great group holdings 2009 annual report

8/2/2019 Great Group Holdings 2009 Annual Report

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GREAT GROUP HOLDINGS LIMITED

2009Annual Report


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About Us 01

Chairmans Message 02

Operations Review 06

Financial Highlights 08

Directors Prole 10

Key Executives Prole 12

Group Structure 13

Corporate Inormation 14Financial Contents 15

Contents


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About Us

Based in Quanzhou City, Fujian Province, Great Group Holdings Limited

(Great Group or the Group) is an established undergarment manuacturer

in the PRC. The Group is principally engaged in the design, manuacture,

distribution and sales o mens and womens undergarments. The Group also

manuactures and sells childrens and inants apparel.

Great Group designs, manuactures and sells mens undergarments, and to

a lesser extent, womens undergarments, under its proprietary GRAT.UNIC

() brand in the PRC. The Group also manuactures and sells mens

undergarments bearing the Superman trademark licensed rom Warner Bros

Consumer Products Inc.

Sold across 18 provinces/municipalities/autonomous regions in the PRC, the

Groups GRAT.UNIC () and Superman products can be ound at 106

points o sales as at 31 December, 2009 . These comprise specialty stores or

dedicated shel-spaces located strategically in shopping malls, departmental

stores and commercial areas o major cities in the PRC.


Annual Report 20091


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Chairmans Message

20099

2009

--

2009925

GRAT.UNIC

09

GRAT.UNIC

6017

23.5 %

2009

5.16

28.81%20097,503

6.0 %

2010

1

2.

55

2010

2011

3.

4.

GRAT.UNIC

5.

,ODM/OEM

2010


Annual Report 20093


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Chairmans Message

Dr Srdrs,

On behal o the Board o Great Group HoldingsLimited, it is my honour to present to you the

Groups maiden nancial report since our listing

on 25 September 2009 or the nancial year ended

31 December 2009 (FY2009).

FY2009 is indeed a challenging year. The nancial

crisis aecting the world markets, especially EU

and the US caught many unprepared. Crisis in

Chinese (WeiJi) means opportunity amongst

risks. For Great Group, we turned adversity into

advantage instead. We have taken this opportunity

to successully list on the SGX Main-board; Great

Group Holdings Limited and its subsidiaries have

made their mark in the global arena and are well

positioned to maniest globally.

Being prepared, we were able to weather the

eects o the economic crisis with minimum

impact, yet limiting the extent o risk we are

exposed to. The management reviewed and made

timely adjustments to the expansion strategy

o the Group to obtain higher market share and

enhance awareness o our own brand--GRAT.UNIC.In FY2009, GRAT.UNIC brand achieved sales o RMB

60 million or growth o 23.5%. GRAT.UNIC was

awarded 2009 Fujian Provinces Renowned Brand

Award in recognition o our Brands strong growth

and reputation. Streamlining o our production

processes and cost-cutting measures have also

resulted in improvement in overall eciency. The

Group aces the economic crisis optimistically.

Our products are well positioned and well

received, as refected in our improved sales

numbers. The Group has a record sale o RMB516

million representing a 28.81% growth in sales

in FY2009. We have also achieved an increase in

net income o RMB75 million or FY2009, a net

increase o 6.0% over FY2008

We envision the ollowing or 2010 and beyond:

1. Continue with our eorts to gain market share

with a ocus on the domestic market. We plan

to set up a marketing and operational base

in Shanghai to increase the brand awareness

and build a wider distribution network or our

Groups Brand;

2. Develop a state o the art acility or Great

Group. The construction o Great Group

Industrial Park at the Jiangnan High-Tech

Inormation Industrial Zone has commenced

in December 2009. The rst phase o the new

industrial park is expected to be completed

and be ully operational in early 2011. New

and technologically advanced equipment and

acilities will be installed, and by extension,

reduce costs and help improve margins;

3. Strengthen the internal controls o the

Group, enhance risk management, increase

productivity through cost-cutting measures,

branding, product enhancement and re-

positioning;

4. Expand the research and design capacity

to enhance the variety o our GRAT.UNIC

products in order to cater to the dierentsegments and demands o customers and

capture a larger market share in China;

5. Set up an international distribution and

sales centre in Hong Kong to oster closer

relationship and rapport with both existing

and prospective contract manuacturing

customers.

The 2010 market presents a challenging and

exciting ront. Going orward, Great Group strives

to reach greater heights with a view to delivering

greater returns or each and every shareholder. We

greatly appreciate and thank the shareholders or

their support and trust in the Group in this new

nancial year; together we shall prosper.


Annual Report 20094


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Touch Forward


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Operations Review

Revenue

Our perormance or the nancial year ended on 31 December 2009 (FY2009)

surpassed that o last nancial year that ended on 31 December 2008 (FY2008). In

FY2008, we recorded a revenue o RMB400.8 million and a net prot o RMB70.8 million,

while in FY2009 we recorded RMB516.3 million and RMB75.0 million respectively.

The increase in revenue or FY2009 versus FY2008 is mainly attributable to the change

in product mix whereby our contract manuacturing or more complicated designs and

large-sized products with higher average selling price were sold during the nancial year.

PRoitability

Even though the Group has improvement in the revenue, the Group has recorded a

decrease in gross prot. This is due to the increased cost o sales and thus lower gross

prot margin in FY2009 as compared to FY2008 respectively. The Groups gross prot

decreased by approximately RMB6.4 million or 6.2% rom RMB104.3 million in FY2008 toRMB97.9 million in FY2009 despite the increase o 28.8% in sales in FY2009.

The Groups gross prot margin decreased rom 26.0% in FY2008 to 19.0% in FY2009.

The decreases in the gross prot margin or FY2009 versus FY2008 were mainly due to

the downward pressure on our selling price, particularly o our contract manuacturing

products, caused by the global nancial crisis and depreciation o the USD, in which the

Groups substantial sales were traded, against RMB.

or m increased by approximately RMB3.9 million or 162.8% rom RMB2.4

million in FY2008 to RMB6.3 million in FY2009. The increases were driven by an increase

in government incentive, or the Groups listing on SGX and being one o the big income

tax payer in Quanzhou PRC, o approximately RMB2.5 million. On top o the government

incentive, the Group also received Small and Medium Enterprises (SMEs) export and

other incentives o approximately RMB3.0 million rom the PRC government.

Sg d dsr ss decreased by 17.7% rom RMB8.0 million in FY2008 to

RMB6.6 million in FY2009. Lower selling and distribution cost is due to less advertising,

entertainment and design activities which is in line with the managements eort to

manage cost.

admsr xpss increased by 91.9% rom RMB6.2 million in FY2008 to RMB11.9

million in FY2009. The increase is mainly due to IPO related expenses and higher sta

salaries and related costs arising rom additional key management sta and directors

pursuant to the Companys listing. The Group started to incur proessional expenses

relating to compliance activities rom the third quarter o FY2009 onwards. This is alsoone o the reasons or lower prot achieved during the year.

or oprg expss in the current nancial year o RMB11,000 is RMB3.2 million

less than the other operating expenses recorded in FY2008. This was due to oreign

exchange gain arising rom xed deposit maintained in SGD.

im x xps decreased by 47.6% to RMB8.7 million in FY2009 which is in line

with the decrease in prot beore income tax.

balance SheetS anD caSh loWS

Cash and cash equivalents increased by RMB74.8 million or 226.0% rom RMB33.1

million as at 31 December 2008 to RMB107.9 million as at 31 December 2009. Theincrease in cash and cash equivalents was mainly due to IPO proceeds.


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Operations Review

Trade and other receivables increased by RMB65.9 mill ion or 50.3% to RMB197.0 mill ion

as at 31 December 2009 rom RMB131.1 million as at 31 December 2008. The increase

in trade and other receivables was mainly due to higher trade receivables balance.

More sales were made in the ourth quarter o FY2009 (4Q09) as compared to the

corresponding period.

Inventories as at 31 December 2009 were approximately RMB30.4 million representing

a decrease o 10.6% or RMB3.6 million rom RMB34.0 million as at 31 December 2008.

More sales were made in the 4Q09 as compared to the corresponding period, causing

inventory levels as at current year end to be lower than the previous year end.

Other current assets as at 31 December 2009, were approximately RMB1.6 million

rom approximately RMB3.1 million as at 31 December 2008, refecting a decrease o

approximately 48.4% or RMB1.5 million. The decrease was mainly due to the osetting o

capitalised IPO expenses against IPO proceeds and lesser prepaid expenses in FY2009.

The Groups property,plant and equipment increased by approximately RMB2.0 million

or 11.5% to RMB19.4 million as at 31 December 2009 rom RMB17.4 million as at 31

December 2008 as the Group incurred additional cost or construction-in-progress

relating to the new land use right during the nancial year.

As at 31 December 2009, the Groups intangible assets increased by approximately

RMB15.1 million or 943.8% to RMB16.7 million rom RMB1.6 million as at 31 December

2008. This was mainly due to the purchase o land use right or the new premise at the

Jiangnan High-Tech Inormation Industrial Zone.

Trade and other payables decreased by approximately RMB3.8 million or 30.9% to

RMB8.5 million as at 31 December 2009 rom RMB12.3 million as at 31 December 2008.

The decrease was mainly due to lower trade payables, which were in line with the

decrease in raw material purchases in 4Q09, and lower other payables due to lesser

accruals or other operating expenses as at 31 December 2009 as compared to 31

December 2008.

The borrowings increased by approximately RMB4.2 million or 10.0% to RMB46.2 million

as at 31 December 2009 rom RMB42.0 million as at 31 December 2008. New short term

loans were taken up by our PRC subsidiaries in 4Q09 as working capital.

Current income tax liabilities decreased by RMB8.2 million or 62.1% to approximately

RMB5.0 million as at 31 December 2009 rom approximately RMB13.2 million as at 31

December 2008. The decrease was mainly due to less tax obligation o a subsidiary.

The Groups operations continue to generate positive cash fows o RMB21.0 million in

FY2009. Ater payment or investing activities o RMB16.3 million, which substantially

attributed to purchase o the land use right or the construction o our new industrial

park; and receipt rom nancing activities o RMB82.7 million, which was substantially

related to capital unds received rom issue o Company shares at its IPO on 25

September 2009, the Groups net cash and bank balances stood at RMB101.6 million as at

31 December 2009.


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Financial Highlights

Smmrsd im Sm (RMbm)r yr edd 31 Dmr y2009 y2008 y2007 y2006

Revenue

- Contract Manuacturing 454.3 351.1 242.4 144.0

- GRAT.UNIC 60.2 48.7 19.9 2.4

- Superman 1.8 1.0 - -

TOTAL 516.3 400.8 262.3 146.4

Prot Beore Interest & Tax (PBIT) 85.4 88.9 61.2 24.7

Interest Income 0.3 0.4 0.2 0.3

Finance Expenses (1.9) (1.9) (0.7) (0.3)

Prot Beore Income Tax (PBT) 83.7 87.4 60.7 24.7

Income Tax (8.7) (16.6) (4.2) (2.4)

Prot ater Income Tax (PAT) 75.0 70.8 56.5 22.2

Selling & Distribution expenses as a % over revenue 1.3% 2.0% 1.8% 2.6%

Administrative expenses as a % over revenue 2.3% 1.5% 1.3% 1.3%

Smmrsd b S (RMbm)

Current Assets 336.8 201.3 118.8 72.5

Non-current Assets 36.0 21.6 15.7 12.0

Current Liabilities 59.7 67.5 49.9 34.8

Equity 313.1 155.4 84.6 49.7

Cash and Bank Balances 107.9 33.1 9.0 6.4

Inventories 30.4 34.0 27.7 6.8

idrs/Rs

PBIT Margin 16.5% 22.2% 23.3% 16.8%PBT Margin 16.2% 21.8% 23.1% 16.8%

PAT Margin 14.5% 17.7% 21.5% 15.2%

Earnings Per Share (RMB cents) 34.71 35.40 28.23 11.12

Return on Equity (ROE) (%) 23.96 45.54 66.73 44.76

Return on Assets (ROA) (%) 20.12 31.74 41.98 26.32

Current Ratio (x) 5.64 2.98 2.38 2.08

Gearing Ratio (x) 0.19 0.43 0.59 0.70

Liquidity Ratio 5.13 2.48 1.83 1.89

Net Asset Value (NAV) Per Share (RMB cents) 118.17 77.71 42.30 24.83

Number o Ordinary Shares Issued (million)* 265 200 200 200

Average Trade Receivables Turnover (Days) 75 63 53 37

Average Trade and Bills Payables Turnover (Days) 14 25 40 36

Average Inventory Turnover (Days) 28 38 33 18

*Prior to FY2009 were based on pre-invitational shares o 200,000,000.

R b Sgm(RMbm)

y2006

Superman

144 242

20

351

49

1

454

60

2

2

Contract Manuacturing

y2007 y2008 y2009

GRAT.UNIC

Grss Prf(RMbm)

y2006

Gross Prot Margin

30

21.3%

27.1%

26%

19%

65

87

17

83

156

1

Contract Manuacturing

y2007 y2008 y2009

GRAT.UNIC & Superman


Annual Report 20098


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Culture in Nature


Annual Report 20099


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Directors Proile

lm yw h @ lm y Q is our Independent Director and was appointed to our

Board on 18 June 2009. He is currently the managing director o Asia Pacic Business

Consultants Pte. Ltd., a Singapore company providing tax and business consultancy

services.

Mr Lim has more than 20 years o experience in the tax, nancial services and investment

banking industries. Prior to ounding Asia Pacic 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 o Singapore.

Mr Lim holds a Bachelors Degree in Accountancy and a Masters Degree in Business

Administration rom the National University o Singapore. He is a ellow member o the

Institute o Certied Public Accountants o Singapore (ICPAS) and a ull member o the

Singapore Institute o Directors.

He also serves as an independent director on the boards o Singapore listed companies:

Advanced Integrated Manuacturing Corp Limited, China Eratat Sports Fashion Limited,

KSH Holdings Limited and KTL Global Limited.

l Km l, J is our Independent Director and was appointed to our Board

on 18 June 2009. Ms. Lee holds a Bachelor o Law (Honours) degree rom the National

University o Singapore and is a member o the Singapore Institute o Directors. She has

more than 18 years o experience in legal practice and is currently a director o Aptus Law

Corporation, heading its corporate practice. Her main areas o practice are corporate law,

corporate nance, mergers and acquisitions and venture capital. Ms. Lee also serves on

the boards o listed companies, Jackspeed Corporation Ltd, Zhongguo Pengjie Fabrics

Limited and Lee Metal Group Ltd.


Annual Report 200911


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Key Executives Proile

c a () has been our General Manager (Production) since May 2000 and isresponsible or overseeing the production process and day-to-day management o our

Groups Production Department. Cai Ane has more than 10 years o experience in the

textile industry. Between January 1997 and April 2003, she was assisting the head oDachuan Textile Factory () in managing its operations. Between February

1993 and December 1996, she was an assistant to the head o Hesheng Apparel Factory in

Yonghe town () and was assisting in the management o its productiono clothing or clients. Prior to that, she worked as an apprentice or various garment

manuacturing actories in the PRC to gain experience in the garment manuacturing

business rom September 1983 to February 1993.

Wg Jx() has been our Deputy Production Manager since January 2006and is responsible or assisting our General Manager (Production) in overseeing the

production process o our Group and management o our Production Department. He

joined our Group in September 2002 as the actory head o production, in charge omanaging the production department. He was subsequently promoted as the deputy

production manager in January 2006. Prior to that, he joined Zhengli Garment-making

(Xiamen) Co., Ltd. () in March 1996 as a tailor and as its typesettingoperator in July 1997. In August 1998, he was promoted as its supervisor and in October

1999, was promoted to assistant manager cum production supervisor, assisting the

manager in production operation until August 2000. He started his career in February

1994 as weaving worker at Hangzhou Chunan First Silk Factory () till

November 1995.

He graduated rom Jiangjiaqu Adult Science and Technology School ()

with a high school graduation certication in 1991.

W X () has been our Sales Manager since February 2003 and is responsibleor 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 ater-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 or ollowing up with customerson trade receivables. In March 1999, she joined Quanzhou Green Garments Co., Ltd. () as a procurement sta and let 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 asecretary to the general manager in Shishi Lihui Computer Printing Co., Ltd. (

) and let in September 1993.

She obtained a graduation certication (Business Administration) rom Continuing Education

School o Huaqiao University () in 1992.

Zg Sw () is our Chie Financial Ocer and has been with our Group sinceMay 2007. He is responsible or the nancial, accounting and taxation matters o our

Group. From December 2003 to April 2007, he was the chie nancial ocer o Labixiaoxin

(Fujian) Food Industry Co., Ltd. ( () ) and was in charge oits nancial management. In November 2002, he joined Guilin Seamild Biology Technology

Development Co., Ltd. () as the manager o its auditingdepartment and was in charge o its nance and auditing aairs until December 2003. Prior

to that, he was the manager o the auditing department o Dongguan Hsu Fu Chi Food

Co., Ltd. () rom March 1999 to November 2002. From January1998 to December 1998, he was the general manager at Wanxi Shule Sanitary Articles Co.,

Ltd. (). Between August 1990 and December 1997, he was the

nance manager at Anhui Jinzhai County Silk Group ().

He graduated rom Anhui Agricultural College () with a Bachelor in Finance and

Accountancy in July 1990 and he was conerred the title o accountant by the Ministry o

Personnel, the PRC in July 1994. He was accredited as senior accountant in December 1996.




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Group Structure

Gr Grp hdgs lmd (Sgpr)

Qz Gr

Grms c., ld

(PRc)

j Gr s

idsr c., ld

(PRc)

Gr Wrdwd

(trdgs) lmd

(bvi)

Gr hdg

lmd

(hg Kg)




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Corporate Inormation

boaRD o DiRectoRS

Weng Wenwei (

) (Executive Chairman and CEO)Weng Wenju () (Executive Director)

Teoh Teik Kee (Lead Independent Director)

Lee Kim Lian, Juliana (Independent Director)

Lim Yeow Hua @ Lim You Qin (Independent Director)

auDit coMMitteeTeoh Teik Kee (Chairman)

Lee Kim Lian, Juliana

Lim Yeow Hua @ Lim You Qin

ReMuneRation coMMitteeLim Yeow Hua @ Lim You Qin (Chairman)

Teoh Teik Kee

Lee Kim Lian, Juliana

noMination coMMitteeLee Kim Lian, Juliana (Chairman)

Teoh Teik Kee

Lim Yeow Hua @ Lim You Qin

Weng Wenwei ()

ReGiSteReD oice36 Carpenter Street, Singapore 059915

PRinciPal Placeo buSineSSLinjiang Industrial Zone, Nanhuan Road, Licheng

District, Quanzhou City, Fujian Province, the PRC

coMPany SecRetaRyOng Wei Jin (LLB-Hons)

ShaRe ReGiStRaR anDShaRe tRanSeR aGentBoardroom Corporate & Advisory Services Pte. Ltd.

3 Church Street #08-01

Samsung Hub

Singapore 049483

eXteRnal auDitoRS

Nexia TS Public Accounting Corporation5 Shenton Way

UIC Building #16-00

Singapore 068808

Partner-in-charge: Henry SK Tan

FCPA Singapore, ACA

inteRnal auDitoRSBDO LLP

19 Keppel Road

#02-01, Jit Poh Building

Singapore 089058

PRinciPal banKeRSBank o China, Quanzhou Branch

()

Bank o 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 o China,

Quanzhou Licheng Sub-branch

()Wenling Street Zhongduan, Quanzhou City,

Fujian Province, the PRC

()

OCBC Bank65 Chulia Street

#01-00

OCBC Centre

Singapore 049513




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Corporate Governance Report 16

Directors Report 25

Statement by Directors 28

Independent Auditors Report 29

Consolidated Statement o Comprehensive Income 31

Balance Sheets 32

Consolidated Statement o Changes In Equity 33

Consolidated Cash Flow Statement 34

Notes to the Financial Statements 35

Statistics o Shareholdings 69

Notice o Annual General Meeting 71

Proxy Form

Financial Contents


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Corporate Governance ReportFor the nancial year ended 31 December 2009

Great Group Holdings Limited (the Company) recognises the importance o a high standard o corporate governance within the

Companys group o 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 o all shareholders. The Company

adopts practices based on the Singapore Code o Corporate Governance 2005 (the Code) and the Best Practice Guide issued by

the Singapore Exchange Securities Trading Limited (the SGX-ST). The board o directors o the Company (the Board) is pleased

to report on the compliance o 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 o its aairs

The Boards primary role is to provide protection and enhancement o shareholders long-term value. The principal unctions o the

Board include:

supervises the management o the businesses and aairs o the Group

reviews and approves the Groups strategic plans, key operational initiatives, major unding and investment proposals

identies principal risks o the Groups businesses and ensures the appropriate systems are in place to manage these risks

reviews the nancial perormance o the Group

evaluates the perormance and compensation o senior management personnel; and

assumes responsibility or corporate governance practices.

To urther assist in the execution o its responsibilities, the Board has established a number o Board committees which include

and Audit Committee (AC), a Nominating Committee (NC) and a Remuneration Committee (RC) (collectively, the Board

Committees). These committees unction within clearly dened terms o reerences and operating procedures, which are reviewed

on a regular basis. The eectiveness o each committee is also constantly monitored.

The Board meets on a quarterly basis and whenever necessary to discharge their duties. The number o meetings held by the

Board and Board Committees and attendance or the nancial year 31 December 2009 (FY2009) up to the date o this Report are

summarized in the table below:

Board AC RC NC

Number o meetings held 2 2 1 1

Directors No. o meetings attended

Name o Director

Weng Wenwei(1) 2 2(4) 1(4) 1

Weng Wenju

(2)

2 - - -Teoh Teik Kee(3) 2 2 1 1

Lee Kim Lian, Juliana(3) 2 2 1 1

Lim Yeow Hua @ Lim You Qin(3) 2 2 1 1

Notes:

1. Weng Wenwei was appointed as a Director on 29 February 2008.

2. Weng Wenju was appointed as a Director on 23 December 2008.

3. Teoh Teik Kee, Lee Kim Lian, Juliana and Lim Yeow Hua @ Lim You Qin were appointed as Directors on 18 June 2009.

4. Attendance by invitation.


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Principle 2: Board Composition and Balance

The Board currently has ve members, comprising two (2) executive directors and three (3) independent directors, all o whom

have the relevant core competence and diversity o experience to enable them to contribute eectively to the Group. Brie proles

o each Director in oce at the date o this Report are set out in pages XX to XX o this Annual Report.

As at the date o this report, the Board comprises the ollowing members:

Weng Wenwei Executive Chairman and Chie Executive Ocer (CEO)

Weng Wenju Director

Teoh Teik Kee Lead Independent Director

Lee Kim Lian, Juliana Independent Director

Lim Yeow Hua @ Lim You Qin Independent Director

The Board constantly examines its size and, with a view to determining the impact o the number upon eectiveness, decides

on what it considers an appropriate size or itsel. The composition o the Board will be reviewed on an annual basis by the NC toensure that the Board has the appropriate mix o expertise and experience, adequate or the scale o operations o the Company.

In determining the size and composition o the Board, the Board ensures that at least one-third are independent non-executive

Directors and that each Director should submit him-/hersel or re-nomination and re-election at regular intervals o at least once

every three years.

The NC had reviewed the independence o the Directors or FY2009 in accordance with the Codes criteria o independence and

is o the view that the three o the Directors, namely Teoh Teik Kee, Lim Yeow Hua @ Lim You Qin and Lee Kim Lian, Juliana, are

independent directors within the meaning o the Code.

Principle 3: Chairman and CEO

Weng Wenwei is the Executive Chairman and CEO. He is responsible or the day-to-day running o the Group as well as the exerciseo control o the quality, quantity and timeliness o inormation fow between the Board and management. The unctions o the

Chairman and CEO are not separated given the strong element o independence presence on the Board and the scope and nature

o the operations o the Group. However, as good corporate governance practice and to ensure that there is no concentration

o power and authority vested in one individual, the Group has appointed Teoh Teik Kee 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 o the Chairman or CEO, or where such contact is not possible or inappropriate. Hence, the Board is o the opinion

that sucient checks and saeguards are in place to ensure that the process o decision making is independent and based on

collective decisions without individual exercising any considerable power or infuence.

As Chairman o the Board, Weng Wenwei bears responsibility or the eective working o the Board. He is responsible or, amongst

others, ensuring that Board meetings are held when necessary, setting the Board meeting agenda in consultation Chie Financial

Ocer, assisting in ensuring compliance with the Groups guidelines on corporate governance, acting as acilitator 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 ollowed and that applicable rules and regulations are complied with. The Company Secretary also attends all

meetings o the Board and Board Committees. In addition, there is constant communication between Board members and key

decisions require approval rom all Directors prior to implementation.

Besides giving guidance on the corporate direction o the Group, the role o the Chairman includes the scheduling and chairing

o Board meetings and controlling o the quality, quantity and timeliness o inormation supplied to the Board. Weng Wenwei also

sets the business strategies and directions or the Group and manages the business operations o the Group.


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Principle 4: Board Membership

The NC comprises Lee Kim Lian, Juliana Teoh Teik Kee, Lim Yeow Hua @ Lim You Qin and Weng Wenwei, the majority o whom are

independent. The NC is chaired by Lee Kim Lian, Juliana.

The Board has approved the written terms o reerence o the NC. The NC perorms the ollowing unctions:

(a) To make recommendations to the Board o the appointment o new executive and non-executive directors, including

making recommendations on the composition o the Board generally and the balance between executive and non-

executive Directors appointed to the Board.

(b) To regularly review the Board structure, size and composition and make recommendations to the Board with regards to any

adjustments that are deemed necessary.

(c) To determine the process or search, nomination, selection and appointment o new board members and be responsible

or assessing nominees or candidates or appointment or election to the Board, determining whether or not such nomineehas the requisite qualications and whether or not he/she is independent.

(d) To determine annually whether or not a director is independent.

(e) To recommend Directors who are retiring by rotation to be put orward or re-election.

( ) To decide whether or not a director is able to and has been adequately carrying out his/her duties as a Director o 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 aced by directors

who serve on multiple boards.

(g) To decide how the Board's perormance may be evaluated and propose objective perormance criteria, as approved by the

Board that allows comparison with its industry peers, and address how the Board has enhanced long term shareholders'

value.

(h) To be responsible or assessing the eectiveness o the Board as a whole and or assessing the eective contribution and

commitment o each individual Director to the eectiveness o the Board. The results o the perormance evaluation will be

reviewed by the Chairman and the assessment shall be disclosed annually.

The directors submit themselves or re-nomination and re-election at regular intervals o at least once every three years. The

Companys Articles and Association provides that one third o 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 o Association also provides that newly appointed

directors are required to submit themselves or re-nomination and re-election at the next AGM o the Company.

Principle 5: Board Perormance

The NC has established a process or assessing the eectiveness o the Board as a whole and or assessing the contribution o

each individual director. The perormance criteria or the Board evaluation include an evaluation o the size and composition o

the Board, the Boards access to inormation, accountability and Board processes. Board perormance in relation to discharging its

principal responsibilities in terms o the nancial 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.



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Principle 6: Access to inormation

To assist the Board in ullling its responsibilities, the management provides the Board with a management report containing

complete, adequate and timely inormation prior to the Board meetings. All Directors have separate and independent access to

executives ocers o the Company (Executive Ocers), 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.

The Directors and the chairman o the respective Board Committees, whether as a group or individually are able to seek independent

proessional advice as and when necessary in urtherance o their duties at the cost o the Company.

(B) REMUNERATION MATTERS

Principle 7: Procedures or Developing Remuneration Policies

The RC comprises Lim Yeow Hua @ Lim You Qin (chairman o the RC), Teoh Teik Kee and Lee Kim Lian, Juliana. All members o the

RC including the chairman are Independent Directors.

The RC is regulated by a set o written terms o reerence approved by the Board and has access to independent proessional advice,

i necessary. The RC recommends to the Board, a ramework o remuneration and to determine the specic remuneration packages

and terms o employment or each o the Directors and executive ocers o the Group as well as those employees related to the

executive directors and controlling shareholders o the Group, such recommendation should cover all aspects o remuneration,

including but not limited to directors ees, salaries, allowances, bonuses, options and benets-in-kind.

Each member o the Remuneration Committee shall abstain rom voting on any resolutions in respect o his remuneration

package.

Principle 8: Level and Mix o 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 perormance and the perormance o individual Directors.

The remuneration o the Executive Chairman and CEO, with the Company as disclosed in the Companys Prospectus dated 16

September 2009. The service agreement is or an initial period o three (3) years, with eect rom 25 September 2009.

Our Group has also previously entered into various letters o employment with all o the Executive Ocers. Such letters typically

provide or the salaries payable to the Executive Ocers, their working hours, medical benets, grounds o termination and certain

restrictive covenants.

Details o the employee share plan adopted by the Company are set out in the directors report section.



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Principle 9: Disclosure on Remuneration

The breakdown o remuneration o the Directors and Executive Ocers or FY2009 is set out below.

Remuneration Band and Name

Director

Fees

Salary and

other

benets Bonus Total

Directors

Below S$250,000

Weng Wenwei - 84% 16% 100%

Weng Wenju - 100% - 100%

Teoh Teik Kee 100% - - 100%

Lim Yeow Hua @ Lim You Qin 100% - - 100%

Lee Kim Lian, Juliana 100% - - 100%

Key Executives

Below S$250,000

Cai Ane - 100% - 100%

Wang Jianxin - 100% - 100%

Wei Xueen - 100% - 100%

Zhang Shiwu - 100% - 100%

Liang Choong Wai - 100% - 100%

The Company does not have any employees who are immediate amily members o a Director, the CEO or substantial shareholder,whose remuneration have exceeded S$150,000 during the nancial year ended 31 December 2009.

(C) ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Board and the management o the Group always strive to conduct themselves in ways that deliver maximum sustainable

value to our shareholders. The Board, through its announcements o results, aims to provide the shareholders with a balanced and

understandable assessment o the Company and the Groups perormance, position and prospects.

Prompt ulllment o statutory reporting requirements is but one way to maintain our shareholders condence and trust in the

Board and the managements capability and integrity. As part o building and maintaining shareholders condence, reporting o

consolidated nancial results, via SGXNET, was made well within the time-rame stipulated in the SGX Listing Manual.

The management currently provides the Board with appropriately detailed management accounts o the Groups nancial

perormance, position and prospects on a regular basis.

Principle 11: Audit Committee

The AC comprises Teoh Teik Kee (chairman o the AC), Lim Yeow Hua @ Lim You Qin and Lee Kim Lian, Juliana. All members o the

AC, including the chairman, are Independent Directors. The AC will assist the Board in discharging their responsibility to saeguard

the assets, maintain adequate accounting records, and develop and maintain eective systems o internal control, with the overall

objective o ensuring that management creates and maintains an eective control environment in the Company. The AC will

provide a channel o communication between the Board o Directors, the management and the external auditors o the Companyon matters relating to audit.



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No non-audit services were provided by the external auditors during FY2009. The AC had recommended the re-appointment o

Nexia TS Public Accounting Cooperation as external auditors at the orthcoming AGM.

Principle 12: Internal Controls

The Board acknowledges that it is responsible or the overall internal control ramework, but recognises that the system o internal

controls maintained by the management and in place throughout this nancial year provides reasonable but not absolute

assurance against any material nancial mis-statement or loss. The Board notes that the system o internal controls is designed to

manage rather than eliminate the risk o ailure to achieve business objectives.

The Board believes that in the absence o any evidence to the contrary, the system o internal control that has been maintained by

the Groups management throughout the nancial year up to the date o this Report is adequate to meet the needs o the Group

in its current business environment.

Principle 13: Internal Audit

The Company has outsourced its internal audit unctions to BDO LLP (BDO). BDO reports directly to the AC. The AC will annually

assess and ensure the adequacy o the internal audit unctions.

(D) COMMUNICATION WITH SHAREHOLDERS

Principle 14: Communication with Shareholders

In line with continuous disclosure obligations o the Company, pursuant to the SGX-STs Listing Rules and the Singapore Companies

Act, the Boards policy is that shareholders are inormed o all major developments that impact the Group regularly and on a timely

basis.

Pertinent inormation is communicated to shareholders on a regular and timely basis through the ollowing means:

- Results and annual reports are announced or issued within the mandatory period

- Material inormation are disclosed in a comprehensive, accurate and timely manner via SGXNET and the press

- Companys annual general meetings

All shareholders o the Company receive annual reports and are inormed o shareholders meetings through notices published

in the newspapers and reports or circulars sent to all shareholders. Shareholders are invited at such meetings to put orth any

questions they may have on the motions to be debated and decided upon. I any shareholder is unable to attend, he is allowed to

appoint up to two proxies to vote on his behal at the meeting through proxy orms 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 o accountability and to stay inormed o

the Groups strategy and goals. The Directors regard AGMs as an opportunity to communicate directly with shareholders and

encourage greater shareholder participation.

The notice o the AGM is dispatched to shareholders, together with explanatory notes or a circular on items o special business, at

least 14 days beore the meeting. The Board welcomes questions rom shareholders who have an opportunity to raise issues either

inormally or ormally beore or at the AGM.

The Chairpersons o the AC, RC and NC are normally available at the meeting to answer those questions relating to the work o these

committees. The Companys external auditors will also be present to assist the Directors in addressing queries by shareholders.



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(E) MATERIAL CONTRACTS

Save as disclosed in the nancial statement, there were no material contracts entered into by the Company or its subsidiaries

involving the interests o 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 ocers. The Directors and ocers are prohibited to trade in the Companys securities, during

the period beginning one (1) month and two (2) weeks beore the date o the announcement o the ull year and quarterly results

respectively and ending on the date o the announcement o the relevant results. In addition, the ocers o the Company are

advised not to deal with the Companys securities or 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.

(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 o the

shareholders. When a potential confict o interest occurs, the Director concerned will be excluded rom discussions and rerain

rom exercising any infuence over other members o the Board.

The aggregate value o interested person transactions entered into during the nancial year under review is as ollows:-

Name o interested person

Aggregate value o all interested

person transaction during thenancial year under review

(excluding transactions less than

S$100,000)

Aggregate value o all interested

person transactions conducted

during the nancial year underreview under shareholders mandate

pursuant to Rule 920 (excluding

transactions less than S$100,000)

Mr Weng Wen Wei

- Cash advances to Great Group

Holdings Limited RMB 0.7 million Not Applicable

Other than the above-mentioned, there are no other interested party transactions as at 31 December 2009.

(H) RISK MANAGEMENT

The Company does not have a Risk Management Committee. The executive directors and senior management assume the

responsibilities o the risk management unction. They regularly assess and review the Groups business and operational

environment in order to identiy areas o signicant business and nancial risks, such as credit risks, oreign exchange risks, liquidity

risks and interest rates risks, as well as appropriate measures to control and mitigate these risks.

Ater review o nancial risks o the Group by the Board, there is no any other nancial risks or disclosure except or those nancial

risks disclosed in the notes to the nancial statement (Note 24).



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(I) USE OF IPO PROCEEDS

The Net IPO proceeds (ater deducting estimated expenses or proessional ees, underwriting and placement commissions and

other transaction expenses related to the IPO) are approximately S$15.8 million. As at the date o this report, the net IPO proceeds

have been utilized as ollows:

Intended use as per Prospectus

Amount

allocated

(S$000)

(A)

Amount utilised

as at the date o

this Report

($000)

(B)

Balance

amount

(S$000)

(B)

Construction o new premises at the Jiangnan High-Tech

Inormation Industrial Zone, Quanzhou City, Fujian Province 8,000 3,176 4,824

Expansion o production capacity and acilities 3,000 - 3,000

Promoting GRAT.UNIC and increasing marketing eort 3,000 - 3,000Enhancing research and development capabilities 1,000 - 1,000

General working capital requirements 844 351 493

Total 15,844 3,527 12,317

(J) BEST PRACTICES GUIDE

The Company has complied materially with the Best Practices Guide issued by SGX-ST.



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The directors present their report to the members together with the audited nancial statements o the Group or the nancial year

ended 31 December 2009 and the balance sheet o the Company as at 31 December 2009.

Directors

The directors o the Company in oce at the date o this report are as ollows:

Mr Weng Wenwei (appointed on 29 February 2008)

Mr Weng Wenju (appointed on 23 December 2008)

Mr Teoh Teik Kee (appointed on 18 June 2009)

Mr Lim Yeow Hua @ Lim You Qin (appointed on 18 June 2009)

Ms Lee Kim Lian, Juliana (appointed on 18 June 2009)

Arrangements to enable directors to acquire shares and debentures

Neither at the end o nor at any time during the nancial year was the Company a party to any arrangement whose object was to

enable the directors o the Company to acquire benets by means o the acquisition o shares in, or debentures o, the Company

or any other body corporate.

Directors interests in shares or debentures

According to the register o directors shareholdings, none o the directors holding oce at the end o the nancial year had any

interest in the shares or debentures o the Company or its related corporations, except as ollows:

Holdings registeredin name o

director or nominee

Holdings in whichdirector is deemed

to have an interest

At

31.12.2009

At date 1.1.2009

or date o

appointment,

i later

At

31.12.2009

At date 1.1.2009

or date o

appointment,

i later

Company

(No. o ordinary shares)

Mr Weng Wenwei - - 181,500,000 181,500,000

Ultimate Holding Corporation - G & W Investment

Management Co., Ltd

(No. o ordinary shares o US$1 each)

Mr Weng Wenwei 1 1 - -

By virtue o section 7 o the Singapore Companies Act Cap. 50, Mr. Weng Wenwei is deemed to have an interest in the shares o the

subsidiaries held by the Company.

The directors interests in the ordinary shares o the Company as at 21 January 2010 were the same as those as at 31 December 2009.

Directors ReportFor the nancial year ended 31 December 2009


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Directors contractual benets

Since the end o the previous nancial year, no director has received or become entitled to receive a benet by reason o a contract

made by the Company or a related corporation with the director or with a rm o which he is a member or with a company in which

he has a substantial nancial interest, except as disclosed in the accompanying nancial statements and in this report.

Share Options

Great Group Perormance Share Scheme

The Great Group Perormance Share Scheme (the PSS) or Executive Directors, Non-Executive Directors (including independent

directors), and employees o the Group was approved by members o the Company at an Extraordinary General Meeting on 18

June 2009. PSS is administered by the Remuneration Committee o the Company, comprising the independent directors o the

Company, namely, Kenny Lim Yeow Hua @ Lim You Qin, Lim Kim Lian, Juliana, Teoh Teik Kee. The purpose o the PSS is to provide

an opportunity or Directors (including Non-Executive Directors) and employees o the Group who have met perormance targetsto 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 o perormance, and to give recognition to those who have contributed to success and

development o the Company and o the Group.

Under the PSS, a participant will be awarded the right to receive ully paid shares ree o charge (the Awards), upon the participant

achieving prescribed perormance targets. Awards may only be vested, and consequently any shares comprised in such awards

shall only be delivered, upon the committee being satised that the prescribed perormance targets have been achieved. There

are no vesting periods beyond the perormance achievement periods. The selection o participant and the number o shares

which are the subject o each award to be granted to a participant in accordance with the PSS shall be determined at the absolute

discretion o the committee, which shall take into account criteria such as rank, job perormance, years o service and potential

or uture development, contribution to the success and development o the Group and the extent o eort required to achieve

the perormance target within the perormance period. The committee shall decide, in relation to each award to be granted toa participant; (a) the date on which the Award is to be vested; (b) the number o shares which are the subject o the award; (c)

prescribed perormance targets; (d) the perormance period during which the prescribed perormance targets are to be satised;

and (e) the extent to which the Companys shares under that award shall be released on the prescribed perormance targets being

satised. Awards may be granted at any time in the course o a nancial year.

The total number o new shares which may be issued pursuant to awards granted under the PSS shall not exceed 15% o the issued

share capital o the Company on the day preceding the relevant date o award. Subject to such adjustment as may be made to the

PSS as a result o any variation in the capital structure o the Company, no more than 25% o the total number o shares in respect

o which the Company may grant Award under the PSS may be oered in aggregate must not exceed 10% o the total number o

shares in respect o which the Company may grant Award in the uture. There were no Awards granted during the nancial year.

There were no options granted during the nancial year to subscribe or unissued shares o the Company or its subsidiaries.

No shares were issued during the year by virtue o the exercise o options to take up unissued shares o the Company or its

subsidiaries.

There were no unissued shares o the Company under option at the end o the nancial year.

Audit Committee

The members o the Audit Committee at the end o the nancial year were as ollows:

Mr Teoh Teik Kee (Chairman)

Ms Lee Kim Lian, JulianaMr Lim Yeow Hua @ Lim You Qin



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All members o the Audit Committee were non-executive directors. All members were independent.

The Audit Committee carried out its unctions in accordance with Section 201B(5) o the Singapore Companies Act. In perorming

those unctions, the Committee reviewed:

the audit plan o the Companys independent auditor and any recommendations on internal accounting control arising

rom the statutory audit;

the assistance given by the Companys management to the independent auditor; and

the balance sheet o the Company and the consolidated nancial statements o the Group or the nancial year ended

31 December 2009 beore their submission to the Board o Directors, as well as the independent auditors report on the

balance sheet o the Company and the consolidated nancial statements o the Group.

The Audit Committee has recommended to the Board that the independent auditor, Nexia TS Public Accounting Corporation,

be nominated or re-appointment at the orthcoming Annual General Meeting o the Company.

Independent Auditor

The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment.

On behal o the directors

Weng Wenwei

Director

Weng Wenju

Director

31 March 2010



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In the opinion o the directors,

(a) the balance sheet o the Company and the consolidated nancial statements o the Group as set out on pages 31 to 68 are

drawn up so as to give a true and air view o the state o aairs o the Company and o the Group as at 31 December 2009

and o the results o the business, changes in equity and cash fows o the Group or the nancial year then ended; and

(b) at the date o this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and

when they all due.

The directors have, on the date o this statement, authorised these nancial statements or issue.

On behal o the directors

Weng Wenwei

Director

Weng Wenju

Director

31 March 2010

Statement by DirectorsFor the nancial year ended 31 December 2009


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We have audited the accompanying nancial statements o Great Group Holdings Limited (the Company) and its subsidiaries (the

Group) set out on pages 31 to 68, which comprise the balance sheets o the Company and o the Group as at 31 December 2009,

the consolidated statement o comprehensive income, the consolidated statement o changes in equity and the consolidated

cash fow statement o the Group or the nancial year then ended, and a summary o signicant accounting policies and other

explanatory notes.

Managements Responsibility or the Financial Statements

Management is responsible or the preparation and air presentation o these nancial statements in accordance with the provisions

o the Singapore Companies Act (Cap. 50) (the Act) and Singapore Financial Reporting Standards. This responsibility includes:

(a) devising and maintaining a system o internal accounting control sucient to provide a reasonable assurance that assets

are saeguarded against loss rom unauthorised use or disposition; and transactions are properly authorised and that they

are recorded as necessary to permit the preparation o true and air prot and loss accounts and balance sheets and to

maintain accountability o assets;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

Auditors Responsibility

Our responsibility is to express an opinion on these nancial 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 perorm

the audit to obtain reasonable assurance as to whether the nancial statements are ree rom material misstatement.

An audit involves perorming procedures to obtain evidence about the amounts and disclosures in the nancial statements. The

procedures selected depend on the auditors judgement, including the assessment o the risks o material misstatement o thenancial statements, whether due to raud or error. In making those risk assessments, the auditor considers internal control relevant

to the entitys preparation and air presentation o the nancial statements in order to design audit procedures that are appropriate

in the circumstances, but not or the purpose o expressing an opinion on the eectiveness o the entitys internal control. An audit

also includes evaluating the appropriateness o accounting policies used and the reasonableness o accounting estimates made

by management, as well as evaluating the overall presentation o the nancial statements.

We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis or our audit opinion.

Independent Auditors Report to the Members oGreat Group Holdings Limited


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Opinion

In our opinion,

(a) the balance sheet o the Company and the consolidated nancial statements o the Group are properly drawn up in

accordance with the provisions o the Act and Singapore Financial Reporting Standards so as to give a true and air view o

the state o aairs o the Company and o the Group as at 31 December 2009, and the results, changes in equity and cash

fows o the Group or the nancial year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company, have been properly kept in accordance

with the provisions o the Act.

Nexia TS Public Accounting Corporation

Public Accountants and Certied Public Accountants

Director in-charge: Henry SK Tan

Appointed since nancial year ended 31 December 2008

Singapore

31 March 2010

Independent Auditors Report to the Members oGreat Group Holdings Limited


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2009 2008

Note RMB000 RMB000

Sales 4 516,301 400,835

Cost o sales (418,392) (296,495)

Gross prot 97,909 104,340

Other income 5 6,290 2,393

Expenses

- Distribution and marketing (6,620) (8,044)

- Administrative (11,910) (6,197)

- Other operating (11) (3,203)- Finance 8 (1,923) (1,862)

Prot beore income tax 83,735 87,427

Income tax expense 9 (8,710) (16,620)

Total comprehensive income, representing net prot 75,025 70,807

Total comprehensive income, representing net prot, attributable to

equity holders o the Company 75,025 70,807

Earnings per share (RMB cents)

- Basic 10 35 35

Consolidated Statement o Comprehensive IncomeFor the nancial year ended 31 December 2009

The accompanying notes orm an integral part o these nancial statements


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Group Company

2009 2008 2009 2008

Note RMB000 RMB000 RMB000 RMB000ASSETS

Current assets

Cash and cash equivalents 11 107,863 33,135 9,617 433

Trade and other receivables 12 197,040 131,097 - -

Inventories 13 30,379 34,005 - -

Other current assets 14 1,555 3,089 89 1,640

336,837 201,326 9,706 2,073

Non-current assets

Investments in subsidiaries 15 - - 209,967 136,100

Property, plant and equipment 16 19,357 17,355 - -Intangible assets 17 16,692 1,636 - -

Deposit or land-use right - 2,630 - -

36,049 21,621 209,967 136,100

Total assets 372,886 222,947 219,673 138,173

LIABILITIES

Current liabilities

Trade and other payables 18 8,476 12,345 9,101 3,890

Borrowings 19 46,229 42,035 - -

Current income tax liabilities 5,039 13,156 - -

Total liabilities 59,744 67,536 9,101 3,890NET ASSETS 313,142 155,411 210,572 134,283

EQUITY

Capital and reserves attributable to equity

holders o the Company

Share capital 20 104,766 22,060 104,766 22,060

Restructuring reserve 21 114,040 114,040 114,040 114,040

Retained earnings/ (accumulated losses) 94,336 19,311 (8,234) (1,817)

Total equity 313,142 155,411 210,572 134,283


Balance SheetsAs at 31 December 2009


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Attributable to equity holders o the Company

Share

Capital

Restructuring

Reserve

Retained

Earnings

Total

EquityNote RMB000 RMB000 RMB000 RMB000

2009

Beginning o nancial year 22,060 114,040 19,311 155,411

Issuance o shares pursuant to IPO 20 92,462 - - 92,462

Share issue expenses 20 (9,756) - - (9,756)

Total comprehensive income or the

nancial year - - 75,025 75,025

End o nancial year 104,766 114,040 94,336 313,142

2008

Beginning o nancial year 25,614 - 58,990 84,604

Transer to restructuring reserve 21 (3,554) 114,040 (110,486) -

Total comprehensive income or the

nancial year - - 70,807 70,807

End o nancial year 22,060 114,040 19,311 155,411


Consolidated Statement o Changes In EquityGreat Group Holdings Limited


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2009 2008

Note RMB000 RMB000

Cash ows rom operating activities

Net prot 75,025 70,807

Adjustments or

- Income tax expense 8,710 16,620

- Amortisation and depreciation 1,917 1,772

- Unrealised air value gains rom derivative nancial instruments - (500)

- Interest expenses 1,923 1,862

- Interest income (348) (353)

87,227 90,208

Change in working capital

- Trade and other receivables (65,943) (52,320)- Inventories 3,626 (6,290)

- Other current assets 1,534 (45)

- Trade and other payables (3,869) (9,541)

- Bills payables (1,550) 3,340

Cash generated rom operations 21,025 25,352

Interest received 348 353

Interest paid (1,923) (1,862)

Income tax paid (16,827) (9,646)

Net cash provided by operating activities 2,623 14,197

Cash ows rom investing activities

Additions to property, plant and equipment (3,726) (7,683)

Purchase o intangible assets (12,619) (41)

Net cash used in investing activities (16,345) (7,724)

Cash ows rom nancing activities

Proceeds rom borrowings 122,466 86,952

Repayment o borrowings (116,722) (69,256)

Proceeds rom issuance o ordinary shares 82,706 -Short-term bank deposits pledged 2,777 (3,422)

Net cash provided by nancing activities 91,227 14,274

Net increase in cash and cash equivalents 77,505 20,747

Cash and cash equivalents at beginning o nancial year 24,126 3,379

Cash and cash equivalents at end o nancial year 11 101,631 24,126


Consolidated Cash Flow StatementFor the nancial year ended 31 December 2009


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Notes to the Financial StatementGreat Group Holdings Limited



These notes orm an integral part o and should be read in conjunction with the accompanying nancial statements.

The nancial statements o the Group and the Company or the nancial year ended 31 December 2009 were authorised or issue

in accordance with a resolution o the directors on 31 March 2010.

1. Corporate inormation

1.1 The Company

Great Group Holdings Limited (the Company) is listed on the Singapore Exchange and incorporated and domiciled

in Singapore. The address o its registered oce is 36 Carpenter Street, Singapore 059915. The principal place o

business is located at Ruiming Building, Nanhuan Road, Licheng District, Quanzhou, Fujian Province, the Peoples

Republic o China (PRC).

The principal activities o the Company is investment holding. The principal activities o the subsidiaries are

disclosed in Note 15.

On 25 September 2009, the Company was admitted to the ocial list o Singapore Exchange Securities Trading

Limited.

1.2 The Restructuring Exercise

The ollowing was undertaken in the Restructuring Exercise in preparation or the admission o the Company to the

Ocial List o the SGX-ST:

(a) Incorporation o the Company

The Company was incorporated on 29 February 2008 in Singapore as an investment holding company withan initial issued and paid-up share capital o S$2 comprising two ordinary shares, all o which was issued

and allotted to G&W Investment Management Co., Ltd. (G&W). G&W, an investment holding company

incorporated in the British Virgin Islands (BVI), is wholly-owned by Executive Director and CEO, Weng

Wenwei.

On 22 June 2009, the Company was converted into a public company and changed its name to Great

Group Holdings Limited.

(b) Acquisition o Fujian Great Fashion Industry Co., Ltd (Fujian Great)

Immediately prior to the Restructuring Exercise, Fujian Great was wholly-owned by Great Holdings HK

Limited (HK Great), a company incorporated in Hong Kong. HK Great is wholly-owned by the Executive

Chairman and CEO, Weng Wenwei and his spouse in the proportion o 60 per cent and 40 per cent

respectively. In order or the Company to acquire the entire share capital o Fujian Great rom HK Great, the

Company had on 7 October 2008 entered into a share transer agreement with HK Great (the Fujian Great

Share Transer Agreement) to acquire the entire issued share capital o Fujian Great rom HK Great or a

purchase consideration o HK$15 million. The consideration o HK$15 million was arrived at based on the

registered capital o Fujian Great as at the date o the Fujian Great Share Transer Agreement. The net asset

value (NAV) o Fujian Great at the time o the Fujian Great Share Transer Agreement was RMB68.3 million

(based on NAV as at 30 September 2008). Under the Fujian Great Share Transer Agreement and side letter

dated 9 November 2008, the consideration or the aoresaid transer settled as at 31 December 2008 by way

o a set-o as described in paragraph (d) o the Restructuring Exercise.


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1. Corporate inormation (continued)

1.2 The Restructuring Exercise (continued)

(c) Acquisition o Quanzhou Great Garments Co., Ltd (Quanzhou Great)

Immediately prior to the Restructuring Exercise, the entire equity interest o Quanzhou Great was held

by HK Great. Pursuant to a share transer agreement dated 7 October 2008 (the Quanzhou Great Share

Transer Agreement), the Company acquired the entire share capital in Quanzhou Great rom HK Great or

a consideration o HK$10 million. The consideration o HK$10 million was arrived at based on the registered

capital o Quanzhou Great as at the date o the Quanzhou Great Share Transer Agreement. The NAV o

Quanzhou Great was RMB67.8 million as at 30 September 2008. Under the Quanzhou Great Share Transer

Agreement and side letter dated 9 November 2008, the consideration or the aoresaid transer was settled

as at 31 December 2008 by way o a set-o as described in paragraph (d) o the Restructuring Exercise.

On 10 October 2008, the Company has obtained the approval rom the Quanzhou City Licheng DistrictForeign Trade and Economic Cooperative Bureau in respect o the Acquisition. The Companys equity

interest in both Fujian Great and Quanzhou Great has been registered with the Quanzhou Administrative

Bureau or Industry and Commerce in accordance with the relevant PRC laws.

Following completion o the abovesaid acquisition, Fujian Great and Quanzhou Great became wholly-

owned subsidiaries o the Company.

(d) Settlement o the consideration or the acquisition o Fujian Great and Quanzhou Great

On 31 December 2008, HK Great agreed to subscribe or 9,998 ordinary shares in the Company or an

aggregate consideration o HK$25 million (Subscription Consideration), agreed to be equivalent to

S$4,720,900. Under the terms o this subscription agreement, HK Great and the Company agreed that theSubscription Consideration shall be oset against the consideration or the Fujian Great Share Transer

Agreement and the Quanzhou Great Share Transer Agreement. HK Great also directed the Company to

issue the 9,998 ordinary shares to G&W.

2 Summary o signicant accounting policies

2.1 Basis o Preparation

The nancial statements have been prepared in accordance with the Singapore Financial Reporting Standards

(FRS). The nancial statements have been prepared under the historical cost convention, except as disclosed

in the accounting policies below. The nancial statements are presented in Chinese Renminbi (RMB), unless

otherwise stated.

The preparation o nancial statements in conormity with FRS requires management to exercise its judgement

in the process o applying the Groups accounting policies. It also requires the use o certain critical accounting

estimates and assumptions. The areas involving a higher degree o judgement or complexity, or areas where

assumptions and estimates are signicant to the nancial statements are disclosed in Note 3.

Interpretations and amendments to published standards eective in 2009

On 1 January 2009, the Group adopted the new or amended FRS and Interpretations to FRS (INT FRS) that are

mandatory or application rom 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 ollowing are the new or revised FRS and INT FRS that are relevant to the Group:


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2 Summary o signicant accounting policies (continued)

2.1 Basis o Preparation (continued)

FRS 1 (revised)Presentation o nancial statements (eective rom 1 January 2009). The revised standard

prohibits the presentation o items o income and expenses (that is, non-owner changes in equity) in the

statement o changes in equity. All non-owner changes in equity are shown in a perormance statement,

but entities can choose whether to present one perormance statement (the statement o comprehensive

income) or two statements (the income statement and statement o comprehensive income). The Group

has chosen to adopt the ormer alternative. Where comparative inormation is restated or reclassied, a

restated balance sheet is required to be presented as at the beginning comparative period. There is no

restatement o the balance sheet as at 1 January 2008 in the current nancial year.

FRS 108 Operating segments (eective rom 1 January 2009) replaces FRS 14 Segment reporting, and

requires a management approach, under which segment inormation is presented on the same basis as

that used or internal reporting purposes. This has resulted in an increase in the number o reportablesegment presented. Segment revenue, segment prots and segment assets are also measured on a basis

that is consistent with internal reporting.

AmendmenttoFRS107 Improving disclosures about nancial statements (eective rom 1 January 2009). The

amendment requires enhanced disclosures about air value measurement and liquidity risk. The adoption

o the amendment results in additional disclosures but does not have an impact on the accounting policies

and measurement bases adopted by the Group.

2.2 Group Accounting

(a) Subsidiaries

Subsidiaries are entities over which the Group has power to govern the nancial and operating policies,

generally accompanied by a shareholding giving rise to a majority o the voting rights. The existence and

eect o potential voting rights that are currently exercisable or convertible are considered when assessing

whether the Group controls another entity.

Please reer to the paragraph Investments in subsidiaries or the accounting policy on investments in

subsidiaries in the separate nancial statements o the Company.

(b) Basis o consolidation

The consolidated nancial statements comprise the nancial statements o the Company and its subsidiaries

as at the balance sheet date. The nancial statements o the subsidiaries are prepared or the same reporting

date as the parent company. Consistent accounting policies are applied or like transactions and events in

similar circumstances.

All intra-group balances, transactions, income and expenses and prots and losses resulting rom intra-

group transactions that are recognised in assets, are eliminated in ull.

The consolidation nancial statement o the Group or the nancial years ended 31 December 2009 and

2008 have been prepared under the pooling-o-interest method, as the Restructuring Exercise completed

as described in Note 1.2 is a legal reorganisation o entities under common control. Under this method, the

Company has been treated as the holding company o all its subsidiaries under common control or the

nancial years presented rather than rom the date o completion o the Restructuring Exercise. Accordingly,

the consolidated results o the Group or the years ended 31 December 2009 and 2008 include the results o

the Company and subsidiaries under common control or the entire periods.


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2.2 Group Accounting (continued)

(b) Basis o consolidation(continued)

Pursuant to this:

Assetsandliabilitiesareconsolidatedattheirexistingcarryingamounts;

Noamountisrecognisedforgoodwill;and

TheGroupssharecapital representsthesubsidiariespaid-upsharecapital forthenancialyear

ended 31 December 2008.

Consolidation o the subsidiaries in the Peoples Republic o China (PRC) is based on the subsidiaries

nancial statements prepared in accordance with FRS. Prots refected in the nancial statements prepared

in accordance with FRS may dier rom those refected in PRC statutory nancial statements o the

subsidiaries, prepared or PRC reporting purposes. In accordance with the relevant laws and regulations,prots available or distribution by PRC subsidiaries are based on the amounts stated in their respective

statutory nancial statements.

2.3 Revenue Recognition

Sales comprise the air value o the consideration received or receivable or the sale o goods and rendering o

services in the ordinary course o the Groups activities. Sales are presented, net o value-added tax, rebates and

discounts, and ater eliminating sales within the Group.

The Group recognises revenue when the amount o revenue and related cost can be reliably measured, when it is

probable that the collectibility o the related receivables is reasonably assured and when the specic criteria or

each o the Groups activities are met as ollows:

(a) Sale o goods

Revenue rom sale o goods is recognised when the Group has delivered the products to its customers,

the customers have accepted the products and the recoverability o the related receivables is reasonably

assured.

(b) Interest income

Interest income is recognised using the eective interest method.

2.4 Property, Plant and Equipment

(a) Measurement

Property, plant and equipment are initially recognised at cost and subsequently carried at cost less

accumulated depreciation and accumulated impairment losses.

The cost o an item o 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 or it to be

capable o operating in the manner intended by management.


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2.5 Intangible Assets (continued)

(c) Acquired computer sotware licenses (continued)

Computer sotware licenses are subsequently carried at cost less accumulated amortisation and accumulated

impairment losses. These costs are amortised to prot or loss using the straight-line method over their

estimated useul lives o ve years.

The amortisation period and amortisation method o intangible assets are reviewed at least at each balance sheet

date. The eects o any revision are recognised in the income statement when the changes arise.

2.6 Borrowing Costs

Borrowing costs are recognised in prot or loss using the eective interest method.

2.7 Investments in Subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Companys balance sheet.

On disposal o investments in subsidiaries, the dierence between disposal proceeds and the carrying amounts o

the investments are recognised in prot or loss.

2.8 Impairment o Non-nancial Assets

Property, plant and equipment

Intangible assets

Investments in subsidiaries

Property, plant and equipment, intangible assets and investments in subsidiaries are tested or impairment

whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose o impairment testing, the recoverable amount (i.e. the higher o the air value less cost to sell and

the value-in-use) is determined on an individual asset basis unless the asset does not generate cash fows that are

largely independent o those rom other assets. I this is the case, the recoverable amount is determined or the

cash-generating-unit (CGU) to which the asset belongs.

I the recoverable amount o the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount

o the asset (or CGU) is reduced to its recoverable amount.

The dierence between the carrying amount and recoverable amount is recognised as an impairment loss in prot

or loss.

An impairment loss or an asset is reversed i, and only i, 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 o 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 o any accumulated amortisation or depreciation) had no impairment loss been

recognised or the asset in prior years.

A reversal o impairment loss or an asset is recognised in prot or loss.


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2.9 Loans and Receivables

Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted

in an active market. They are presented as current assets, except or those maturing later than 12 months ater the

balance sheet date which are presented as non-current assets. Borrowings and receivables are presented as trade

and other receivables and cash and cash equivalents on the balance sheet.

These nancial assets are initially recognised at air value plus transaction cost and subsequently carried at

amortised cost using the eective interest method.

The Group assesses at each balance sheet date whether there is objective evidence that these nancial assets are

impaired and recognises an allowance or impairment when such evidence exists. Allowance or impairment is

calculated as the dierence between the carrying amount and the present value o estimated uture cash fows,

discounted at the original eective interest rate.

2.10 Inventories

Inventories are carried at the lower o cost and net realisable value. Cost is determined using the weighted

average method. The cost o nished goods 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 o business, less applicable variable selling expenses.

2.11 Trade and Other Payables

Trade and other payables are initially recognised at air value, and subsequently carried at amortised cost using the

eective interest method.

2.12 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to deer settlement or

at least 12 months ater the balance sheet date.

Borrowings are initially recognised at air value (net o transaction costs) and subsequently carried at amortised

cost. Any dierence between the proceeds (net o transaction costs) and the redemption value is recognised in

prot or loss over the period o the borrowings using the eective interest method.

2.13 Employee Compensation

Employee benets are recognised as an expense, unless the cost qualies to be capitalised as an asset.

Defned contribution plans-pension benefts

The Group is required to provide certain sta pension benets to their employees under existing PRC regulations.

Pensions contributions are provided at rates stipulated by PRC regulations and are contributed to a pension und

managed by government agencies, which are responsible or administering these amounts o

great group holdings 2009 annual report

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