Great Group Holdings 2011 Annual Report

annual report 2011
Can traditional be
sexy ?
Corporate Profile
Great Group Holdings Limited (Great Group or the Group) is an undergarment company based in Quanzhou City, Fujian Province, PRC. The Group engages principally in the design, manufacture, distribution and sale of mens and womens undergarments. It also designs, manufactures and sells childrens and infants apparel, swimwear, casual home wear and pyjamas. The design, manufacture and sale of mens and womens undergarments take place under the Groups proprietary GRAT. UNIC brand in the PRC. This brand targets middle-to upperclass consumers. The brand is present at over 140 points of sales across 18 provinces/municipalities/autonomous regions in the PRC. These comprise of specialty stores or dedicated shelf-spaces located strategically in shopping malls, department stores and commercial areas of a number of major cities. The brand is also carried by one specialty store in Hong Kong. Great Group was incorporated on 29 February 2008 in Singapore as an investment holding company and subsequently listed on the SGX-ST on 25 September 2009.
,, GRAT.UNIC () 18 140 , 2008229 . 2009925
Contents Chairmans Message Financial Review Financial Highlights Board of Directors Key Management Group Structure Corporate Information Financial Contents Corporate Governance Report
10 14 16 18 22 23 24 25 26
Some may classify us a traditional organisation due to the nature of our business operations. We believe we are much more than that. Yes, we manufacture products that are traditionally fundamental for everyday needs. But we infuse it with contemporary designs and innovative manufacturing processes for end results that are, anything but traditional. And thats why we believe we are..
...innovators
...trendsetters
...and creators of
...sexy.
Chairmans Message
Dear Shareholders, On behalf of the Board of Directors, it is my pleasure to present to you our Annual Report for the financial year ended 31 December 2011 (FY2011). FY2011 was a year in which the Eurozone debt crisis, coming so soon after the U.S. financial crisis caused by the sub-prime problem, significantly impacted the global garment industry. Amidst the high unemployment and weaker consumer spending, demand for garments has slowed. As a significant portion of our sales is derived from European customers, Great Group was impacted by the reductions and delays of our contract manufacturing orders.
The economic sentiment in Europe started to decline significantly in the second half of FY2011, even as the earlier pressure from rising raw material prices started to ease. It was also a period when our entire management team was focused on two key activities the relocation of a significant portion of our manufacturing activities in Quanzhou City to a new facility and increased marketing activities within the Peoples Republic of China (PRC) and at various garment fairs around the world. Hence, it is against this economic backdrop and significant internal developments that I present you our financial scorecard. Financial Review Revenue for FY2011 rose 8.6% to RMB679.8 million. This was mainly attributable to higher sales volume in the first nine months of the financial year before the slowdown (due to the Euro crisis) gathered momentum in the fourth quarter. Our increased sales orders recorded amidst the challenging conditions also reflected higher average selling prices achieved as we widened our product range. Gross profit increased by 11.0% from RMB109.6 million in FY2010 to RMB121.7 million in FY2011, mainly contributed by the contract manufacturing segment which recorded higher sales volume with higher average selling price and the reduced pressure from raw material prices, in particular cotton and cloth materials. Net profit attributable to shareholders in FY2011 of RMB53.0 million was lower than RMB75.1 million a year ago, due to the slowdown in export sales of some key products, increase in selling and distribution expenses and administrative expenses, professional fees as well as higher income tax expense. Earnings per share (EPS) for FY2011 (based on issued share capital base of 265 million shares) decreased to 20.0 RMB cents from 28.32 RMB cents in FY2010. Net asset value per share as at 31 December 2011 was at 1.55 RMB compared to 1.41 RMB as at 31 December 2010.
Strategies to Respond to Market Conditions The Group has already set in motion several initiatives to respond to the challenges in the operating environment. I will outline here the strategies already in place or being contemplated. The first is to improve our product mix to increase revenue as well as gross margins. Since 2010 the Group has been introducing more products (such as childrens wear, swim wear, casual wear and pajamas) to reduce our dependence on undergarments. In line with this, we are incorporating more design elements to offer original design manufacture. This has deepened our value proposition to existing customers who have increased orders, and attracted the attention of many new customers as we participate in various trade fairs. Indeed, as shareholders would have noticed, our top line has continued to grow amidst the economic uncertainty as has our gross profit, reflecting in part the initial success of this strategy. The second strategy comprises our ongoing efforts to improve operational and financial efficiencies. While this has been ongoing for a while, the year under review marked a major milestone when we completed the construction and fit-out of our new production facility at the Jiangnan High-Tech Information Industrial Zone (JHIIZ) in Quanzhou City in Fujian Province. This new facility which measures 60,000 square meters is significant in that it serves as a major catalyst for us to introduce two key initiatives: A significant increase in capacity which will allow us to reap economies of scale The introduction of lean production methods and practices to significantly improve strategic planning, procurement processes, workflow, productivity while reducing cycle times and production costs. Concurrent with the operational initiatives we are also working hard to improve financial efficiencies, including inventory, cash management and cash conversion cycles.
Great Group Holdings Limited annual report 2011
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Chairmans Message
The third prong of our strategy comprises corporate actions including potential mergers and acquisitions. The dramatic changes in the global garment industry constitute a crisis which offers a major opportunity. While outsourced garment manufacturing to the PRC has taken place for nearly 30 years since the PRCs economic reforms, the next wave of global manufacturing will comprise a combination of vertical integration and much-deeper relationship between end-customer and manufacturers such as Great Group. Allow me to elaborate. Many Western customers have continued to depend on trading houses as intermediaries. But the Eurozone crisis is now leading to a major disintermediation, in which the role of the middleman is reduced as both customers and manufacturers seek to bridge to each other directly. It has, and will, lead to consolidation of weaker manufacturers in the PRC. For Great Group, we have the advantages of size (being one of the largest garment manufacturers in Quanzhou) and a new facility which offers superior value to competitors in terms of modern production methods. To take this strategy further, we will consider acquisitions, investments and alliances with trading companies themselves. The Company is confident that this strategy of disintermediation being executed at a time when Western customers are looking to cut costs further during the current crisis will yield opportunities,
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increase our sales and marketing network and raise our relationship with customers to a completely new level while improving our own vertical integration. In these three strategies lie the destiny of Great Group. The crisis in the global garment industry offers an exciting opportunity for us to seize. As shareholders are aware, the Group had proposed a dual listing on the London Stock Exchange. However, in view of the weak market conditions in Europe, the Group has decided to delay this proposed dual listing. Acknowledgements On behalf of the Board of Directors, we wish to take this opportunity to record our sincere thanks to so many people who have contributed so much during such a challenging and eventful year. To the many hands who transformed JHIIZ into a reality, all management and staff who have worked so hard, our customers and partners, and our loyal shareholders, we wish to express our sincere appreciation. We look forward to your continued support as we chart an exciting future for Great Group. Mr Weng Wenwei Executive Chairman and CEO
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Financial Review
Review by Business Segment Review by Geographical Region
FY2010
FY2011
FY2010
FY2011
FY2010 FY2011 Contract Manufacturing GRAT.UNIC Superman 88.3% 11.5% 0.2% 91.8% 8.2% Asia Europe North America South America Other Revenue and Gross Profit The Groups revenue increased 8.6% to RMB679.8 million in the financial year ended 31 December 2011 (FY2011) from RMB625.8 million in FY2010. This was mainly attributable to higher sales volume in the first nine months of FY2011 as a result of increased demand for our contract manufacturing products with higher average selling price. Gross profit increased by 11.0% to RMB121.7 million in FY2011 from RMB109.6 million in FY2010. Gross profit margin rose to 17.9% from 17.5%, respectively, largely due to higher gross profit from mens and womens undergarments, partially offset by lower margin of other products. Expenses Selling and distribution expenses increased by RMB8.9 million to RMB17.6 million in FY2011 from RMB8.7 million in FY2010, mainly contributed by increase in marketing and promotional expenses, increase in payroll costs and costs of setting up of retail and flagship stores in Greater Shanghai as well as higher insurance, consulting fees and port charges. Administrative expenses rose by RMB16.1 million to RMB32.2 million in FY2011 from RMB16.1 million in FY2010. This was mainly due to expenses incurred for the proposed dual listing on The London Stock
FY2010 FY2011 26.5% 45.7% 9.9% 14.3% 3.6% 19.0% 54.4% 6.0% 15.2% 5.4%
Exchange. In view of the weak market conditions in Europe, the Group has decided to delay the proposed dual listing. Professional and corporate expenses, staff costs, office rental and expenses as well as depreciation charges had also increased significantly as compared to FY2010. Finance expenses increased by RMB4.1 million to RMB6.6 million in FY2011 from RMB2.5 million in FY2010. This was mainly due to higher bank borrowings and interest rates. Profit Before and After Tax Due to higher selling and distribution expenses and administrative expenses, profit before tax decreased by 23.3% to RMB63.4 million in FY2011 compared to a year ago. Income tax expense increased by 36.9% to RMB10.5 million in FY2011 from RMB7.7 million in FY2010. The effective tax rate of 16.5% in FY2011 was higher than the effective tax rate of 9.3% in FY2010 mainly due to the expiration of tax incentive for a subsidiary. Profit for FY2011 deceased 29.5% to RMB52.9 million from RMB75.1 million in FY2010. Financial Position Cash and cash equivalents decreased by 26.2% to RMB92.3 million as at 31 December 2011 from RMB125.1 million as at 31 December 2010, mainly due to net cash outflows used in investing activities.
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Trade and other receivables increased by 14.4% to RMB323.2 million as at 31 December 2011 from RMB282.5 million a year ago, due to higher advances to suppliers. Inventories as at 31 December 2011 amounted to RMB57.8 million representing an increase of approximately RMB32.5 million compared to RMB25.3 million as at 31 December 2010. This was mainly due to 1) delay in taking delivery by some of the customers; 2) increase in pre-production raw materials; and 3) higher finished goods for stocking purposes at outlets and flagships stores in Great Shanghai. Due to the additional construction costs for the new factory at Jiangnan Hi-Tech Information Industrial Zone (JHIIZ), property, plant and equipment increased by 124.6% to RMB164.4 million as at 31 December 2011 compared to a year ago. Current liabilities amounted to RMB252.6 million as at 31 December 2011, an increase of RMB95.5 million from RMB157.1 million as at 31 December 2010. This was mainly due to higher borrowings related to construction of the new factory at JHIIZ and increased bills issued to the suppliers. Total shareholders equity increased by 10.2% to RMB411.1 million as at 31 December 2011 from RMB373.2 million as at 31 December 2010, mainly attributable to net profits in FY2011, partially offset by dividends paid to equity holders. Cash Flow Cash and bank balances decreased by RMB51.5 million to RMB61.5 million as at 31 December 2011 compared to a year earlier. The Group continued to generate positive cash flow from operations of RMB20.2 million. Net cash used in investing activities of RMB96.7 million represented payments for new machineries, office equipment and construction of the new JHIIZ factory. Net cash flow from financing activities amounted to RMB24.9 million was mainly of net proceeds from borrowings, partially offset by payment of dividends to equity holders.
Financial Highlights
Summarised Income Statement (RMBmil) For Financial Year Ended 31 December Revenue - Contract Manufacturing - GRAT.UNIC - Superman Total Gross Profit Profit Before Interest & Tax (PBIT) Interest Income Finance Expenses Profit Before Income Tax (PBT) Income Tax Net Profit (NP) Selling & Distribution Expenses as a % over Revenue Administrative Expenses as a % over Revenue Summarised Balance Sheet (RMBmil) As At 31 December Cash and Cash Equivalents Property, Plant and Equipment Current Assets Non-current Assets Current Liabilities Equity Inventories Financial Indicators/Ratios For Financial Year Ended 31 December PBIT Margin PBT Margin NP Margin Earnings Per Share (RMB cents) Return on Equity (ROE) (%) Return on Assets (ROA) (%) Current Ratio (x) Gearing Ratio (x) Liquidity Ratio Net Asset Value (NAV) Per Share (RMB cents) Number of Ordinary Shares Issued (million)* Average Trade Receivables Turnover (Days) Average Trade and Bills Payables Turnover (Days) Average Inventory Turnover (Days) FY2007 242.4 19.9 262.3 71.0 61.2 0.2 (0.7) 60.7 (4.2) 56.5 1.8% 1.3% FY2007 9.0 11.3 118.8 15.7 49.9 84.6 27.7 FY2007 23.3% 23.1% 21.5% 28.23 66.73 41.98 2.38 0.59 1.83 42.30 200 53 40 33 FY2008 351.1 48.7 1.0 400.8 104.3 88.9 0.4 (1.9) 87.4 (16.6) 70.8 2.0% 1.5% FY2008 33.1 17.4 201.3 21.6 67.5 155.4 34.0 FY2008 22.2% 21.8% 17.7% 35.40 45.56 31.77 2.98 0.43 2.48 77.71 200 63 25 38 FY2009 454.3 60.2 1.8 516.3 97.9 85.4 0.3 (1.9) 83.7 (8.7) 75.0 1.3% 2.3% FY2009 107.9 19.4 336.8 36.0 59.7 313.1 30.4 FY2009 16.5% 16.2% 14.5% 34.71 23.96 20.12 5.64 0.19 5.13 118.15 265 75 14 28 FY2010 552.6 72.2 1.0 625.8 109.6 85.0 0.2 (2.5) 82.7 (7.7) 75.1 1.4% 2.6% FY2010 125.1 73.2 436.5 93.8 157.1 373.2 25.3 FY2010 13.6% 13.2% 12.0% 28.32 20.11 14.15 2.78 0.42 2.62 140.83 265 84 24 20 FY2011 623.9 55.9 679.8 121.7 70.1 1.5 (6.6) 63.4 (10.5) 52.9 2.6% 4.7% FY2011 92.3 164.4 476.3 187.4 252.6 411.1 57.8 FY2011 10.3% 9.3% 7.8% 19.98 12.88 7.98 1.89 0.61 1.66 155.14 265 83 46 27
*Prior to FY2009 were based on pre-invitational shares of 200,000,000 00 16
Group Revenue
(RMBmil)
400.8 262.3 FY2007 FY2008
516.3
625.8
679.8
FY2009
FY2010
FY2011
CAGR 26.88%
Net Profit Attributable to Equity Holders (RMBmil) 70.8 56.5 75.0 75.1 52.9
FY2007
FY2008
FY2009
FY2010
FY2011
Net Assets / NAV Per Share (RMBmil / RMB Per Share) 1.55 1.41 1.18 411.1 373.2 0.78 313.1 0.42 84.6 FY2007 155.4 FY2008 FY2009 FY2010 FY2011
NAV Per Share
Overall Profit Margin 27.1 21.5 26.0 19.0 17.7 14.5 FY2009 17.5 12.0 FY2010
(%)
17.9 7.8 FY2011
FY2007
FY2008
Gross Profit Margin
Net Profit Margin
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Board of Directors
Top from left to right
Weng Wenwei Weng Wenju

Bottom from left to right
Teoh Teik Kee Lim Yeow Hua @ Lim You Qin Lee Kim Lian, Juliana
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Board of Directors
Weng Wenwei Weng Wenwei is the Executive Chairman and CEO of our Group. He was appointed to our Board on 29 February 2008 and is responsible for the overall strategic and business management of our Group. Weng Wenwei has over 20 years of business and management experience in the textile industry. In May 2005, he founded Fujian Great and was appointed as its general manager responsible for its business strategies and development. In July 2000, he was appointed as the general manager of Quanzhou Great where he was responsible for its business operations and management. In January 1997, he founded Dachuan Textile Factory in Licheng District, Quanzhou City. Dachuan Textile Factory was engaged in the manufacture of undergarments for export to its overseas customers and as the director and head of the factory, Weng Wenwei was responsible for its management and business operations from January 1997 to April 2003. From February 1993 to December 1996, he was the head of Hesheng Apparel Factory in Yonghe town , a small workshop that manufactured clothing for clients. He graduated from the Zimao Vocational High School in Jinjiang City, Fujian Province in 1988 with a high school graduation certification. He has been the vice president of the Industry and Commerce Association (Chamber of Commerce) of Licheng District since 2007. Weng Wenju Weng Wenju is the Executive Director and Procurement Manager of our Group. He was appointed to our Board on 23 December 2008 and is responsible for the sourcing and procurement of raw materials and accessories used in our production process. He has been our procurement manager since August 2005. In August 2004, he joined our Group as assistant to the general manager, responsible for assisting the general manager in the daily operation and management of Quanzhou Great. He started his career in April 2004 as a technician in Quanzhou Jitong Computer Company in charge of computer technical maintenance, until July 2004 before joining our Group. He graduated from Quanzhou Business and Trade School with a graduation certification in Computer and Application in 2004. Teoh Teik Kee Teoh Teik Kee is our Non-Independent Non-Executive Director. He was appointed to our Board on 18 June 2009 as Independent Director and was re-designated as a Non-Independent Non-Executive Director on 15 August 2011. Mr Teoh is a Chartered Accountant by training, and has worked with KPMG Peat Marwick McLintock in London and PricewaterhouseCoopers in Singapore. He also has extensive experience in investment banking and stock broking when he was with the DBS Group from 1993 to 2001. Mr Teoh graduated from Aston University, Birmingham, United Kingdom with a Bachelor of Science (Honours) degree in Managerial and Administrative Studies, and is a member of The Institute of Chartered Accountants in England and Wales. He also has a diploma in Corporate Treasury Management awarded by The Association of Corporate Treasurers in the United Kingdom. He also serves as an independent director on the board of Singapore listed company, Luzhou Bio-Chem Technology Limited and Hong Kong listed company, City e-Solutions Ltd.
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Lim Yeow Hua @ Lim You Qin Lim Yeow Hua @ Lim You Qin is our Lead Independent Director. He was appointed to our Board on 18 June 2009 as Independent Director and was appointed as Lead Independent Director on 15 August 2011. He is currently the managing director of Asia Pacific Business Consultants Pte. Ltd., a Singapore company providing tax and business consultancy services. Mr Lim has more than 20 years of experience in the tax, financial services and investment banking industries. Prior to founding Asia Pacific Business Consultants Pte. Ltd., he has held several management positions in various organizations including senior regional tax manager with British Petroleum (BP), director (Structured Finance) at UOB Asia Ltd, senior tax manager at KPMG, senior vice president (Structured Finance) at Macquarie Investment Pte Ltd., senior tax manager at Price Waterhouse and deputy director at the Inland Revenue Authority of Singapore. Mr Lim holds a Bachelors Degree in Accountancy and a Masters Degree in Business Administration from the National University of Singapore. He is a fellow member of the Institute of Certified Public Accountants of Singapore (ICPAS) and a full member of the Singapore Institute of Directors.
He also serves as an independent director on the board of Singapore listed companies: Advanced Integrated Manufacturing Corp Limited, China Minzhong Food Corporation Limited, Eratat Lifestyle Limited, KSH Holdings Limited and KTL Global Limited. Lee Kim Lian, Juliana Lee Kim Lian, Juliana is our Independent Director. She was appointed to our Board on 18 June 2009 and was last re-elected at the Companys Annual General Meeting in April 2010. Ms. Lee holds a Bachelor of Laws (Honours) degree from the National University of Singapore and is a member of the Singapore Institute of Directors. She has more than 19 years of experience in legal practice and is currently a director of Aptus Law Corporation, heading its corporate practice. Her main areas of practice are corporate law, corporate finance, mergers and acquisitions and venture capital. Ms. Lee also serves on the boards of listed companies, Lee Metal Group Ltd and Nordic Group Limited.
Key Management
Cai Ane - General Manager Cai Ane has been our General Manager (Production) since May 2000 and is responsible for overseeing the production process and day-to-day management of our Groups Production Department. Cai Ane has more than 10 years of experience in the textile industry. Between January 1997 and April 2003, she was assisting the head of Dachuan Textile Factory in managing its operations. Between February 1993 and December 1996, she was an assistant to the head of Hesheng Apparel Factory in Yonghe town and was assisting in the management of its production of clothing for clients. Prior to that, she worked as an apprentice for various garment manufacturing factories in the PRC to gain experience in the garment manufacturing business from September 1983 to February 1993. Ms Cai is the wife of our Executive Chairman and CEO, Weng Wenwei. Lee Teck Kheng - Chief Financial Officer Lee Teck Kheng was appointed as Chief Financial Officer of the Group in November 2011. Mr. Lee is based in Singapore and is responsible for overseeing the financial, accounting and taxation matters of the Group. Prior to this, from 2007 to 2011, Mr Lee was Group Financial Controller of Sei Woo Technologies Limited Singapore. From 1999 to 2007, Mr Lee was the Group Financial Controller of KIG Singapore, where apart from his duties in leading the financial and accounting functions of the Groups regional operations, he also undertook additional responsibility as the Chief Financial Officer of KIG Glass Berhad, a Malaysia Bursa-listed company. From 1979 to 1997, he held various management positions in finance, overseeing the entire spectrum of finance and accounting, tax, risk management and investor relations, across a wide range of industries including multi-national and government-linked corporations. Mr Lee has been a full member of the Institute of Certified Public Accountants of Singapore (ICPAS) since 1989. He received his Bachelor of Commerce (Accountancy) degree from Nanyang University in 1979. Tse Shek China Financial Controller Tse Shek was appointed as China Financial Controller of the Group in November 2011. Mr. Tse is based in Quanzhou and is responsible for management of finance, accounting, human resources and administration of all subsidiaries of the Group in China. Mr Tse has extensive experience with more than 27 years working in the accountancy and financial services industries including holding several management positions in various organizations. From March 2009 until joining the Group, Mr Tse worked as an Acting Financial Controller at GP Batteries International Ltd, responsible for financial and operational management of a number of production plants. Prior to this, he was Finance Manager at Whitehill Electrochemical Company Ltd (owned by GP Batteries International Ltd). Mr Tse graduated from Hong Kong Polytechnic with an Endorsement Certificate and Higher Certificate in Accountancy. He also has a Master in Business Administration from the University of South Australia which he completed in April 1999 and a Diploma in Legal Studies from The University of Hong Kong in August 2001. Wei Xuefen - Sales Manager Wei Xuefen has been our Sales Manager since February 2003 and is responsible for product sales and marketing activities, such as developing sales and marketing strategies, maintaining customer relationships, securing new customers, monitoring market trend and providing customers with after-sales service. Prior to joining our Group in February 2003, she worked in Quanzhou Licheng Dachuan Textile Factory in March 2000 where she was responsible for following up with customers on trade receivables. In March 1999, she joined Quanzhou Green Garments Co., Ltd. as a procurement staff and left in March 2000. Between September 1993 and September 1998, she worked at Shishi Huasheng Computer Printing Co., Ltd. as sales manager in 1993. She started her career in July 1992 as a secretary to the general manager in Shishi Lihui Computer Printing Co., Ltd. and left in September 1993. She obtained a graduation certification (Business Administration) from Continuing Education School of Huaqiao University in 1992.
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Group Structure
Great Group Holdings Limited
Fujian Great Fashion Industry Co..Ltd
Quanzhou Great Garments Co., Ltd
Great Worldwide (Trading) Limited
Great Holding Limited
Grixpro International Trading Limited
Great Fashion Trading (Shanghai) Limited
Great Brand Management Limited
Grixpro Trading (Xiamen) Limited
23 00
Corporate Information
Board of Directors Weng Wenwei Executive Chairman and CEO Weng Wenju Executive Director Teoh Teik Kee Non-Independent Non-Executive Director Lim Yeow Hua @ Lim You Qin Lead Independent Director Lee Kim Lian, Juliana Independent Director Audit Committee Lim Yeow Hua @ Lim You Qin Chairman Teoh Teik Kee Lee Kim Lian, Juliana Remuneration Committee Lee Kim Lian, Juliana Chairman Lim Yeow Hua @ Lim You Qin Teoh Teik Kee Nomination Committee Lee Kim Lian, Juliana Chairman Teoh Teik Kee Lim Yeow Hua @ Lim You Qin Registered Office 36 Carpenter Street Singapore 059915 Principal Office and Contact Details Xiantang District, Changtai Street, Licheng District, Quanzhou City, Fujian Province, China Share Registrar and Share Transfer Agent Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Independent Auditors Nexia TS Public Accounting Corporation 100 Beach Road #30-00 Shaw Tower Singapore 189702 Director-in-charge: Philip Tan Jing Choon CPA Singapore Internal Auditors BDO Consultants Pte Ltd. 21 Merchant Road #05-01, Royal Merukh S.E.A Building Singapore 058267 Principal Bankers Bank of China, Quanzhou Branch Bank of China Building, Fengze Street, Quanzhou City, Fujian Province, the PRC Industrial Bank Co., Ltd., Quanzhou Branch Industrial Bank Building, Fengze Street, Quanzhou City, Fujian Province, the PRC China Construction Bank, Quanzhou Licheng Sub-branch Wenling Street Zhongduan, Quanzhou City, Fujian Province, the PRC Industrial and Commercial Bank of China, Quanzhou Licheng Subbranch Wenling Street Zhongduan, Quanzhou City, Fujian Province, the PRC
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Huaxia Bank, Quanzhou Branch No. 81, Wengling Street, Licheng District, Quanzhou City, Fujian Province, the PRC HSBC (Hong Kong) G/F, 82-84 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong Bank of Quanzhou Kaiyuan Subbranch 48, East Street, Licheng District, Quanzhou City, Fujian Province, the PRC Shanghai Pudong Development Bank, Quanzhou Branch 29, Fengze Street, Fengze District, Quanzhou City, Fujian Province, the PRC Xiamen International Bank International Bank Building, #08-10, Lujiang Street, Xiamen City, Fujian Province, the PRC China Merchant Bank, Quanzhou Jiangnan Sub-branch Troop 73141 Apartment, Xingxian Street, Licheng District, Quanzhou City, Fujian Province, the PRC China Everbright Bank, Quanzhou Licheng Sub-branch Youth Building, #288, Tianan Street, Fengzhe District, Quanzhou City, Fujian Province, the PRC China Construction Bank Corporation, Singapore Branch 9 Raffles Place #33-01/02 Republic Plaza Singapore 048619 OCBC Bank 65 Chulia Street #01-00 OCBC Centre Singapore 049513
Company Secretaries Ong Wei Jin, LL.B. (Hons) Goh Wei Lin, LL.B. (Hons)
Financial Contents Corporate Governance Report
26 37 40 41 42 43 44 45 46 84 85
Directors Report Statement by Directors Independent Auditors Report Consolidated Statement of Comprehensive Income Balance Sheets Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Statistics of Shareholdings Notice of Annual General Meeting Proxy Form
Corporate Governance Report

For the financial year ended 31 December 2011 Great Group Holdings Limited (the Company) recognises the importance of a high standard of corporate governance within the Companys group of companies (the Group) and is committed to maintaining it. Good corporate governance establishes and maintains a legal and ethical environment, which strives to preserve and enhance the interests of all shareholders. The Company adopts practices based on the Singapore Code of Corporate Governance 2005 (the Code) and the Best Practice Guide issued by the Singapore Exchange Securities Trading Limited (the SGX-ST). The board of directors of the Company (the Board) is pleased to report on the compliance of the Company with the Code except where otherwise stated and such compliance is regularly reviewed to ensure transparency and accountability.
(A) BOARD MATTERS Principle 1: The Boards conduct of its affairs

The Boards primary role is to provide protection and enhancement of shareholders long-term value. The principal functions of the Board include: supervises the management of the businesses and affairs of the Group reviews and approves the Groups strategic plans, key operational initiatives, major funding and investment proposals identifies principal risks of the Groups businesses and ensures the appropriate systems are in place to manage these risks reviews the financial performance of the Group evaluates the performance and compensation of senior management personnel; and assumes responsibility for corporate governance practices.
To further assist in the execution of its responsibilities, the Board has established a number of Board committees which include an Audit Committee (AC), a Nominating Committee (NC) and a Remuneration Committee (RC) (collectively, the Board Committees). These committees function within clearly defined terms of references and operating procedures, which are reviewed on a regular basis. The effectiveness of each committee is also constantly monitored. The Board meets on a quarterly basis and whenever necessary to discharge their duties. Dates of the Board meetings are normally set by the directors well in advance. Meetings of the Board and Board Committees may be conducted by way of telephone conferencing, if necessary. The number of meetings held by the Board and Board Committees and attendance for the financial year 31 December 2011 (FY2011) up to the date of this Report are summarized in the table below: Board 5 AC RC 4 1 No. of meetings attended 4(4) 2(4) 4 4 4 1(4) 1(4) 1 1 1 NC 1
Number of meetings held Directors Name of Directors Weng Wenwei Weng Wenju Teoh Teik Kee(1) Lee Kim Lian, Juliana(2) Lim Yeow Hua @ Lim You Qin(3)
5 4 5 5 5
1 1(4) 1 1 1
Notes: 1. Redesignated as a Non-Independent Non-Executive Director and ceased to be the Lead Independent Director effective 15 August 2011. 2. Appointed as Chairman of the RC on 15 August 2011. 3. Appointed as Lead Independent Director and Chairman of the AC on 15 August 2011. 4. Attendance by invitation. 26

For the financial year ended 31 December 2011
Principle 2: Board Composition and Balance

The Board currently has five members, comprising two (2) executive directors, one (1) non-independent non-executive director and two (2) independent directors, all of whom have the relevant core competence and diversity of experience to enable them to contribute effectively to the Group. Brief profiles of each Director in office at the date of this Report are set out in pages 20 to 21 of this Annual Report. As at the date of this report, the Board comprises the following members: Weng Wenwei Weng Wenju Teoh Teik Kee Lim Yeow Hua @ Lim You Qin Lee Kim Lian, Juliana Executive Chairman and Chief Executive Officer (CEO) Executive Director Non-Independent Non-Executive Director Lead Independent Director Independent Director
The Board constantly examines its size and, with a view to determining the impact of the number upon effectiveness, decides on what it considers an appropriate size for itself. The composition of the Board will be reviewed on an annual basis by the NC to ensure that the Board has the appropriate mix of expertise and experience, adequate for the scale of operations of the Company. In determining the size and composition of the Board, the Board ensures that at least one-third are independent non-executive Directors and that each Director should submit him-/herself for re-nomination and re-election at regular intervals of at least once every three years. The NC had reviewed the independence of the Directors for FY2011 in accordance with the Codes criteria of independence and is of the view that the two non-executive Directors, namely Lim Yeow Hua @ Lim You Qin and Lee Kim Lian, Juliana are independent directors within the meaning of the Code.
Principle 3: Chairman and CEO

Weng Wenwei is the Executive Chairman and CEO. He is responsible for the day-to-day running of the Group as well as the exercise of control of the quality, quantity and timeliness of information flow between the Board and management. The functions of the Chairman and CEO are not separated given the strong element of independence presence on the Board and the scope and nature of the operations of the Group. However, as good corporate governance practice and to ensure that there is no concentration of power and authority vested in one individual, the Group has appointed Lim Yeow Hua @ Lim You Qin as the Lead Independent Director. The Lead Independent Director will be available to the shareholders where they have concerns which cannot be resolved through the normal channels of the Chairman or CEO, or where such contact is not possible or inappropriate. Hence, the Board is of the opinion that sufficient checks and safeguards are in place to ensure that the process of decision making is independent and based on collective decisions without individual exercising any considerable power or influence. As Chairman of the Board, Weng Wenwei bears responsibility for the effective working of the Board. He is responsible for, amongst others, ensuring that Board meetings are held when necessary, setting the Board meeting agenda in consultation with Chief Financial Officer, assisting in ensuring compliance with the Groups guidelines on corporate governance, acting as facilitator at Board meetings and maintaining regular dialogue with the management on all operational matters. The Directors have separate and independent access to the Company Secretary, whose duties include ensuring the Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary also attends all meetings of the Board and Board Committees. In addition, there is constant communication between Board members and key decisions require approval from all Directors prior to implementation. Besides giving guidance on the corporate direction of the Group, the role of the Chairman includes the scheduling and chairing of Board meetings and controlling of the quality, quantity and timeliness of information supplied to the Board. Weng Wenwei also sets the business strategies and directions for the Group and manages the business operations of the Group.
Great Group Holdings Limited annual report 2011 27

Principle 4: Board Membership

The Nominating Committee (NC) is established for the purposes of ensuring that there is a formal and transparent process for all Board appointments. The NC is chaired by Ms. Lee Kim Lian, Juliana (Independent Director) with the following directors as members: Lim Yeow Hua @ Lim You Qin Teoh Teik Kee Weng Wenwei (Ceased to be a member of NC effective 9 March 2012) The Board has approved the written terms of reference of the NC. The NC performs the following functions: (a) To make recommendations to the Board of the appointment of new executive and non-executive directors, including making recommendations on the composition of the Board generally and the balance between executive and non-executive Directors appointed to the Board. To regularly review the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary. To determine the process for search, nomination, selection and appointment of new board members and be responsible for assessing nominees or candidates for appointment or election to the Board, determining whether or not such nominee has the requisite qualifications and whether or not he/she is independent. To determine annually whether or not a director is independent. To recommend Directors who are retiring by rotation to be put forward for re-election. To decide whether or not a director is able to and has been adequately carrying out his/her duties as a Director of the Company, particularly when he/she has multiple board representations. The NC shall recommend to the Board internal guidelines to address the competing time commitments faced by directors who serve on multiple boards. (g) To decide how the Boards performance may be evaluated and propose objective performance criteria, as approved by the Board that allows comparison with its industry peers, and address how the Board has enhanced long term shareholders value. To be responsible for assessing the effectiveness of the Board as a whole and for assessing the effective contribution and commitment of each individual Director to the effectiveness of the Board. The results of the performance evaluation will be reviewed by the Chairman and the assessment shall be disclosed annually.
(b) (c)
(d) (e) (f)
(h)
The directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. The Companys Articles and Association provides that one third of the Board, or the number nearest to one third is to retire by rotation at every Annual General Meeting (AGM). In addition, the Companys Articles of Association also provides that newly appointed directors are required to submit themselves for re-nomination and re-election at the next AGM of the Company. The NC had recommended the re-appointment of the following Director who will be retiring at the forthcoming AGM: i. ii. Mr Weng Wenju Ms. Lee Kim Lian, Juliana
28

For the financial year ended 31 December 2011 The Board had accepted the NCs recommendation and accordingly, the abovementioned Directors will be offering themselves for re-election. In considering the nomination, the NC has taken into account of the contribution of the Directors with reference to their attendance and participation at Board and Board Committee meetings as well as the proficiency with which they have discharged their responsibilities. The dates of appointment and last re-election of each director are set out below.
Directors Weng Wenwei Weng Wenju Teoh Teik Kee Lim Yeow Hua @ Lim You Qin Lee Kim Lian, Juliana
Designation
Executive Chairman & CEO Executive Director Non-Independent Non-Executive Director Lead Independent Director Independent Director
Date of Initial Appointment

29 February 2008 23 December 2008 18 June 2009 18 June 2009 18 June 2009
Date of last Re-election

25 April 2011 24 September 2009 23 April 2010 25 April 2011 23 April 2010
Principle 5: Board Performance

The NC has established a process for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual director. The performance criteria for the Board evaluation include an evaluation of the size and composition of the Board, the Boards access to information, accountability, Board processes and Board performance in relation to discharging its principal responsibilities in terms of the financial indicators as set out in the Code. The Board and the NC have endeavored to ensure that each Director appointed to the Board possesses the experience, knowledge and skills critical to the Groups business, so as to enable the Board to make sound and well-considered decisions.
Principle 6: Access to information

To assist the Board in fulfilling its responsibilities, the management provides the Board with a management report containing complete, adequate and timely information prior to the Board meetings. All Directors have separate and independent access to executives officers of the Company (Executive Officers), including the Company Secretary at all times. The Company Secretary and/or his nominee attend all Board and Board Committee meetings and ensure that Board procedures and all other rules and regulations applicable to the Company are complied with. Changes to regulations are closely monitored by the Management and for changes which have an important bearing on the Company or the Directors disclosure obligations, the Directors are briefed during the Board meetings. The Directors and the chairman of the respective Board Committees, whether as a group or individually are able to seek independent professional advice as and when necessary in furtherance of their duties at the cost of the Company.
29

(B) REMUNERATION MATTERS Principle 7: Procedures for Developing Remuneration Policies

The RC comprises three members, the majority of whom are Independent directors. It is chaired by Ms. Lee Kim Lian, Juliana (Independent Director) with the following directors as members: Lim Yeow Hua @ Lim You Qin Teoh Teik Kee The RC is regulated by a set of written terms of reference approved by the Board and has access to independent professional advice, if necessary. The RC recommends to the Board, a framework of remuneration and determines the specific remuneration packages and terms of employment for each of the Directors and executive officers of the Group as well as those employees related to the executive directors and controlling shareholders of the Group, such recommendation covering all aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits-in-kind. For the year under review, the RC held one (1) meeting. Each member of the Remuneration Committee shall abstain from voting on any resolutions in respect of his remuneration package.
Principle 8: Level and Mix of Remuneration

In setting remuneration packages, the Company takes into account pay and employment conditions within the same industry and in comparable companies, as well as the Groups relative performance and the performance of individual Directors. The remuneration of the Executive Chairman and CEO, is as disclosed in the Companys Prospectus dated 16 September 2009. His service agreement is for an initial period of three (3) years, with effect from 25 September 2009. Our Group has also previously entered into various letters of employment with all of the Executive Officers. Such letters typically provide for the salaries payable to the Executive Officers, their working hours, medical benefits, grounds of termination and certain restrictive covenants. Details of the employee share plan adopted by the Company are set out in the directors report section.
30

Principle 9: Disclosure on Remuneration

The breakdown of remuneration of the Directors and Executive Officers for FY2011 is set out below. Salary and other benefits
Remuneration Band and Name Directors Below S$250,000 Weng Wenwei
Director Fees
Bonus
Total
Weng Wenju Lim Yeow Hua @ Lim You Qin Teoh Teik Kee Lee Kim Lian, Juliana
Key Executives Below S$250,000 Cai Ane
100%
22% 32% 100% 100%
78% 68%
100%
100% 100% 100% 100%
Wei Xuefen Lee Teck Kheng Tse Shek Voon Choon Nie
100% 100% 100% 100% 92%
8%
100%
100% 100% 100% 100%
The Company does not have any employees who are immediate family members of a Director, the CEO or substantial shareholder, whose remuneration have exceeded S$150,000 during the financial year ended 31 December 2011. Directors fees are approved by shareholders at every Annual General Meeting of the Company.
(C) ACCOUNTABILITY AND AUDIT Principle 10: Accountability

The Board and the management of the Group always strive to conduct themselves in ways that deliver maximum sustainable value to our shareholders. The Board, through its announcements of results, aims to provide the shareholders with a balanced and understandable assessment of the Company and the Groups performance, position and prospects. Prompt fulfillment of statutory reporting requirements is but one way to maintain our shareholders confidence and trust in the Board and the managements capability and integrity. As part of building and maintaining shareholders confidence, reporting of consolidated financial results, via SGXNET, was made well within the time-frame stipulated in the SGX Listing Manual. The management currently provides the Board with appropriately detailed management accounts of the Groups financial performance, position and prospects on a regular basis.
Principle 11: Audit Committee

The AC comprises three members, the majority of whom are Independent directors. It is chaired by Mr. Lim Yeow Hua @ Lim You Qin (Lead Independent Director) with the following directors as members: Lee Kim Lian, Juliana Teoh Teik Kee

For the financial year ended 31 December 2011 The AC will assist the Board in discharging their responsibility to safeguard the assets, maintain adequate accounting records, and develop and maintain effective systems of internal control, with the overall objective of ensuring that management creates and maintains an effective control environment in the Company. The AC will provide a channel of communication between the Board of Directors, the management and the independent auditors of the Company on matters relating to audit. The Audit Committee meets as and when required (and at least quarterly) to perform the following functions: (a) To review with the independent auditors, their independence and objectivity annually; the audit plan, including the nature and scope of the audit and its cost effectiveness before the audit commences; their evaluation of the system of internal accounting controls; their audit report; their management letter and managements response; and any significant financial reporting issues and judgments so as to ensure integrity of the financial statements of the Company and any formal announcements relating to the Companys financial performance. To review the quarterly, half-yearly and full year financial results before submission to the Board for approval. To review the assistance and co-operation given by the management and the officers of the Group to the auditors. To review the internal audit programme and ensure co-ordination between the internal and independent auditors and management. To review the scope and results of the internal audit procedures and the internal auditors report on their findings directly to the AC. To discuss problems and concerns, if any, arising from audits, and any matters which the auditors may wish to discuss (in the absence of management, where necessary). To report to the Board its findings from time to time on matters arising and requiring the attention of AC. To review interested person transaction (if any) falling within the scope of Chapter 9 of the SGX Listing Manual, and to ensure that they are carried out on normal commercial terms and in accordance with the internal control procedures. To approve the internal control procedures and arrangements for all current and future related party transactions to ensure that they are carried out on arms length basis and on normal commercial terms which will not be prejudicial to the interests of the Company and shareholders. To review potential conflicts of interests, if any. To review all non-audit services provided by the auditors to ensure that they would not, in the ACs opinion, affect the independence of the auditors. To undertake such other reviews and projects as may be requested by the Board. To undertake such other functions and duties as may be required by statute or the Listing Manual, and by such amendments made thereto from time to time. To make recommendations to the Board on the appointment, re-appointment and removal of the independent auditors, and approving the remuneration and terms of engagement of the independent auditors. To review the adequacy of the Companys internal financial controls, operational and compliance controls, and risk management policies and systems established by the management.
(b) (c) (d) (e) (f) (g) (h)
(i)
(j) (k) (l) (m) (n) (o)

32

For the financial year ended 31 December 2011 Pursuant to the above, it is the opinion of the AC that the Company complies with the Codes guidelines on Audit Committees. In addition, the AC has explicit authority to investigate any matter within its terms of reference, full access to and co-operation of the Groups management, as well as reasonable resources to enable it to discharge its function properly. The AC has full discretion to invite any Director or management personnel to attend its meetings. The Groups independent auditor, Nexia TS, is an accounting firm registered with the Accounting and Corporate Regulatory Authority. The AC is satisfied that Nexia TS and the audit engagement partner assigned to the audit have adequate resources and experience to meet its audit obligations. In this connection, the Company has complied with Rules 712 and 715 of the Listing Manual. No non-audit services were provided by the independent auditors during FY2011. The AC had recommended the re-appointment of Nexia TS Public Accounting Cooperation as independent auditors at the forthcoming AGM.
Principle 12: Internal Controls

The Board acknowledges that it is responsible for the overall internal control framework and is fully aware of the need to put in place a system of internal controls within the Group to safeguard shareholders interests and the Groups assets, but recognizes that no cost effective internal control system will preclude all errors and irregularities. Internal control can provide only reasonable and not absolute assurance against material misstatement or loss. During the financial year, the Groups internal auditors had conducted annual review of the effectiveness of the Groups internal controls. The external auditors during the conduct of their normal audit procedures may also report on matters relating to internal controls. Any material non-compliance and recommendation for improvement were reported to the AC. The AC, with the participation of the Board, has reviewed the adequacy of the Groups internal controls that address the Groups financial, operational and compliance risk. The AC has also reviewed and continues to monitor the effectiveness of the actions taken by the management on the recommendations made by the internal and external auditors in this respect. Based on external and internal auditors report, the actions taken by the management, the on-going review and continuing efforts at enhancing controls and processes, the Board, with the concurrence of the AC, is of the opinion that, in the absence of any evidence to the contrary, the system of internal controls in place are adequate in meeting the needs of the Group in its current business environment.
Principle 13: Internal Audit

The Group outsources its internal audit function to BDO Consultants Pte Ltd, a member firm of BDO International. The Internal Auditor reports directly to the AC on audit matters and performs its works in line withthe Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The AC reviews and approves the annual internal audit plan as well as the internal audit reports and activities. The AC is of the view that the Internal Auditor has adequate resources to perform its functions and has, to the best of its ability, maintained its independence from the activities that it audits. The AC, on an annual basis, will assess the effectiveness of the Internal Audit by examining the scope of the Internal Audit work and its independence, the internal auditors reports and its relationship with the external auditors.
33

(D) COMMUNICATION WITH SHAREHOLDERS Principle 14: Communication with Shareholders

In line with continuous disclosure obligations of the Company, pursuant to the SGX-STs Listing Rules and the Singapore Companies Act, the Boards policy is that shareholders are informed of all major developments that impact the Group regularly and on a timely basis. Pertinent information is communicated to shareholders on a regular and timely basis through the following means: Results and annual reports are announced or issued within the mandatory period Material information are disclosed in a comprehensive, accurate and timely manner via SGXNET and the press Companys annual general meetings
All shareholders of the Company receive annual reports and are informed of shareholders meetings through notices published in the newspapers and reports or circulars sent to all shareholders. Shareholders are invited at such meetings to put forth any questions they may have on the motions to be debated and decided upon. If any shareholder is unable to attend, he is allowed to appoint up to two proxies to vote on his behalf at the meeting through proxy forms sent in advance. At shareholders meetings, each distinct issue is proposed as a separate resolution.
Principle 15: Greater Shareholder Participation

In addition, shareholders are encouraged to attend the AGM to ensure a high level of accountability and to stay informed of the Groups strategy and goals. The Directors regard AGMs as an opportunity to communicate directly with shareholders and encourage greater shareholder participation. The notice of the AGM is dispatched to shareholders, together with explanatory notes or a circular on items of special business, at least 14 days before the meeting. The Board welcomes questions from shareholders who have an opportunity to raise issues either informally or formally before or at the AGM. The Chairpersons of the AC, RC and NC are normally available at the meeting to answer those questions relating to the work of these committees. The Companys independent auditors will also be present to assist the Directors in addressing queries by shareholders.
(E) MATERIAL CONTRACTS

Save as disclosed in paragraph G Interested Party Transactions, there were no material contracts entered into by the Company or its subsidiaries involving the interests of the CEO, directors or controlling shareholders.
(F) DEALINGS IN SECURITIES

The Company has adopted internal codes in relation to dealings in the Companys securities pursuant to the SGX-ST Best Practices Guide that are applicable to all its officers. The Directors and officers are prohibited to trade in the Companys securities, during the period beginning one (1) month and two (2) weeks before the date of the announcement of the full year and quarterly results respectively and ending on the date of the announcement of the relevant results. In addition, the officers of the Company are advised not to deal with the Companys securities for a short term considerations and are expected to observe the insider trading laws at all times even when dealing in securities within the permitted trading periods.
34

(G) INTERESTED PARTY TRANSACTIONS

The Group has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the Audit Committee and that transactions are conducted on an arms length basis that are not prejudicial to the interests of the shareholders. When a potential conflict of interest occurs, the Director concerned will be excluded from discussions and refrain from exercising any influence over other members of the Board. The aggregate value of interested person transactions for the year ended 31 December 2011 is as follows: Aggregate value of all interested person transaction during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) RMB10.5 million
Name of interested person Loan to Mr Weng Wenwei (Please refer to our Q1 2011 announcement for further details) Entry into a consultancy agreement with Peeka Strategic Pte Ltd, in which our Non Independent and Non Executive Director Mr. Teoh Teik Kee holds a substantial interest. Purchases from Quanzhou Honghao Colour Printing Co., Ltd , a company in which our Director Mr Weng Wenju owns 50% of the interest.
Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) NA
S$ 125,850
NA
RMB1.7 million
NA
Mr Weng Wengwei had, in connection with banking facilities granted by various banks to our Group, provided personal guarantees to secure such facilities. No fees were paid or are payable by our Group to Mr Weng Wengwei in connection with such guarantees.
(H) RISK MANAGEMENT

The Company does not have a Risk Management Committee. The executive directors and senior management assume the responsibilities of the risk management function. They regularly assess and review the Groups business and operational environment in order to identify areas of significant business and financial risks, such as credit risks, foreign exchange risks, liquidity risks and interest rates risks, as well as appropriate measures to control and mitigate these risks. Risks arising from the Groups financial operations are separately discussed in Note 27 to the Financial Statements on pages 69 to 79.
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(I) USE OF IPO PROCEEDS

The Net IPO proceeds (after deducting estimated expenses for professional fees, underwriting and placement commissions and other transaction expenses related to the IPO) are approximately S$15.8 million. As at the date of this report, the net IPO proceeds have been utilized as follows: Original amount allocated In S$000 Construction of new premises at the Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province Expansion of production capacity and facilities Promoting GRAT.UNIC and increasing marketing effort Enhancing research and development capabilities General working capital requirements Total
*
Revised amount allocated* (B)
(A)
Amount utilized as at the date of this report (C)
Balance amount (B - C)
8,000 3,000 3,000 1,000 844 15,844
10,416 584 3,000 1,000 844 15,844
10,416 584 3,000 539 844 15,383
461 461
The revised amount allocated and amount utilized are not in accordance with the stated use in the Companys prospectus dated 16 September 2009.
As announced on 24 February 2012, the Company has re-allocated approximately S$ 2.4 million out of the amount originally allocated for expansion of production facilities to construction of new premises at Jiangnan High-Tech Information Industrial Zone. The Company obtained the property ownership certificate on 9 February 2012. As at 31 December 2011, the Company has incurred approximately RMB 148 million (approximately equivalent to S$ 30 million at an average exchange rate of 1SGD to RMB 5.0) on the construction of new premises. The Company will make periodic announcements on the use of proceeds when the remaining proceeds are materially disbursed.
(J) BEST PRACTICES GUIDE

The Company has complied materially with the Best Practices Guide issued by SGX-ST.
36
Directors Report
For the financial year ended 31 December 2011 The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 31 December 2011 and the balance sheet of the Company as at 31 December 2011.
DIRECTORS
The directors of the Company in office at the date of this report are as follows: Mr Weng Wenwei Mr Weng Wenju Mr Teoh Teik Kee Mr Lim Yeow Hua @ Lim You Qin Ms Lee Kim Lian, Juliana
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
DIRECTORS INTERESTS IN SHARES OR DEBENTURES
According to the register of directors shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows: Holdings registered in name of director or nominee At At 31.12.2011 1.1.2011 Holdings in which director is deemed to have an interest At At 31.12.2011 1.1.2011
Company (No. of ordinary shares) Mr Weng Wenwei Mr Weng Wenju Ultimate Holding Corporation G & W Investment Management Co., Ltd (No. of ordinary shares of US$1 each) Mr Weng Wenwei
1,960,000
1,960,000
181,500,000 -
181,500,000 -
By virtue of section 7 of the Singapore Companies Act Cap. 50, Mr. Weng Wenwei is deemed to have interest in the shares of the subsidiaries held by the Company. The directors interests in the ordinary shares of the Company as at 21 January 2012 were the same as those as at 31 December 2011.
DIRECTORS CONTRACTUAL BENEFITS
Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements and in this report.
37
Directors Report
SHARE OPTIONS
Great Group Performance Share Scheme The Great Group Performance Share Scheme (the PSS) for Executive Directors, Non-Executive Directors (including Independent Directors), and employees of the Group was approved by members of the Company at an Extraordinary General Meeting on 18 June 2009. The PSS is administered by the Remuneration Committee (Committee) of the Company, comprising the independent directors and a non-independent non-executive director of the Company, namely, Lim Yeow Hua @ Lim You Qin, Lee Kim Lian, Juliana and Teoh Teik Kee. The purpose of the PSS is to provide an opportunity for Directors (including Non-Executive Directors) and employees of the Group, who have met performance targets, to be remunerated not just through cash bonuses but also by an equity stake in the Company so as to motivate them to greater dedication, loyalty and higher standards of performance, and to give recognition to those who have contributed to success and development of the Company and of the Group. Under the PSS, a participant will be awarded the right to receive fully paid shares free of charge (the Awards), upon the participant achieving prescribed performance targets. Awards may only be vested, and consequently any shares comprised in such Awards shall only be delivered, upon the Committee being satisfied that the prescribed performance targets have been achieved. There are no vesting periods beyond the performance achievement periods. The selection of participant and the number of shares which are the subject of each Award to be granted to a participant in accordance with the PSS shall be determined at the absolute discretion of the Committee, which shall take into account criteria such as rank, job performance, years of service and potential for future development, contribution to the success and development of the Group and the extent of effort required to achieve the performance target within the performance period. The Committee shall decide, in relation to each Award to be granted to a participant; (a) the date on which the Award is to be vested; (b) the number of shares which are the subject of the Award; (c) prescribed performance targets; (d) the performance period during which the prescribed performance targets are to be satisfied; and (e) the extent to which the Companys shares under that award shall be released on the prescribed performance targets being satisfied. Awards may be granted at any time in the course of a financial year. The total number of new shares which may be issued pursuant to Awards granted under the PSS shall not exceed 15% of the issued share capital of the Company on the day preceding the relevant date of awards. Subject to such adjustment as may be made to the PSS as a result of any variation in the capital structure of the Company, no more than 25% of the total number of shares in respect of which the Company may grant Awards under the PSS may be offered in aggregate to the associates of controlling shareholders (as defined in the PSS) and the total number of shares to be offered to each of its associates must not exceed 10% of the total number of shares in respect of which the Company may grant Awards in the future. There were no Awards granted during the financial year. There were no options granted during the financial year to subscribe for unissued shares of the Company or its subsidiaries. No shares were issued during the year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company or its subsidiaries under option at the end of the financial year.
AUDIT COMMITTEE
The members of the Audit Committee at the end of the financial year were as follows: Mr Lim Yeow Hua @ Lim You Qin (Chairman) Mr Teoh Teik Kee Ms Lee Kim Lian, Juliana All members of the Audit Committee are independent non-executive directors except for Mr Teoh Teik Kee who is a non-independent non-executive director.
38
Directors Report
AUDIT COMMITTEE (CONTD)
The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, SGX Listing Manual and the Code of Corporate Governance including the following: reviewed the audit plan and results of the internal auditors examination and evaluation of the Groups systems of internal accounting controls; reviewed the audit plan of the Companys independent auditor and any recommendation on internal accounting controls arising from the statutory audit; reviewed the assistance given by the Companys management to the independent auditor; reviewed the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 31 December 2011 before their submission to the Board of Directors, as well as the independent auditors report on the balance sheet of the Company and the consolidated financial statements of the Group; reviewed the quarterly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group; met with the independent auditor, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the Audit Committee; evaluated the quality of the works performed by the independent auditor of the Group; reviewed the re-appointment of the independent auditor of the Group; and reviewed interested person transactions (as defined in Chapter 9 of the SGX listing manual).
The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full authority and the discretion to invite any director and executive officer to attend its meetings. The independent and internal auditors have unrestricted access to the Audit Committee. The Audit Committee is satisfied with the independence and objectivity of the independent auditor and has recommended to the Board of Directors that the independent auditor, Nexia TS Public Accounting Corporation, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.
INDEPENDENT AUDITOR
The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment. On behalf of the directors
Weng Wenwei
Director
Weng Wenju
Director
19 March 2012
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Statement by Directors
For the financial year ended 31 December 2011 In the opinion of the directors, (a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 42 to 83 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2011 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(b)
The directors have, on the date of this statement, authorised these financial statements for issue. On behalf of the directors
Weng Wenwei
Director
Weng Wenju
Director
19 March 2012
40
Independent Auditors Report

to the Members of Great Group Holdings Limited
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Great Group Holdings Limited (the Company) and its subsidiaries (the Group) set out on pages 42 to 83, which comprise the consolidated balance sheet of the Group and the balance sheet of the Company as at 31 December 2011, the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that gives a true and fair view in accordance with the provisions of the Singapore Companies Act (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011, and the results, changes in equity and cash flows of the Group for the financial year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. Nexia TS Public Accounting Corporation Public Accountants and Certified Public Accountants Director in-charge: Philip Tan Jing Choon Appointed since financial year ended 31 December 2011 Singapore 19 March 2012
41
Consolidated Statement of Comprehensive Income

For the financial year ended 31 December 2011 2011 RMB000 679,775 (558,091) 121,684 (1,876) (17,575) (32,176) (6,617) 63,440 (10,497) 52,943 2010 RMB000 625,818 (516,215) 109,603 404 (8,666) (16,136) (2,485) 82,720 (7,669) 75,051
Note Revenue Cost of sales Gross profit Other (losses)/gains, net Expenses - Selling and distribution - Administrative - Finance Profit before income tax Income tax expense Total comprehensive income, representing net profit, attributable to equity holders of the Company Earnings per share attributable to equity holders of the Company (RMB cents per share) - Basic and diluted 4
8 9
10
20
28
The accompanying notes form an integral part of these financial statements

42
Balance Sheets
As at 31 December 2011 Group 2011 2010 RMB000 RMB000 Company 2011 2010 RMB000 RMB000
Note
ASSETS Current assets
Cash and cash equivalents Trade and other receivables Inventories Other current assets Derivative financial assets
11 12 13 14 15
92,286 323,221 57,816 2,651 343 476,317 164,440 17,294 5,679 187,413 663,730
125,053 282,493 25,348 2,642 916 436,452 73,213 17,619 3,010 93,842 530,294
308 22,092 268 22,668 209,975 99 2 210,076 232,744
1,271 31,315 151 147 32,884 209,967 8 209,975 242,859
Non-current assets
Investments in subsidiaries Property, plant and equipment Intangible assets Deposit for machinery and equipment
16 17 18
Total assets LIABILITIES Current liabilities

Trade and other payables Borrowings Current income tax liabilities Derivative financial liabilities 19 20 15
Total liabilities NET ASSETS EQUITY
35,393 214,364 2,761 80 252,598 411,132
38,407 113,894 3,864 941 157,106 373,188
13,717 13,717 219,027
8,992 8,992 233,867
Capital and reserves attributable to equity holders of the Company

Share capital Restructuring reserve Retained profits
Total equity
21 22 23
104,766 114,040 192,326 411,132
104,766 114,040 154,382 373,188
104,766 114,040 221 219,027
104,766 114,040 15,061 233,867

Consolidated Statement of Changes in Equity

Attributable to equity holders of the Company

Note Group Share Restructuring capital reserve RMB000 RMB000 Retained profits RMB000
Total equity RMB000
2011
Beginning of financial year Total comprehensive income for the financial year Dividend relating to 2010 paid End of financial year
104,766 24 104,766 104,766 24 104,766
114,040 114,040 114,040 114,040
154,382 52,943 (14,999) 192,326 94,336 75,051 (15,005) 154,382
373,188 52,943 (14,999) 411,132 313,142 75,051 (15,005) 373,188
2010
Beginning of financial year Total comprehensive income for the financial year Dividend relating to 2009 paid End of financial year

44
Consolidated Statement of Cash Flows

For the financial year ended 31 December 2011 Group 2011 2010 RMB000 RMB000 52,943 10,497 3,139 (288) 6,617 (1,534) 71,374 (40,728) (32,468) (9) (3,014) 35,140 30,295 1,534 (11,600) 20,229 (93,880) (161) (2,669) (96,710) 342,227 (276,897) (6,617) (18,794) (14,999) 24,920 (51,561) 113,030 61,469 75,051 7,669 2,384 25 2,485 (195) 87,419 (85,453) 5,031 (1,087) 29,931 18,575 54,416 195 (8,844) 45,767 (55,793) (1,374) (3,010) (60,177) 206,232 (157,142) (2,485) (5,791) (15,005) 25,809 11,399 101,631 113,030
Note
Cash flows from operating activities
Net profit Adjustments for: - Income tax expense - Amortisation and depreciation - Fair value (loss)/gain on derivative financial instruments - Interest expense - Interest income Change in working capital - Trade and other receivables - Inventories - Other current assets - Trade and other payables - Bills payables Cash generated from operations Interest received Income tax paid
Net cash provided by operating activities Cash flows from investing activities
Additions to property, plant and equipment Additions to intangible assets Deposits for machinery and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings Repayment of borrowings Interest paid Short-term bank deposits pledged Dividends paid to equity holders of the Company Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
11

Notes to the Financial Statements

For the financial year ended 31 December 2011 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. The financial statements of the Group and the Company for the financial year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 19 March 2012.
Great Group Holdings Limited (the Company) is listed on the Singapore Exchange and incorporated and domiciled in Singapore. The address of its registered office is 36 Carpenter Street, Singapore 059915. The principal place of business is located at No. 77 Taikang Road, Xiangtang Community, Changtai Street, Licheng District, Quanzhou City, Fujian Province, the Peoples Republic of China (PRC). The principal activities of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 16. The Companys immediate and ultimate holding corporation is G & W Investment Management Co., Ltd, incorporated in the British Virgin Islands.
CORPORATE INFORMATION
2.1
Basis of preparation These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Groups accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3. Interpretations and amendments to published standards effective in 2011 On 1 January 2011, the Group adopted the new or amended FRS and Interpretations to FRS (INT FRS) that are mandatory for application from that date. Changes to the Groups accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Groups and Companys accounting policies and had no material effect on the amounts reported for the current or prior financial years.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.2
Group accounting (a) Subsidiaries (i) Consolidation Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies, generally accompanied by a shareholding giving rise to a majority 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 consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
46

2.2
Group accounting (contd) (a) Subsidiaries (contd) (ii) Acquisitions The acquisition method of accounting is used to account for business combinations by the Group, except for business combination under common control. For business combinations under acquisition method of accounting, the consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair values of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD)
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interests proportionate share of the acquirees net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. Acquisition of entities under common control have been accounted for using the pooling-ofinterest method. Under this method: The financial statement of the Group have been prepared as if the Group structure immediately after the transaction has been in existence since the earliest date the entities are under common control; The assets and liabilities are brought into the financial statements at their existing carrying amounts from the perspective of the controlling party; The income statements includes the results of the acquired entities since the earliest date the entities are under common control; The comparative figures of the Group represent the income statement, statement of comprehensive income, statements of cash flows and statement of changes in equity have been prepared as if the combination had occurred from the date when the combining entities or businesses first came under common control; The cost of investment is recorded at the aggregate of the nominal value of the equity shares issued, cash and cash equivalents and fair values of other consideration; and On consolidation, the difference between the cost of investment and the nominal value of the share capital of the merged subsidiaries is taken to restructuring reserve. Cash paid/payable arising from the acquisition under common control is also taken to the restructuring reserve.
47

2.2
Group accounting (contd) (a) Subsidiaries (contd) (iii) Disposals When a change in the Group ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts previously recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific Standard. Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognised in profit or loss. Please refer to the paragraph Investments in subsidiaries for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.
2.3
Revenue recognition Sales comprise the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Groups activities. Sales are presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Groups activities are met as follows: (a) Sale of goods Revenue from sale of goods is recognised when the Group has delivered the products to its customers, the customers have accepted the products and the recoverability of the related receivables is reasonably assured. Interest income Interest income is recognised using the effective interest method.
(b) 2.4
Property, plant and equipment (a) Measurement (i) Leasehold buildings and workshops Leasehold buildings and workshops are initially recognised at cost, and subsequently carried at the cost less accumulated depreciation and accumulated impairment losses. (ii) Other property, plant and equipment All other items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. Components of costs The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs (refer to Note 2.6 on borrowing costs).
(iii)
48

2.4
Property, plant and equipment (contd) (b) Depreciation Construction in-progress is not depreciated. Depreciation on other items of property, plant and equipment is calculated on a straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Machinery and equipment Leasehold buildings and workshops Furniture & fitting and office equipment Motor vehicles Useful lives 5-10 years 20-50 years 3-5 years 5 years
The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise. (c) Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the Company and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in the profit or loss when incurred. Disposal On disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss within other losses, net.
(d)
2.5
Intangible assets (a) Land-use rights Land-use rights are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to profit or loss using the straight-line method over 50 years, which is the shorter of the estimated useful lives and periods of contractual rights. (b) Acquired computer software licenses Acquired computer software licenses are initially capitalised at cost which includes the purchase price (net of any discounts and rebates) and other directly attributable cost of preparing the asset for its intended use. Direct expenditure including employee costs, which enhances or extends the performance of computer software beyond its specifications and which can be reliably measured, is added to the original cost of the software. Costs associated with maintaining the computer software are recognised as an expense when incurred. Computer software licenses are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to profit or loss using the straight-line method over their estimated useful lives of five years. The amortisation period and amortisation method of intangible assets are reviewed at least at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise.
49

2.6
Borrowing costs Borrowing costs are recognised in profit or loss using the effective interest method except to the extent that they are capitalised. Borrowing costs are capitalised if they were directly attributable to acquisition, construction or production of qualifying assets. Capitalising of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs are being incurred. Borrowing costs are capitalised until the assets are ready for their intended use or sale. Borrowing costs on general borrowings are capitalised by applying a capitalisation rate to the acquisition, construction or production of qualifying assets that are financed by general borrowings.
2.7
Investments in subsidiaries Investments in subsidiaries are carried at cost less accumulated impairment losses in the Companys balance sheet. On disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. Impairment of non-financial assets Property, plant and equipment Intangible assets Investments in subsidiaries Property, plant and equipment, intangible assets and investments in subsidiaries are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating-unit (CGU) to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss. An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss.
2.8
50

2.9
Financial assets (a) Classification The Group classifies its financial assets in the following categories: loans and receivables. The classification depends on the nature of the assets and the purpose for which the assets were acquired. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as trade and other receivables (Note 12) and cash and cash equivalents (Note 11) on the balance sheet.
(b)
Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade date the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in profit or loss. Any amount in other comprehensive income relating to that asset is reclassified to profit or loss. Trade receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as borrowings.
(c) (d) (e)
Initial measurement Financial assets are initially recognised at fair value plus transaction costs. Subsequent measurement Loans and receivables are subsequently carried at amortised cost using the effective interest method. Impairment The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. (i) Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss.
51

2.9
Financial assets (contd) (e) Impairment (contd) (i) Loans and receivables (contd) The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods. Inventories Inventories are carried at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses. Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method.
2.10
2.11
2.12
Borrowings Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities. Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
2.13
Employee compensation Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset. (a) Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. Pension benefits The Group is required to provide certain staff pension benefits to their employees under existing PRC regulations. Pension contributions are provided at rates stipulated by PRC regulations and are contributed to a pension fund managed by government agencies, which are responsible for administering these amounts for the subsidiaries employees. The Group has no further payment obligations once the contributions have been paid. Pension contributions are recognised as expenses in the period in which the related services are performed.
(b)
52

2.14
Leases When the Group is the lessee:
The Group leases factories and offices under the operating leases from non-related parties. Operating leases Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the period of the lease. Contingent rents are recognised as an expense in profit or loss when incurred. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place. 2.15 Income taxes Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred income tax is measured: (i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and (ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities except for investment properties.
Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. 2.16 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
53

2.17
Currency translation (a) Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (functional currency). The financial statements are presented in Renminbi (RMB), which is the functional currency of the Company. (b) Transactions and balances Transactions in a currency other than the functional currency (foreign currency) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss. However, in the consolidated financial statements, currency translation differences arising from borrowings in foreign currencies and other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations, are recognised in other comprehensive income and accumulated in the currency translation reserve. When a foreign operation is disposed of or any borrowings forming part of the net investment of the foreign operation are repaid, a proportionate share of the accumulated translation differences is reclassified to profit or loss, as part of the gain or loss on disposal. Foreign exchange gains and losses that relate to borrowings are presented in the income statement within finance cost. All other foreign exchange gains and losses impacting profit or loss are presented in the income statement within other losses net. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined. (c) Translation of Group entities financial statements The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) Assets and liabilities are translated at the closing exchange rates at the reporting date; Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and All resulting currency translation differences are recognised in the comprehensive income and accumulated in the currency translation reserve.
(iii)
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and translated at the closing rates at the reporting date. 2.18 Cash and cash equivalents For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents include cash on hand and deposits with financial institutions which are subject to an insignificant risk of change in value.
54

2.19
Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account. When any entity within the Group purchases the Companys ordinary share (Treasury Share), the consideration paid including any directly attributable incremental cost is presented as a component within equity holders, until they are cancelled, sold or reissued. When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company. When treasury shares are subsequently sold or reissued pursuant to an employee share option scheme, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sales or reissue new of any directly attributable incremental transaction costs and related income tax, is recognised in the capital reserve.
2.20 2.21
Dividends to Companys shareholders Dividends to the Companys shareholders are recognised when the dividends are approved for payment. Government grants Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants receivable are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income. Government grants relating to assets are presented in the balance sheet as a deferred income, and amortised to profit or loss on the straight-line basis over the estimated useful lives of the relevant assets.
2.22
Fair value estimation of financial assets and liabilities The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts. The fair values of currency forwards are determined using actively quoted forward exchange rates.
2.23
Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Executive Chairman and Chief Executive Officer (CEO) who makes strategic decisions. Derivative financial instruments Derivative financial instruments comprise mainly of currency forward contracts. A derivative financial instrument is initially recognised at its fair value on the date the contract is entered into and is subsequently carried at its fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised in profit or loss or when the changes arise.
2.24
55

2.24
Derivative financial instruments (contd) Derivative financial instruments are reported in the financial statements on a net basis where legal right of setoff exists. Derivative financial instruments are carried as assets when fair value is positive and as liabilities when fair value is negative.
Estimates, assumptions and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Areas involving a higher degree of judgement or complexity, or area where estimates and assumptions are significant to the financial statements are disclosed below.
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
(a)
Impairment of loans and receivables Management reviews its loans and receivables for objective evidence of impairment at least annually. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that a receivable is impaired. In determining this, management makes judgements as to whether there is observable date indicating that there has been a significant change in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the market, economic or legal environment in which the debtor operates in. Where there is objective evidence of impairment, management makes judgements as to whether an impairment loss should be recognised in profit or loss. The carrying amounts of trade and other receivables at the balance sheet date are disclosed in Note 12. If the net present values of estimated cash flows increase/decrease by 10% (2010: 10%) from managements estimates for all past due loans and receivables, the Groups allowance for impairment will decrease/ increase by RMB2,870,000 (2010: RMB645,000).
(b)
Income taxes The Group is subject to income tax in the PRC and signicant judgement is required in determining the provision for tax. There are transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises provisions for tax based on estimates of the taxes that are likely to become due. Where the nal tax outcome is different from the amounts that were initially recorded, such differences will impact the current income tax in the period in which such determination is made. Useful lives of machinery and equipment The cost of machinery and equipment are depreciated on a straight-line basis over their useful lives, which management estimates to be of 5 to 10 years. The Group reviews the residual values and useful lives of plant and machinery at each reporting date in accordance with the accounting policies in Note 2.4. The estimation of the residual values and useful lives involves significant judgements. The carrying amounts of the Groups machinery and equipment as at 31 December 2011 were RMB9,031,000 (2010: RMB9,339,000). If the actual useful lives of these plant and equipment differ by 1 year from management estimates, the carrying amount of the plant and equipment will be increased by RMB726,000 (2010: RMB590,000) or decreased by RMB819,000 (2010: RMB657,000) and correspondingly to profit or loss.
(c)
56

REVENUE
Group 2011 2010 RMB000 RMB000 623,909 55,866 679,775 552,610 72,164 1,044 625,818
Sales of goods Contract manufacturing GRAT.UNIC Superman
OTHER (LOSSES)/GAINS, NET
Group 2011 2010 RMB000 RMB000 1,534 387 436 (5,181) 948 (1,876) 195 3,798 (25) (3,604) 40 404
Interest income Government grants (a) Fair value gain/(loss) on derivative financial instruments - net Currency translation loss, net Other (a) 6 There is no condition attached to the goverment grants.
EXPENSES BY NATURE Group 2011 2010 RMB000 RMB000 Purchases of inventories Allowance for impairment of trade and other receivables Amortisation of intangible assets (Note 18 (c)) Depreciation of property, plant and equipment (Note 17) Total amortisation and depreciation Bank charges and related expenses Courier, freight, custom and port charges Directors fees Employee compensation (Note 7) Entertainment and travelling IPO related expenses Professional fees Auditors fees - Auditors of the Company - Other auditors Marketing, advertising and exhibition Rental expenses on operating leases Stamp duties and other taxes Utilities and office expenses Insurance Consumables Inspection, testing and certification expenses Research and development Other expenses Changes in inventories Total cost of sales, selling and distribution and administrative expenses 540,688 1,790 486 2,653 3,139 2,361 4,525 1,402 52,590 1,643 3,954 4,743 1,458 210 5,223 2,275 4,387 4,081 909 1,347 596 1,198 1,791 (32,468) 607,842 469,224 447 1,937 2,384 1,187 4,331 771 44,749 1,220 1,338 519 99 705 1,583 3,255 2,655 376 83 301 49 1,157 5,031 541,017
57

EMPLOYEE COMPENSATION
Group 2011 2010 RMB000 RMB000 Wages and salaries Employers contribution to defined contribution plans, including Central Provident Fund (CPF) Other short-term benefits 46,820 2,098 3,672 52,590 40,915 1,818 2,016 44,749
FINANCE EXPENSES
Group 2011 2010 RMB000 RMB000 3,585 3,032 6,617 1,455 1,030 2,485
Interest expense Bank borrowings Trade receivables factoring
INCOME TAX EXPENSE
Group 2011 2010 RMB000 RMB000 9,136 1,361 10,497 7,077 592 7,669
Tax expense attributable to profit is made up of: Current income tax PRC Under-provision of current income tax in prior financial years
The tax expense on profit differs from the amount that would arise using PRCs statutory rate of income tax as explained below: Group 2011 2010 RMB000 RMB000 Profit before income tax Tax calculated at tax rate of 25% (2010: 25%) Effects of Different tax rates in other countries Tax incentive Expenses not deductible for tax purpose Income not subject to tax Deferred income tax assets not recognised Other 63,440 15,860 (11,023) 2,853 1,707 (261) 9,136 82,720 20,680 (10,973) (5,228) 1,021 (2) 1,493 86 7,077
58

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised tax losses of approximately RMB6,828,000 (2010: RMB5,974,000) which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements. The tax losses have no expiry date and are not recognised as it is not probable that future taxable profit will be available against which the subsidiaries can utilise the benefits.
INCOME TAX EXPENSE (CONTD)
10
Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year. Group 2011 2010 Net profit attributable to equity holders of the Company (RMB000) Weighted average number of ordinary shares outstanding for basic earnings per share (000) Basic earnings per share (RMB cents) There are no dilutive potential ordinary shares during the financial years. 52,943 265,000 20 75,051 265,000 28
EARNINGS PER SHARE
11
CASH AND CASH EQUIVALENTS
Group 2011 2010 RMB000 RMB000 12,056 80,230 92,286 13,454 111,599 125,053
Company 2011 2010 RMB000 RMB000 308 308 1,271 1,271
Cash at bank and on hand Short-term bank deposits
For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise the following: Group 2011 2010 RMB000 RMB000 Cash and bank balances (as above) Less: Bank deposits pledged Cash and cash equivalents per consolidated statement of cash flows 92,286 (30,817) 61,469 125,053 (12,023) 113,030
Bank deposits relate to bank balances that the Group has to maintain with the banks for obtaining short-term bank facilities for letters of credit relating to the purchase of raw materials of approximately RMB65,925,000 (2010: RMB30,785,000) (Note 20).
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12
TRADE AND OTHER RECEIVABLES
Group 2011 2010 RMB000 RMB000 156,833 (867) 155,966 167,774 (923) 166,851 404 323,221 155,013 155,013 125,069 125,069 2,411 282,493
Company 2011 2010 RMB000 RMB000 22,092 22,092 31,315 31,315
Trade receivables Non-related parties Less: Allowance for impairment of receivables (Note 27(b)) Advances to suppliers Less: Allowance for impairment of receivables (Note 27(b)) Non-trade amounts due from subsidiaries Other receivables
The Group factored trade receivables with carrying amounts of RMB71,139,000 (2010: RMB37,509,000) to banks as at 31 December 2011. The transaction has been accounted for as collateralised borrowing as the bank has full recourse to the Group in the event of default by the debtors (Note 20). The non-trade amounts due from subsidiaries are unsecured, interest-free and are repayable on demand.
13
INVENTORIES
Group 2011 2010 RMB000 RMB000 26,651 15,749 15,416 57,816 7,946 9,581 7,821 25,348
Company 2011 2010 RMB000 RMB000 -
Raw materials Work-in-progress Finished goods
The cost of inventories recognised as an expense and included in cost of sales amounts to RMB508,220,000 (2010: RMB474,255,000).
14
OTHER CURRENT ASSETS

Group 2011 2010 RMB000 RMB000 Refundable deposits Prepayments 361 2,290 2,651 2,642 2,642 Company 2011 2010 RMB000 RMB000 139 129 268 151 151
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15
DERIVATIVE FINANCIAL INSTRUMENTS

Contract Notional Amount RMB000 2011 Non-hedging instruments - Currency forwards Group Fair Value Asset Liability RMB000 RMB000 Contract Notional Amount RMB000
Company Fair Value Asset Liability RMB000 RMB000
69,841
343
(80)
2010 Non-hedging instruments - Currency forwards 139,623
916
(941)
6,724
147
Currency forwards The Group enters into currency forwards to reduce the impact of changes in the foreign currency exchange rate of highly probable forecast transactions denominated in foreign currency. While the currency forwards provide hedging effects as required by the Groups risk management policy, the derivatives do not meet the criteria for hedge accounting under the specific rules in FRS 39 Financial Instruments: Recognition and Measurement.
16
INVESTMENTS IN SUBSIDIARIES
Company 2011 2010 RMB000 RMB000 209,967 8 209,975 Country of Business/ Incorporation 209,967 209,967
Equity investments at cost: Beginning of financial year Incorporation of a new subsidiary End of financial year Details of subsidiaries are as follows: Name of Companies Principal Activities
Equity Holding 2011 2010 % % 100 100
Held by the Company Quanzhou Great Garments Co., Ltd (a)
Producing garments, The Peoples weaving, ribbon, printing, Republic of shoes, hats and bags China (exporting the commodity which is not related with the management of the export permit quota) The Peoples Republic of China
Fujian Great Fashion Industry Producing garments, Co., Ltd (a) apparel products and weaving
100
100
61

16
Details of subsidiaries are as follows: (contd) Name of Companies
INVESTMENTS IN SUBSIDIARIES (CONTD)

Country of Business/ Incorporation
Principal Activities
Equity Holding 2011 2010 % % 100 100
Great Worldwide (Trading) Limited (b) Great Holding Limited (c)
Sale and distribution of garments and apparel production Sale and distribution of garments and apparel production
The British Virgin Islands Hong Kong
100
100
Grixpro International Trading Trading Limited (b) Held by Great Holding Limited Great Fashion Trading (Shanghai) Limited (d)
Great Brand Management Limited (b) Held by Grixpro International Trading Limited Grixpro Trading (Xiamen) Co., Ltd (b)
Hong Kong
100
Trading of clothes,import and export activities Brand management and operation
The Peoples Republic of China The British Virgin Islands
100
100
100
Wholesale of apparel, footwear, headwear, boxes, fabrics and accessories, as well as the import and export business
The Peoples Republic of China
100
(a) (b) (c) (d)
Audited by Quanzhou Huatian Tax Agents Limited for local statutory purposes. For the purpose of preparing the consolidated financial statements, these financial statements have been audited by Nexia TS Public Accounting Corporation, Singapore. Not required to be audited under the laws of the country of incorporation. For the purpose of preparing the consolidated financial statements, these financial statements have been audited by Nexia TS Public Accounting Corporation, Singapore. Audited by Charles H.C. Cheung & CPA Limited for local statutory purposes. For the purpose of preparing the consolidated financial statements, these financial statements have been audited by Nexia TS Public Accounting Corporation, Singapore. Audited by Shanghai LangTeng Certified Public Accountants for local statutory purposes. For the purpose of preparing the consolidated financial statements, these financial statements have been audited by Nexia TS Public Accounting Corporation, Singapore.
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17
PROPERTY, PLANT AND EQUIPMENT

Machinery and equipment RMB000 2011 Group Cost Beginning of financial year Additions End of financial year Accumulated depreciation Beginning of financial year Depreciation charge (Note 6) End of financial year Net book value End of financial year
Leasehold buildings and workshops RMB000
Furniture & fitting and office equipment RMB000
Motor Construction vehicles in-progress RMB000 RMB000
Total RMB000
14,858 1,067 15,925
4,173 811 4,984
2,865 1,928 4,793
2,883 1 2,884
57,982 90,073 148,055
82,761 93,880 176,641
5,519 1,375 6,894
1,451 400 1,851
1,120 548 1,668
1,458 330 1,788
9,548 2,653 12,201
9,031 Machinery and equipment RMB000
3,133 Leasehold buildings and workshops RMB000
3,125 Furniture & fitting and office equipment RMB000
1,096
148,055
164,440
Total RMB000
2010 Group Cost Beginning of financial year Additions End of financial year Accumulated depreciation Beginning of financial year Depreciation charge (Note 6) End of financial year Net book value End of financial year
13,016 1,842 14,858
4,173 4,173
1,464 1,401 2,865
1,699 1,184 2,883
6,616 51,366 57,982
26,968 55,793 82,761
4,282 1,237 5,519 9,339
1,263 188 1,451 2,722
837 283 1,120 1,745
1,229
57,982
7,611 1,937 9,548 73,213
229 1,458 1,425
Bank borrowings of the Group are secured by the leasehold buildings and workshops of the Group with carrying amounts of approximately RMB3,133,000 (2010: RMB2,722,000) (Note 20).

17
PROPERTY, PLANT AND EQUIPMENT (CONTD)

Machinery and equipment RMB000 2011 Company Cost Beginning of financial year Additions End of financial year Accumulated depreciation Beginning of financial year Depreciation charge End of financial year Net book value End of financial year Leasehold buildings and workshops RMB000
Furniture & fitting and office equipment RMB000
Total RMB000
11 105 116
11 105 116
3 14 17 99
3 14 17 99
Bank borrowings of the Group are secured by the leasehold buildings and workshops of the Group with carrying amounts of approximately RMB3,133,000 (2010: RMB2,722,000) (Note 20). Machinery and equipment RMB000 2010 Company Cost Additions and balance at end of financial year Accumulated depreciation Depreciation charge and balance at end of financial year Net book value End of financial year Leasehold buildings and workshops RMB000 Furniture & fitting and office equipment RMB000
Total RMB000
11
11
3 8
3 8
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18
INTANGIBLE ASSETS
Group 2011 2010 RMB000 RMB000 16,768 526 17,294 17,120 499 17,619
Company 2011 2010 RMB000 RMB000 2 2 -
Composition: Land-use rights Computer software licenses (a) Land-use rights
Group 2011 2010 RMB000 RMB000 17,631 17,631 511 352 863 16,768 16,712 919 17,631 166 345 511 17,120
Company 2011 2010 RMB000 RMB000 -
Cost Beginning of financial year Additions End of financial year Accumulated amortisation Beginning of financial year Amortisation charge End of financial year Net book value
The land-use rights represent medium-term land-use rights for plots of land situated in the PRC. Bank borrowings of the Group are secured by the land-use rights of the Group with carrying amounts of approximately RMB16,768,000 (2010: RMB17,120,000) (Note 20). (b) Computer software licenses Group 2011 2010 RMB000 RMB000 611 161 772 112 134 246 526 156 455 611 65 47 112 499 Company 2011 2010 RMB000 RMB000 3 3 1 1 2 -
Cost Beginning of financial year Additions End of financial year Accumulated amortisation Beginning of financial year Amortisation charge End of financial year Net book value
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18
(c)
INTANGIBLE ASSETS (CONTD)
Amortisation expense included in the statement of comprehensive income is analysed as follows: Group 2011 2010 RMB000 RMB000 Cost of sales Selling and distribution Administrative expenses Total (Note 6) 122 11 353 486 Group 2011 2010 RMB000 RMB000 23,631 3,541 1,794 6,427 35,393 20,827 6,652 4,074 6,854 38,407 85 362 447
19
TRADE AND OTHER PAYABLES
Company 2011 2010 RMB000 RMB000 1,016 12,701 13,717 554 7,922 516 8,992
Trade payables Non-related parties Accrued operating expenses Advances from customers Non-related parties Non-trade amounts due to subsidiaries Other payables
The non-trade amounts due to subsidiaries are unsecured, interest-free and are repayable on demand.
20
BORROWINGS
Group 2011 2010 RMB000 RMB000

77,300 65,925 71,139 214,364 45,600 30,785 37,509 113,894
Company 2011 2010 RMB000 RMB000

-
Current Bank borrowings Bills payables Trade receivables factoring Total borrowings
The exposure of the above borrowings of the Group to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows: Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000
6 months or less 6 12 months
120,664 93,700 214,364
84,994 28,900 113,894
Bank borrowings of the Group are secured over leasehold buildings and workshops (Note 17) and land-use rights (Note 18) of the Group and joint and several guarantee from the shareholder and its related parties. Bills payable of the Group are secured by certain short-term bank deposits of the Group (Note 11) and corporate guarantee. Trade receivables factoring of the Group are secured by certain trade receivables (Note 12) and joint and several guarantee from the controlling shareholder and its related parties. The fair values of the borrowings approximate its carrying amounts.
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21
SHARE CAPITAL
No of ordinary shares
Amount RMB000
Group and Company 2011 Beginning and end of financial year 2010 Beginning and end of financial year
265,000,000 265,000,000
104,766 104,766
All issued ordinary shares are fully paid. There is no par value for these ordinary shares. Fully paid ordinary shares carry one vote per share and carry a right to dividends as and when declared by the Company.
22
Business combination involving entities under common control are accounted for under the pooling-ofinterest method. The acquisitions of the subsidiaries by the Company were pursuant to the Restructuring Exercise in connection with the listing of the Company on the SGX-ST. The restructuring reserve represents the differences between the cost of investment and nominal value of share capital of the merged subsidiaries. The restructuring reserve is non-distributable.
RESTRUCTURING RESERVE
23
(a)
RETAINED PROFITS
Retained profits of the Group are distributable. Movement in retained profits for the Company is as follows: Company 2011 2010 RMB000 RMB000 15,061 159 (14,999) 221 (8,234) 38,300 (15,005) 15,061
(b)
Beginning of financial year Net profit Dividend paid (Note 24) End of financial year
24
DIVIDENDS
Group and Company 2011 2010 RMB000 RMB000
Ordinary dividend paid Final dividend paid in respect of the previous financial year of RMB0.05660 (2010: RMB0.05662) per share (Note 23)
14,999
15,005
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25
(a)
COMMITMENTS
Capital commitments Capital expenditures contracted for at the balance sheet date but not recognised in the financial statements are as follows: Group 2011 2010 RMB000 RMB000 Property, plant and equipment 13,617 30,000
(b)
Operating lease commitments where the Group is a lessee The Group leases factories and warehouses from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows: Group 2011 2010 RMB000 RMB000 Not later than one year Between one and five years 1,393 435 1,828 838 1,118 1,956
26
In addition to the related party information disclosed elsewhere in the consolidated financial statements, the following related party transactions took place between the Group and related parties at terms agreed between the parties: (i) Sales and purchase of goods and services Other related parties comprise mainly companies which are controlled or significantly influenced by the Groups key management personnel and their close family members. Outstanding balances at 31 December 2011, arising from sale/purchase of goods and services, are unsecured and receivable/payable within 12 months from balance sheet date are disclosed in Note 12 and 19 respectively. Group 2011 2010 RMB000 RMB000
RELATED PARTY TRANSACTIONS
Professional fees paid to Peeka Strategic Pte Ltd Purchase of services from other related parties Loan to other related parties
626 1,721 10,500
277 -
Mr. Teoh Teik Kee is a non-independent non-executive director of the Company, is associated with Peeka Strategic Pte Ltd (Peeka). The professional fee paid to Peeka is according to prevailing market rates as compared to other firms providing similar services.
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26

RELATED PARTY TRANSACTIONS (CONTD)

(ii) Key management personnel conpensation (representing compensation to directors and executive officers of the Group) is as follows: Group 2011 2010 RMB000 RMB000 Wages and salaries Directors fees Employers contribution to defined contribution plans including (CPF) Other short-term benefits 1,900 1,402 100 52 3,454 1,978 771 123 109 2,981
Included in the above is total compensation to directors of the Company amounting to RMB2,480,000 (2010: RMB1,844,000).
27
Financial risk factors The Groups activities expose it to market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Groups overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Groups financial performance.
FINANCIAL RISK MANAGEMENT
The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group. This includes establishing policies such as authority levels, oversight responsibilities, risk identification and measurement and exposure limits.
(a) Market risk (i) Currency risk The Group operates in the Peoples Republic of China with most of the transactions settled in RMB. However, the Group sells to overseas customers in United States Dollars (USD) and is therefore exposed to currency risk. To manage the currency risk, the Group enters into currency forwards with local banks.
The Groups risk management policy is to hedge between 30% to 50% of highly probable forecast transactions (mainly export sales and collection in USD) in the next three to twelve months. The management monitors the requirement to enter into currency forward agreements based on the current exchange rates between USD and RMB by considering the quotation from local banks, past trends and anticipated fluctuation in the exchange rates and current PRC and world market conditions.
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27
(a)
FINANCIAL RISK MANAGEMENT (CONTD)
Market risk (contd) (i) Currency risk (contd) The Groups currency exposure based on the information provided to key management is as follows: RMB USD Other Total RMB000 RMB000 RMB000 RMB000 Group At 31 December 2011 Financial assets Cash and cash equivalents Trade and other receivables Receivables from subsidiaries Other current assets Derivative financial assets Financial liabilities Borrowings Payables to subsidiaries Other financial liabilities Derivative financial liabilities Net financial assets Add: Net non-financial assets Net assets Less: Currency forwards Currency profile including non-financial assets and liabilities Currency exposure of financial assets, net of those denominated in the respective entities functional currencies
39,065 174,781 187,562 221 401,629 175,821 187,562 32,608 395,991 5,638 243,726 249,364 -
46,610 148,327 343 195,280 38,543 1,413 80 40,036 155,244 155,244 (69,841)
6,611 113 4,531 140 11,395 4,531 1,372 5,903 5,492 1,032 6,524 -
92,286 323,221 192,093 361 343 608,304 214,364 192,093 35,393 80 441,930 166,374 244,758 411,132 (69,841)
249,364
85,403
6,524
341,291
85,403
6,644
92,047
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(a)

Market risk (contd) (i) Currency risk (contd) RMB RMB000 USD RMB000 Other RMB000 Total RMB000
Group At 31 December 2010 Financial assets Cash and cash equivalents Trade and other receivables Receivables from subsidiaries Derivative financial assets Financial liabilities Borrowings Payables to subsidiaries Other financial liabilities Derivative financial liabilities Net financial assets Add: Net non-financial assets Net assets Less: Currency forwards Currency profile including non-financial assets and liabilities Currency exposure of financial assets, net of those denominated in the respective entities functional currencies
70,281 179,243 134,092 383,616 92,655 134,092 35,563 262,310 121,306 117,807 239,113 -
47,806 103,250 916 151,972 21,239 1,762 941 23,942 128,030 128,030 (139,623)
6,966 4,776 11,742 4,776 1,082 5,858 5,884 161 6,045 -
125,053 282,493 138,868 916 547,330 113,894 138,868 38,407 941 292,110 255,220 117,968 373,188 (139,623)
239,113
(11,593)
6,045
233,565
(11,593)
6,045
(5,548)
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27
(a)
Market risk (contd) (i) Currency risk (contd) The Companys currency exposure based on the information provided to key management is as follows: RMB USD Other Total RMB000 RMB000 RMB000 RMB000 Company At 31 December 2011 Financial assets Cash and cash equivalents Other receivables Other current assets Financial liabilities Other financial liabilities Net financial assets Add: Net non-financial assets Currency profile including non-financial assets and liabilities Currency exposure of financial assets, net of those denominated in the Companys functional currencies
17,561 17,561 12,701 4,860 209,975
35 35 35 -
273 4,531 139 4,943 1,016 3,927 230
308 22,092 139 22,539 13,717 8,822 210,205
214,835
35
4,157
219,027
35
4,157
4,192
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(a)

Market risk (contd) (i) Currency risk (contd) RMB RMB000 USD RMB000 Other RMB000 Total RMB000
Company At 31 December 2010 Financial assets Cash and cash equivalents Other receivables Derivative financial assets Financial liabilities Other financial liabilities Net financial assets Add: Net non-financial assets Less: Currency forwards Currency profile including non-financial assets and liabilities Currency exposure of financial assets, net of those denominated in the Companys functional currencies
26,539 26,539 7,922 18,617 209,967 -
485 147 632 632 (6,724)
786 4,776 5,562 1,070 4,492 159 -
1,271 31,315 147 32,733 8,992 23,741 210,126 (6,724)
228,584
(6,092)
4,651
227,143
(6,092)
4,651
(1,441)
If the USD changes against the RMB by 6% (2010: 3%) with all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position to the net profit and equity of the Group and the Company will be as follows: Increase/(Decrease) Group 2011 2010 RMB000 RMB000 Company 2011 2010 RMB000 RMB000
USD against RMB Weakened Strengthened
(5,124) 5,124
348 (348)
(2) 2
183 (183)
If other foreign currency changes against the RMB by 2% (2010: 2%) with all other variable including tax rate being held constant, the effects arising from the net financial liability/asset position to the net profit and equity of the Group and the Company will not be significant.
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27
(a)
Market risk (contd) (ii) Cash flow and fair value interest rate risks Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Groups interest rate risk mainly arises from bank loans at fixed interest rates. The Group manages its interest rate risk by keeping bank loans to the minimum required to sustain the operations of the Group. If the interest rates increase/decrease by 1% (2010: 1%) with all other variables including tax rate being held constant, the impact to the net profit as a result of higher/lower interest expense on these borrowings is assessed as being not material.
(b)
Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining cash deposits where appropriate to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties.
Credit exposure to an individual counterparty is restricted by credit limits and terms that are approved by the Chief Executive Officer (CEO). In assessing the credit limits and terms granted, the Group considers the nature of the contract, creditworthiness, payment history and the relationship with the customers. In order to manage the credit risk, the Group purchase insurance from reputable insurance companies in the PRC. As the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. The Groups major classes of financial assets are trade receivables, advances to suppliers and cash and cash equivalents. The trade receivables of the Group comprise 2 debtors (2010: 3 debtors) that individually represented 20 25% of trade receivables.
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27
(b)
Credit risk (contd) The credit risk for trade receivables based on the information provided to key management is as follows: Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000
By geographical areas Asia Europe North America South America Other

By types of customers Non-related parties Multi-national companies Other companies (i)
41,353 111,983 11 65 2,554 155,966
61,698 52,890 12,797 20,711 6,917 155,013
104,249 51,717 155,966
100,291 54,722 155,013
Financial assets that are neither past due nor impaired Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group. The Group has no trade receivables past due or impaired that were re-negotiated during the financial year.
(ii)
Financial assets that are past due and/or impaired There is no other class of financial assets that is past due and/or impaired except for trade receivables and advances to suppliers.
The age analysis of trade receivables past due but not impaired is as follows: Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Past due less than 3 months Past due 3 to 6 months Past due over 6 months 28,377 91 28,468 5,858 257 338 6,453 -
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(b)
Credit risk (contd) (ii) Financial assets that are past due and/or impaired (contd) The carrying amount of trade receivables individually determined to be impaired and the movement in the related allowance for impairment are as follows: Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Past due 3 to 6 months Past due over 6 months Less: Allowance for impairment Beginning of financial year Allowance made End of financial year 581 517 (867) 231 -
867
867
The impaired trade receivables arise mainly from sales to customers of which the balances are long overdue with remote possibility of collection. The age analysis of advances to suppliers past due but not impaired is as follows: Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Past due less than 3 months Past due 3 to 6 months Past due over 6 months 14,934 16,657
1,261 462
20,388 3,768 1,315 25,471
The carrying amount of advances to suppliers individually determined to be impaired and the movement in the related allowance for impairment are as follows: Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Past due 3 to 6 months Past due over 6 months Less: Allowance for impairment Beginning of financial year Allowance made End of financial year 223 1,253 (923) 553 -
923
923
The impaired advances to suppliers arise mainly from suppliers of which the balances are overdue with remote possibility of utilisation.
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(c)
Liquidity risk The table below analyses the maturity profile of the Groups and Companys financial liabilities based on contractual undiscounted cash flows. Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Less than one year Trade and other payables Borrowings 35,393 258,678 294,071 38,407 115,515 153,922 13,717 13,717 8,992 8,992
The Group manages the liquidity risk by maintaining sufficient cash and cash equivalents to enable them to meet their normal operating commitments and having an adequate amount of committed credit facilities. The table below analyses the Groups and the Companys derivative financial instruments for which contractual maturities are essential for an understanding of the timing of the cash flows into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balance due within 12 months equal their carrying balances as the impact of discounting is not significant. Less than 1 year RMB000 Group At 31 December 2011 Gross-settled currency forward - Receipts - Payments
69,841 (69,578) Less than 1 year RMB000
At 31 December 2010 Gross-settled currency forward - Receipts - Payments
139,623 (139,649)
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(c)
Liquidity risk (contd) The Company does not have any derivative financial instruments as at 31 December 2011.
Less than 1 year RMB000
Company At 31 December 2010 Gross-settled currency forward - Receipts - Payments (d)
6,724 (6,576)
Capital risk The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings. Management monitors capital based on a gearing ratio. The Group and the Company are not required by the banks to maintain financial ratios. The Group and the Company target to maintain gearing ratios within 20% to 45% respectively. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents. Total capital is calculated as equity plus net debt. Group Company 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Net debt Total equity Total capital Gearing ratio 157,471 411,132 568,603 28% 27,248 373,188 400,436 7% 13,409 219,027 232,436 6% 7,721 233,867 241,588 3%
The Group has no externally imposed capital requirements for the financial years ended 31 December 2011 and 31 December 2010.
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(e)
Fair value measurements The following table presents assets and liabilities measured at fair value and classified by level of the following fair value measurement hierarchy:
(a) (b) (c) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (is as prices) or indirectly (i.e. derived from prices) (Level 2); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
The fair value of currency forward contracts is determined using quoted forward currency rates at the balance sheet date. This investment is classified as Level 2. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts. The carrying amount of financial instruments is as disclosed on the balance sheet and Note 15 to the financial statements.
28
Management has determined the operating segments based on the reports reviewed by the Executive Chairman and CEO that are used to make strategic decisions. The Executive Chairman and CEO consider the business from both geographical and business segment perspectives. Geographically, management manages and monitors the business in the four primary geographic areas: Asia, Europe, North America and South America. Contract manufacturing revenue are from all geographic locations while GRAT.UNIC and Superman revenue are derived from Asia only.
SEGMENT INFORMATION
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The segment information provided to the Executive Chairman and CEO for the reportable segments for the financial years ended 31 December 2011 and 2010 are as follows: For the financial year ended 31 December 2011 Contract Manufacturing GRAT.UNIC RMB000 RMB000
Sales
SEGMENT INFORMATION (CONTD)
Superman RMB000
All other Segments RMB000
Total RMB000
Total segment sales sales to external parties Gross profit Other losses, net Unallocated costs Finance expense Profit before income tax Income tax expense Net profit
Net profit includes:
623,909 110,302
55,866 11,382
679,775 121,684 (1,876) (49,751) (6,617) 63,440 (10,497) 52,943
- Depreciation
- Amortisation
2,259 474 365,703 92,806 107 5,429 75,722
379 11 202,585 969 51 250 52
15 1 95,442 105 3 176,824
2,653 486 663,730 93,880 161 5,679 252,598
Segment assets Segment assets includes: Additions to property, plant and equipment Additions to intangible assets Deposit for machinery and equipment Segment liabilities
80

28
For the financial year ended 31 December 2010 Contract Manufacturing GRAT.UNIC RMB000 RMB000
Sales
Superman RMB000
All other Segments RMB000
Total RMB000
Total segment sales - sales to external parties Gross profit Other gains, net Unallocated costs Finance expense Profit before income tax Income tax expense Net profit
Net profit includes:
552,610 91,848
72,164 17,447
1,044 308
625,818 109,603 404 (24,802) (2,485) 82,720 (7,669) 75,051
- Depreciation
- Amortisation
729 30 244,603 839 2,758 42,513
685 71,982 1,003 252 11
10 55 -
513 362 213,709
1,937 447 530,294 55,793 1,374 3,010 157,106
Segment assets Segment assets includes: Additions to property, plant and equipment Additions to intangible assets Deposit for machinery and equipment Segment liabilities
53,951 1,374 114,582
The revenue from external parties reported to the Executive Chairman and CEO is measured in a manner consistent with that in the consolidated statement of comprehensive income.
81

28
The Executive Chairman and CEO assesses the performance of the operating segments based on gross profit. Segment results represent the profit earned by each segment without allocation of selling and distribution expenses, administration expenses, other gains, finance expenses and income tax expense. This is the measure reported to the Executive Chairman and CEO for the purposes of resource allocation and assessment of segment performance. Reportable segments assets are reconciled to total assets as follows: The amounts provided to the Executive Chairman and CEO with respect to total assets are measured in a manner consistent with that of the financial statements. For the purposes of monitoring segment performance and allocating resources between segments, the Executive Chairman and CEO monitors the property, plant and equipment, intangible assets, inventories and receivables attributable to each segment. All assets are allocated to reportable segments other than common property, plant and equipment that are being used in the production of contract manufacturing, GRAT.UNIC and Superman, hence cannot be identified specifically to each segment, intangible assets, cash and cash equivalents, other receivables and other current assets. Group 2011 2010 RMB000 RMB000 Segment assets Unallocated Cash and cash equivalents 568,288 92,286 404 2,651 99 2 663,730 316,585 125,053 2,411 2,642 67,251 16,352 530,294
Other receivables Other current assets Property, plant and equipment Intangible assets
Reportable segments liabilities are reconciled to total liabilities as follows:
The amounts provided to the Executive Chairman and CEO with respect to total liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segments. All liabilities are allocated to the reportable segments other than trade and other payables, borrowings and current income tax liabilities. Group 2011 RMB000 Segment liabilities 2010 RMB000 42,524 34,333 76,385 3,864 157,106
Unallocated
75,774 33,599 143,225 252,598
Trade and other payables
Borrowings Current income tax liabilities
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28
Revenue from major products Revenues from external customers are derived mainly from the sale of contract manufacturing, GRAT.UNIC and Superman products (Note 4). The Groups three business segments generated its revenue from these five main geographical areas based on customers locations: 2011 2010 RMB000 RMB000 Asia
Europe North America South America Other
128,957 369,763 40,867 103,543 36,645 679,775
165,960 285,926 61,905 89,572 22,455 625,818
Revenues of approximately RMB361,074,000 (2010: RMB365,789,000) are derived from two external customers which take up approximately 32% (2010: 32%) and 26% (2010: 27%) of total revenue respectively. These revenue are attributable to the contract manufacturing segment.
29
The mandatory standards, amendments and interpretations to existing standards that have been published, and are relevant for the Companys accounting periods beginning on or after 1 January 2012 or later periods and which the Company has not early adopted are: Amendments to FRS 1 Presentation of Financial Statements (effective for annual periods beginning on or after 1 July 2012) Amendments to FRS 12 Deferred tax: recovery of underlying assets (effective for annual periods beginning on or after 1 January 2012) Amendments to FRS 107 Disclosures - Transfers of Financial Assets (effective for annual periods beginning on or after 1 July 2011) FRS 19 (revised 2011) Employee Benefits (effective for annual periods beginning on or after 1 July 2013) FRS 27 (revised 2011) Separate Financial Statements (effective for annual periods beginning on or after 1 July 2013) FRS 110 (revised 2011) Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2013) FRS 112 (revised 2011) Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2013) FRS 113 Fair Value Measurement (effective for annual periods beginning on or after 1 July 2013)
NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS
The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in the future periods will not have a material impact on the financial statements of the Group and of the Company in the period of their initial adoption.
83
Statistics of Shareholdings
As at 9 March 2012
DISTRIBUTION OF SHAREHOLDINGS
No. of Shares issued : Class of Shares : Voting rights : Size of Shareholdings 1,000 10,000 10,001 1,000,000 1,000,001 and above Total 265,000,000 Ordinary shares One vote per share No of Shareholders 156 325 18 499 % 31.26 65.13 3.61 100.00 No. of Shares 1,046,000 27,107,000 236,847,000 265,000,000 No. of Shares 53,632,000 53,244,000 39,965,000 21,076,000 20,525,000 20,090,000 6,090,000 4,648,000 2,383,000 2,236,000 1,960,000 1,910,000 1,895,000 1,816,000 1,650,000 1,421,000 1,156,000 1,150,000 1,000,000 1,000,000 238,847,000 % 0.39 10.23 89.38 100.00
TWENTY LARGEST SHAREHOLDERS

No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Name DBS Vickers Securities (S) Pte Ltd United Overseas Bank Nominees Pte Ltd UOB Kay Hian Pte Ltd OCBC Securities Private Ltd Maybank Kim Eng Securities Pte Ltd Mayban Nominees (S) Pte Ltd Hong Leong Finance Nominees Pte Ltd Sze Sau King Raffles Nominees (Pte) Ltd Lau Siu Fung Weng Wenju Weng Jindao Lim Chiew Hock (Lin Qiufu) Neo Cheng Soon Kwek Swee Heng Wong Tew Hong CIMB Securities (Singapore) Pte Ltd Daniel Tan Poon Kuan Charles Patrick Soh Hock Leong Total
% 20.24 20.09 15.08 7.95 7.75 7.58 2.30 1.75 0.90 0.84 0.74 0.72 0.72 0.69 0.62 0.54 0.44 0.43 0.38 0.38 90.14
Substantial Shareholders of the Company (as recorded in the Register of Substantial Shareholders) as at 9 March 2012. No. of Ordinary shares Direct Indirect Name Interest % Interest % G&W Investment Management Co., Ltd. (1) 181,500,000 68.49 Weng Wenwei(2) 181,500,000 68.49
Note: (1) Registered in the name of nominee DBS Vickers Securities (S) Pte Ltd (51,500,000 shares), United Overseas Bank Nominees Pte Ltd (50,000,000 shares), UOB Kay Hian Pte Ltd (20,000,000 shares), OCBC Securities Private Ltd (20,000,000 shares), Kim Eng Securities Pte. Ltd (20,000,000 shares) and Mayban Nominees (S) Pte Ltd (20,000,000 shares). (2) Mr Weng Wenwei is deemed to be interested in the 181,500,000 shares held by G&W Investment Management Co., Ltd. by virtue of his shareholdings of 100% in G&W Investment Management Co., Ltd..
SUBSTANTIAL SHAREHOLDERS
As at 9 March 2012, approximately 30.77% of the issued ordinary shares of the Company was held in the hands of the public (on the basis of information available to the Company). Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited.
84
FREE FLOAT
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of Great Group Holdings Limited will be held at 36 Carpenter Street, Singapore 059915 on 25 April 2012 at 10.00 a.m. for the following purposes:-
AS ORDINARY BUSINESS
1. 2. 3. 4. 5. 6. To receive and, if approved, to adopt the Audited Accounts for the financial year ended 31 December 2011 together with the Directors Report and Auditors Report thereon. Resolution 1 To approve Directors fees of S$270,000.00 for the financial year ending 31 December 2012 to be paid on a quarterly basis in arrears (2011: S$270,000.00). Resolution 2 To re-elect Mr Weng Wenju who is retiring under Article 107 of the Articles of Association. Resolution 3
To re-elect Ms Lee Kim Lian, Juliana who is retiring under Article 107 of the Articles of Association. Resolution 4 To re-appoint Messrs Nexia TS Public Accounting Corporation, as the Companys Auditors and to authorise the Directors to fix their remuneration. Resolution 5 To transact any other ordinary business which may be properly transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and, if thought fit, to pass the following resolution (with or without amendments) as Ordinary Resolution:7. That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST), the Directors of the Company be authorised and empowered to: (a) (i) (ii) issue shares in the capital of the Company (shares) whether by way of rights, bonus or otherwise; and/or make or grant offers, agreements or options (collectively, Instruments) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and
(b)
(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,
provided that: (1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50 per cent of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20 per cent of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with paragraph (2) below);
Notice of Annual General Meeting

(2) (subject to such manner of calculation and adjustments as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under paragraph (1) above, the percentage of issued shares shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Resolution is passed, after adjusting for: (i) (3) (ii) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and any subsequent bonus issue, consolidation or subdivision of shares;
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. Resolution 6
(4)
BY ORDER OF THE BOARD
ONG WEI JIN COMPANY SECRETARY 5 April 2012 SINGAPORE
NOTES:(i) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A member of the Company, which is a corporation, is entitled to appoint its authorised representative or proxy to vote on its behalf. A proxy need not be a member of the Company. (ii) (iii) (iv) The instrument appointing a proxy must be deposited at the Companys registered office at 36 Carpenter Street Singapore 059915 at least 48 hours before the time of the Meeting. If re-elected under Resolution 3, Mr Weng Wenju will remain as Executive Director of the Board and Procurement Manager of the Company. If re-elected under Resolution 4, Ms Lee Kim Lian, Juliana will remain as the chairman of the Nominating Committee and Remuneration Committee and a member of the Audit Committee, and will be considered an Independent Director of the Company. Resolution 6, if passed, will empower the Directors of the Company to issue shares and convertible securities in the Company up to a maximum of fifty per cent (50%) of the issued share capital of the Company (of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to existing shareholders shall not exceed twenty per cent (20%) of the issued share capital of the Company) for such purposes as they consider would be in the interests of the Company. This authority will continue in force until the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required by law to be held, whichever is the earlier, unless the authority is previously revoked or varied at a general meeting.
86
Proxy Form
(Please see notes overleaf before completing this From) (Incorporated in the Republic of Singapore)
GREAT GROUP HOLDINGS LIMITED
IMPORTANT: 1. For investors who have used their CPF monies to buy Great Group Holdings Limiteds shares, this Annual Report is forwarded to them at their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.
I/We of
(Name)
NRIC/Passport No. (Address)
being a member/members of the above-mentioned Company, hereby appoint:Name Address and/or (delete as appropriate) Name Address NRIC/Passport No. Proportion of Shareholdings No. of Shares % NRIC/Passport No. Proportion of Shareholdings No. of Shares %
or failing him/her/them, the Chairman of the Meeting as my/our proxy/proxies to attend and to vote for me/us on my/ our behalf at the Annual General Meeting (the Meeting) of the Company to be held at 36 Carpenter Street, Singapore 059915 on 25 April 2012 at 10.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote For or Against with a tick [ X ] within the box provided) No. 1. 2. 3. 4. 5. 6. Resolutions relating to: Ordinary Business Audited Accounts, Directors Report and Auditors Report for the year ended 31 December 2011 Approval of Directors Fees Re-election of Mr Weng Wenju as a Director under Article 107 Re-election of Ms Lee Kim Lian, Juliana as a Director under Article 107 Re-appointment of Nexia TS Public Accounting Corporation as Auditors Special Business Authority to Directors to allot and issue new shares pursuant to Section 161 of the Companies Act, Cap. 50 day of 2012. Total number of Shares in: (a) CDP Register (b) Register of Members Signature(s) of Shareholder(s) or, Common Seal of Corporate Shareholder No. of Shares For Against
Date this
NOTES:
1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you. A member of the Company entitled to attend and vote at the Meeting of the Company is entitled to appoint not more than two proxies to attend and vote in his/her stead. Where a member appoints two proxies, he shall specify the percentage of his shares to be represented by each proxy and if no percentage is specified, the first named proxy shall be deemed to represent 100 per cent of his shareholding and the second named proxy shall be deemed to be an alternate to the first named. A proxy need not be a member of the Company. The instrument appointing a proxy or proxies together with the letter of power of attorney, if any, under which it is signed or a duly certified copy thereof, must be deposited at the registered office of the Company at 36 Carpenter Street Singapore 059915, not less than 48 hours before the time appointed for the Meeting. A corporation which is a member may authorise by resolution of its directors or other governing body such a person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50. Please indicate with an X in the spaces provided whether you wish your vote(s) to be for or against the Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/ proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Meeting. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In the case of a member whose shares are entered against his name in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
2. 3.
4. 5.
6.
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Xiantang District, Changtai Street, Licheng District, Quanzhou City, Fujian Province, China

Great Group Holdings 2011 Annual Report

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annual report 2011

Great Group Holdings Limited annual report 2011

Great Group Holdings Limited annual report 2011

*Prior to FY2009 were based on pre-invitational shares of 200,000,000 00 16

400.8 262.3 FY2007 FY2008

17.9 7.8 FY2011

Gross Profit Margin

Net Profit Margin

Great Group Holdings Limited annual report 2011

Top from left to right

Weng Wenwei Weng Wenju

Fujian Great Fashion Industry Co..Ltd

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Great Fashion Trading (Shanghai) Limited

Great Brand Management Limited

Grixpro Trading (Xiamen) Limited

Great Group Holdings Limited annual report 2011

Financial Contents Corporate Governance Report

Corporate Governance Report

(A) BOARD MATTERS Principle 1: The Boards conduct of its affairs

Corporate Governance Report

Principle 2: Board Composition and Balance

Principle 3: Chairman and CEO

Corporate Governance Report

Principle 4: Board Membership

(d) (e) (f)

Corporate Governance Report

Date of Initial Appointment

Date of last Re-election

Principle 5: Board Performance

Principle 6: Access to information

Great Group Holdings Limited annual report 2011

Corporate Governance Report

(B) REMUNERATION MATTERS Principle 7: Procedures for Developing Remuneration Policies

Principle 8: Level and Mix of Remuneration

Corporate Governance Report

Principle 9: Disclosure on Remuneration

Remuneration Band and Name Directors Below S$250,000 Weng Wenwei

22% 32% 100% 100%

100% 100% 100% 100%

100% 100% 100% 100% 92%

100% 100% 100% 100%

(C) ACCOUNTABILITY AND AUDIT Principle 10: Accountability

Principle 11: Audit Committee

Corporate Governance Report

(b) (c) (d) (e) (f) (g) (h)

(j) (k) (l) (m) (n) (o)

Corporate Governance Report

Principle 12: Internal Controls

Principle 13: Internal Audit

Great Group Holdings Limited annual report 2011

Corporate Governance Report

(D) COMMUNICATION WITH SHAREHOLDERS Principle 14: Communication with Shareholders

Principle 15: Greater Shareholder Participation

(E) MATERIAL CONTRACTS

(F) DEALINGS IN SECURITIES

Corporate Governance Report

(G) INTERESTED PARTY TRANSACTIONS

(H) RISK MANAGEMENT

Great Group Holdings Limited annual report 2011