increase in payables		(129,113)		2,045,882
Decrease/(Increase) in receivables		629,975		(2,496,638)
Net cash flow from operating activities before interest and taxation paid		989,088		(2,067,714)
Interest paid		(9,327)		(2,046)
Taxation paid		(11,352)		(1,820)
Net cash flow from operating activities		968,409		(2,071,580)
Investing activities
Purchase of property, plant and equipment		(92,918)		(598,863)
Sale of property, plant and equipment		-		24,555
Assets under construction		(2,750,950)		-
Interest received		388		76
Net cash flow from investing activities		(2,843,480)		(574,232)
Financing activities
Cost of share issue		-		(592,156)
Issue of convertible loan notes		-		115,000
Director's loan		1,857,358		3,067,141
Net cash flow from financing activities		1,857,358		2,589,985
Net decrease in cash and cash equivalents in the period		(17,713)		(55,827)
Cash and cash equivalents at the beginning of the period		126,556		135,733
Effect of foreign exchange rate changes		(16,005)		46,650
Cash and cash equivalents at the end of the period		92,838		126,556

  NOTES TO THE ANNOUNCEMENT

1.   Basis of preparation

The Financial Statements have been prepared in accordance with EU Endorsed International Financial Reporting Standards ('IFRS'), International Financial Reporting Interpretations Committee ('IFRIC') interpretations and the Companies Act 1985 applicable to companies reporting under IFRS. The Group has adopted all of the standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee that are relevant to its operations. As at the date of approval of these consolidated Financial Statements, the following standards and interpretations were in issue but not yet effective:

• IFRS 8, Operating Segments;

• IFRIC 11, IFRS 2: Group and Treasury share transactions; 
  
• IFRIC 12, Service concession arrangements;
  

• IFRIC 13, Customer Loyalty Programmes; and
  

• IFRIC 14, IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction 

The Directors do not anticipate that the adoption of these interpretations in future reporting periods will have a material impact on the Group's results, except for additional disclosures on segregated results, when the relevant standards come into effect for periods commencing on or after 1 January 2008.

Basis of Consolidation

The consolidated Financial Statements consist of GruppeM Investments PLC and its subsidiaries made up to 31 December 2007. The consolidated Financial Statements of GruppeM Investments PLC have been prepared under merger accounting rules. This means that the Financial Statements of GruppeM Investments PLC and its wholly owned subsidiary, GruppeM Hong Kong Limited have been aggregated and presented as if the two companies have always formed a group.

Accordingly, although GruppeM Investments PLC acquired the entire share capital of GruppeM Hong Kong Limited on 31 October 2006, the results for both companies are reflected in comparatives for the whole of the 17 month period ended 31 December 2006, the reason being that due to common ownership and control of the respective entities both before and after the business combination, the business combination falls outside the scope of IFRS 3. 

2.   Earnings per Ordinary Share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares in the convertible loan notes. The convertible loan notes are assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the interest expense.

 As the Company was loss-making in the 17 months ended 31 December 2006, the convertible loan notes were anti-dilutive, and in accordance with IAS 33 were ignored for the purposes of calculating diluted earnings per share. 

	2007			2006
	Profit	Weighted average number of shares	Per share amount	Loss	Weighted average number of shares	Per share amount
	£		pence	£		pence
Basic EPS
Profit/(Loss) attributable to ordinary shareholders	500,233	100,000,000	0.50	(962,780)	29,411,765	(3.27)
	500,233	100,000,000	0.50	(962,780)	29,411,765	(3.27)

	2007
	Profit	Weighted average number of shares	Per share amount
	£		pence
Diluted EPS
Profit attributable to ordinary shareholders	500,233	100,000,000
Interest expense on convertible loan notes and assumed conversion of convertible loan notes	8,649	1,840,000
Profit and weighted average number of shares for diluted EPS	508,882	101,840,000	0.50

3.   Share capital

	2007		2007		2006		2006
	No.		£		No.		£
Authorised:
Ordinary shares of 1p each	200,000,000		2,000,000		200,000,000		2,000,000
Issued and Fully Paid:
Ordinary shares of 1p each	100,000,000		1,000,000		100,000,000		1,000,000

4.   Movement on reserves

The merger reserve represents a reserve arising on consolidation, being the share capital and share premium account balances of GruppeM Hong Kong Limited at 16 July 2004 less the nominal value of the shares issued by the Company to acquire the shares, reflecting the position as if the merger had occurred on 16 July 2004.

Group	Merger reserve	Foreign currency translation reserve	Retained losses
	£	£	£
At 31 December 2006	(1,392,156)	44,715	(1,526,695)
Profit for the period	-	-	500,233
Foreign exchange loss on translation	-	(16,005)	-
At 31 December 2007	(1,392,156)	28,710	(1,026,462)

Circulation to shareholders

The annual report and accounts will be posted to shareholders today and will be available to the public from the Company's registered office at GruppeM Investments PLC, Suite 1.3 Buckingham Court, 78 Buckingham Gate, London, SW1E 6PD and on the Company's website: www.gruppemplc.com.

For more information please contact:

GruppeM Investments PLC
Kenny Chen

Tel: [phone]

Shore Capital and Corporate Limited
Alex Borrelli

Tel: [phone]

Further information on GruppeM Investments PLC can be found on the Company's website: www.gruppemplc.com.

 

END

 

 

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