great group holdings 2011 annual report

8/2/2019 Great Group Holdings 2011 Annual Report

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Can traditionalbesexy?

annual report 2011


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Corporate Profle

Great Group Holdings Limited (Great Group or the Group)

is an undergarment company based in Quanzhou City, Fujian

Province, PRC. Te 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.

Te design, manufacture and sale of mens and womens

undergarments take place under the Groups proprietary GRA.

UNIC brand in the PRC. Tis brand targets middle-to upper-

class consumers. Te brand is present at over 140 points of sales

across 18 provinces/municipalities/autonomous regions in the

PRC. Tese comprise of specialty stores or dedicated shelf-spaces

located strategically in shopping malls, department stores and

commercial areas of a number of major cities. Te 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-S on 25 September 2009.

,,

GRAT.UNIC ()

18140

, 2008229. 2009925

Contents

Chairmans Message 10

Financial Review 14

Financial Highlights 16

Board of Directors 18

Key Management 22

Group Structure 23

Corporate Information 24

Financial Contents 25

Corporate Governance Report 26


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Some may classiy us a traditionalorganisation due to the nature o ourbusiness operations. We believe weare much more than that.

Yes, we manuacture products thatare traditionallyundamentaloreveryday needs.

But we inuse it withcontemporarydesigns andinnovativemanuacturingprocesses or end results that are,anything but traditional.

And thats why we believe we are..


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...innovators


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...trendsetters


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...andcreatorso


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...sexy

.


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Dear Shareholders,On behal o the Board o Directors,

it is my pleasure to present to you our

Annual Report or the nancial year

ended 31 December 2011 (FY2011).

FY2011 was a year in which the

Eurozone debt crisis, coming so

soon aer the U.S. nancial crisis

caused by the sub-prime problem,

signicantly impacted the global

garment industry. Amidst the highunemployment and weaker consumer

spending, demand or garments has

slowed. As a signicant portion o

our sales is derived rom European

customers, Great Group was impacted

by the reductions and delays o our

contract manuacturing orders.

Chairmans Message


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Te economic sentiment in Europe started to decline

signicantly in the second hal o FY2011, even as

the earlier pressure rom rising raw material prices

started to ease. It was also a period when our entire

management team was ocused on two key activities

the relocation o a signicant portion o our

manuacturing activities in Quanzhou City to a new

acility and increased marketing activities within the

Peoples Republic o China (PRC) and at various

garment airs around the world.

Hence, it is against this economic backdrop and

signicant internal developments that I present you

our nancial scorecard.

Financial ReviewRevenue or FY2011 rose 8.6% to RMB679.8 million.

Tis was mainly attributable to higher sales volume

in the rst nine months o the nancial year beore

the slowdown (due to the Euro crisis) gathered

momentum in the ourth quarter. Our increased sales

orders recorded amidst the challenging conditions also

reected higher average selling prices achieved as we

widened our product range.

Gross prot increased by 11.0% rom RMB109.6million in FY2010 to RMB121.7 million in FY2011,

mainly contributed by the contract manuacturing

segment which recorded higher sales volume with

higher average selling price and the reduced pressure

rom raw material prices, in particular cotton and

cloth materials.

Net prot attributable to shareholders in FY2011 o

RMB53.0 million was lower than RMB75.1 million a

year ago, due to the slowdown in export sales o some

key products, increase in selling and distributionexpenses and administrative expenses, proessional

ees as well as higher income tax expense.

Earnings per share (EPS) or FY2011 (based on

issued share capital base o 265 million shares)

decreased to 20.0 RMB cents rom 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 ConditionsTe 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.

Te rst 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 oer original design manuacture. Tis has

deepened our value proposition to existing customers

who have increased orders, and attracted the

attention o many new customers as we participate

in various trade airs. Indeed, as shareholders would

have noticed, our top line has continued to grow

amidst the economic uncertainty as has our gross

prot, reecting in part the initial success o this

strategy.

Te second strategy comprises our ongoing eorts

to improve operational and nancial efciencies.

While this has been ongoing or a while, the year

under review marked a major milestone whenwe completed the construction and t-out o our

new production acility at the Jiangnan High-ech

Inormation Industrial Zone (JHIIZ) in Quanzhou

City in Fujian Province. Tis new acility which

measures 60,000 square meters is signicant in that

it serves as a major catalyst or us to introduce two

key initiatives:

Asignicantincreaseincapacitywhichwillallow

us to reap economies o scale

eintroductionofleanproductionmethodsand practices to signicantly improve strategic

planning, procurement processes, workow,

productivity while reducing cycle times and

production costs.

Concurrent with the operational initiatives we are

also working hard to improve nancial efciencies,

including inventory, cash management and cash

conversion cycles.

Great Group Holdings Limited annual report 2011 11


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Chairmans Message

12

Chairmans Message

Te third prong o our strategy comprises corporate

actions including potential mergers and acquisitions.

Te dramatic changes in the global garment industry

constitute a crisis which oers a major opportunity.While outsourced garment manuacturing to the

PRC has taken place or nearly 30 years since the

PRCs economic reorms, the next wave o global

manuacturing will comprise a combination o vertical

integration and much-deeper relationship between

end-customer and manuacturers 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 o the middleman is reduced as both

customers and manuacturers seek to bridge to each

other directly. It has, and will, lead to consolidation o

weaker manuacturers in the PRC. For Great Group,

we have the advantages o size (being one o the largest

garment manuacturers in Quanzhou) and a new

acility which oers superior value to competitors

in terms o modern production methods. o take

this strategy urther, we will consider acquisitions,

investments and alliances with trading companies

themselves. Te Company is condent that this strategyo disintermediation being executed at a time when

Western customers are looking to cut costs urther

during the current crisis will yield opportunities,

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 o Great Group.

Te crisis in the global garment industry oers an

exciting opportunity or us to seize.

As shareholders are aware, the Group had proposed

a dual listing on the London Stock Exchange.

However, in view o the weak market conditions in

Europe, the Group has decided to delay this proposed

dual listing.

AcknowledgementsOn behal o the Board o 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 eventul year. o the many hands who

transormed JHIIZ into a reality, all management and

sta who have worked so hard, our customers and

partners, and our loyal shareholders, we wish to express

our sincere appreciation. We look orward to your

continued support as we chart an exciting uture or

Great Group.

Mr Weng Wenwei

Executive Chairman and CEO

Chairmans Message


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Financial Review

14

Revenue and Gross ProftTe Groups revenue increased 8.6% to RMB679.8

million in the nancial year ended 31 December 2011

(FY2011) rom RMB625.8 million in FY2010.

Tis was mainly attributable to higher sales volume in

the rst nine months o FY2011 as a result o increased

demand or our contract manuacturing products with

higher average selling price.

Gross prot increased by 11.0% to RMB121.7 million

in FY2011 rom RMB109.6 million in FY2010.

Gross prot margin rose to 17.9% rom 17.5%,

respectively, largely due to higher gross prot rom

mens and womens undergarments, partially oset by

lower margin o other products.

ExpensesSelling and distribution expenses increased by RMB8.9

million to RMB17.6 million in FY2011 rom RMB8.7

million in FY2010, mainly contributed by increase

in marketing and promotional expenses, increase

in payroll costs and costs o setting up o retail and

agship stores in Greater Shanghai as well as higher

insurance, consulting ees and port charges.

Administrative expenses rose by RMB16.1 million to

RMB32.2 million in FY2011 rom RMB16.1 million

in FY2010. Tis was mainly due to expenses incurredor the proposed dual listing on Te London Stock

Exchange. In view o the weak market conditions in

Europe, the Group has decided to delay the proposed

dual listing. Proessional and corporate expenses,

sta costs, ofce rental and expenses as well as

depreciation charges had also increased signicantly

as compared to FY2010.

Finance expenses increased by RMB4.1 million to

RMB6.6 million in FY2011 rom RMB2.5 million

in FY2010. Tis was mainly due to higher bank

borrowings and interest rates.

Proft Beore and Ater TaxDue to higher selling and distribution expenses and

administrative expenses, prot beore 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 rom RMB7.7 million

in FY2010. Te eective tax rate o 16.5% in FY2011

was higher than the eective tax rate o 9.3% in

FY2010 mainly due to the expiration o tax incentive

or a subsidiary. Prot or FY2011 deceased 29.5% to

RMB52.9 million rom RMB75.1 million in FY2010.

Financial PositionCash and cash equivalents decreased by 26.2% to

RMB92.3 million as at 31 December 2011 rom

RMB125.1 million as at 31 December 2010, mainly

due to net cash outows used in investing activities.

FY2010 FY2011

Contract Manuacturing 88.3% 91.8%

GRA.UNIC 11.5% 8.2%

Superman 0.2%

FY2010 FY2011

Asia 26.5% 19.0%

Europe 45.7% 54.4%

North America 9.9% 6.0%

South America 14.3% 15.2%

Other 3.6% 5.4%

Review by Business Segment Review by Geographical Region

FY2011FY2010 FY2010 FY2011


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rade and other receivables increased by 14.4% to


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 o approximately RMB32.5 million compared

to RMB25.3 million as at 31 December 2010.

Tis was mainly due to 1) delay in taking delivery by

some o the customers; 2) increase in pre-production

raw materials; and 3) higher nished goods or

stocking purposes at outlets and agships stores in

Great Shanghai.

Due to the additional construction costs or the new

actory at Jiangnan Hi-ech Inormation IndustrialZone (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 o RMB95.5 million

rom RMB157.1 million as at 31 December 2010.

Tis was mainly due to higher borrowings related to

construction o the new actory at JHIIZ and increased

bills issued to the suppliers.

otal shareholders equity increased by 10.2% to


RMB373.2 million as at 31 December 2010, mainly

attributable to net prots in FY2011, partially oset

by dividends paid to equity holders.

Cash FlowCash and bank balances decreased by RMB51.5

million to RMB61.5 million as at 31 December 2011

compared to a year earlier.

Te Group continued to generate positive cash ow

rom operations o RMB20.2 million.

Net cash used in investing activities o RMB96.7

million represented payments or new machineries,

ofce equipment and construction o the new JHIIZ

actory.

Net cash ow rom nancing activities amounted to

RMB24.9 million was mainly o net proceeds rom

borrowings, partially oset by payment o dividendsto equity holders.


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00

Financial Highlights

Summarised Income Statement (RMBmil)For Financial Year Ended 31 December FY2007 FY2008 FY2009 FY2010 FY2011

Revenue- Contract Manuacturing 242.4 351.1 454.3 552.6 623.9

- GRA.UNIC 19.9 48.7 60.2 72.2 55.9

- Superman 1.0 1.8 1.0

Total 262.3 400.8 516.3 625.8 679.8

Gross Prot 71.0 104.3 97.9 109.6 121.7

Prot Beore Interest & ax (PBI) 61.2 88.9 85.4 85.0 70.1

Interest Income 0.2 0.4 0.3 0.2 1.5

Finance Expenses (0.7) (1.9) (1.9) (2.5) (6.6)

Proft Beore Income Tax (PBT) 60.7 87.4 83.7 82.7 63.4

Income ax (4.2) (16.6) (8.7) (7.7) (10.5)

Net Proft (NP) 56.5 70.8 75.0 75.1 52.9

Selling & Distribution Expensesas a % over Revenue 1.8% 2.0% 1.3% 1.4% 2.6%

Administrative Expenses as a % over Revenue 1.3% 1.5% 2.3% 2.6% 4.7%

Summarised Balance Sheet (RMBmil)As At 31 December FY2007 FY2008 FY2009 FY2010 FY2011

Cash and Cash Equivalents 9.0 33.1 107.9 125.1 92.3

Property, Plant and Equipment 11.3 17.4 19.4 73.2 164.4

Current Assets 118.8 201.3 336.8 436.5 476.3Non-current Assets 15.7 21.6 36.0 93.8 187.4

Current Liabilities 49.9 67.5 59.7 157.1 252.6

Equity 84.6 155.4 313.1 373.2 411.1

Inventories 27.7 34.0 30.4 25.3 57.8

Financial Indicators/RatiosFor Financial Year Ended 31 December FY2007 FY2008 FY2009 FY2010 FY2011

PBI Margin 23.3% 22.2% 16.5% 13.6% 10.3%

PB Margin 23.1% 21.8% 16.2% 13.2% 9.3%

NP Margin 21.5% 17.7% 14.5% 12.0% 7.8%Earnings Per Share (RMB cents) 28.23 35.40 34.71 28.32 19.98

Return on Equity (ROE) (%) 66.73 45.56 23.96 20.11 12.88

Return on Assets (ROA) (%) 41.98 31.77 20.12 14.15 7.98

Current Ratio (x) 2.38 2.98 5.64 2.78 1.89

Gearing Ratio (x) 0.59 0.43 0.19 0.42 0.61

Liquidity Ratio 1.83 2.48 5.13 2.62 1.66

Net Asset Value (NAV) Per Share (RMB cents) 42.30 77.71 118.15 140.83 155.14

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

Average rade Receivables urnover (Days) 53 63 75 84 83

Average rade and Bills Payables urnover (Days) 40 25 14 24 46

Average Inventory urnover (Days) 33 38 28 20 27

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

16


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Overall Proft Margin (%)

FY2007 FY2008 FY2009 FY2010 FY2011

27.1 26.0

19.0 17.5 17.9

7.8

21.517.7

14.5 12.0

CAGR 26.88%

Group Revenue (RMBmil)

262.3

FY2007 FY2008 FY2009 FY2010 FY2011

400.8

516.3625.8

679.8

Net Assets / NAV Per Share (RMBmil / RMB Per Share)

84.6

FY2007 FY2008 FY2009 FY2010 FY2011

155.4

313.1373.2

1.411.18

0.78

0.42

411.1

1.55

Net Proft Attributable to Equity Holders (RMBmil)

56.5

FY2007 FY2008 FY2009 FY2010 FY2011

70.8 75.0 75.1

52.9

NAV Per Share

Net Prot MarginGross Prot Margin


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Board o Directors

Top rom lef to right

WengWenwei

WengWenju

Bottom rom lef to right

TeohTeikKee

LimYeowHua@LimYouQin

LeeKimLian,Juliana

18


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20

Board o Directors

Weng Wenwei

Weng Wenweiis the Executive Chairman and CEO

o our Group. He was appointed to our Board on29 February 2008 and is responsible or the overall

strategic and business management o our Group.

Weng Wenwei has over 20 years o business and

management experience in the textile industry. In May

2005, he ounded Fujian Great and was appointed as its

general manager responsible or its business strategies

and development. In July 2000, he was appointed

as the general manager o Quanzhou Great where

he was responsible or its business operations and

management. In January 1997, he ounded Dachuan

extile Factory in Licheng District,

Quanzhou City. Dachuan extile Factory was engaged

in the manuacture o undergarments or export to

its overseas customers and as the director and head

o the actory, Weng Wenwei was responsible or its

management and business operations rom January

1997 to April 2003. From February 1993 to December

1996, he was the head o Hesheng Apparel Factory in

Yonghe town , a small workshop

that manuactured clothing or clients.

He graduated rom the Zimao Vocational HighSchool in Jinjiang City,

Fujian Province in 1988 with a high school graduation

certication. He has been the vice president o the

Industry and Commerce Association (Chamber o

Commerce) o Licheng District

since 2007.

Weng Wenju

Weng Wenjuis the Executive Director and

Procurement Manager o our Group. He wasappointed to our Board on 23 December 2008 and

is responsible or the sourcing and procurement o

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 or assisting

the general manager in the daily operation and

management o Quanzhou Great. He started his career

in April 2004 as a technician in Quanzhou Jitong

Computer Company in charge

o computer technical maintenance, until July 2004

beore joining our Group.

He graduated rom Quanzhou Business and

rade School with a graduation

certication in Computer and Application in 2004.

Teoh Teik Kee

TeohTeikKeeisourNon-IndependentNon-ExecutiveDirector. 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 eoh is a Chartered Accountant by training, and

hasworkedwithKPMGPeatMarwickMcLintockin

London and PricewaterhouseCoopers in Singapore.

He also has extensive experience in investmentbanking and stock broking when he was with the DBS

Group rom 1993 to 2001.

Mr eoh graduated rom Aston University,

Birmingham,UnitedKingdomwithaBachelor

o Science (Honours) degree in Managerial and

Administrative Studies, and is a member o Te

Institute o Chartered Accountants in England and

Wales. He also has a diploma in Corporate reasury

Management awarded by Te Association o Corporate

TreasurersintheUnitedKingdom.

He also serves as an independent director on the

board o Singapore listed company, Luzhou Bio-Chem

TechnologyLimitedandHongKonglistedcompany,

City e-Solutions Ltd.


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Lim Yeow Hua @ Lim You Qin

LimYeowHua@LimYouQinisourLeadIndependent 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 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 seniorregional tax manager with British Petroleum (BP),

director (Structured Finance) at UOB Asia Ltd,

seniortaxmanageratKPMG,seniorvicepresident

(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 PublicAccountants o Singapore (ICPAS) and a ull

member o the Singapore Institute o Directors.

He also serves as an independent director on the board

o Singapore listed companies: Advanced Integrated

Manuacturing Corp Limited, China Minzhong Food

Corporation Limited, Eratat Liestyle Limited,

KSHHoldingsLimitedandKTLGlobalLimited.

Lee Kim Lian, Juliana

LeeKimLian,JulianaisourIndependentDirector.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 o

Laws (Honours) degree rom the National University

o Singapore and is a member o the Singapore

Institute o Directors. She has more than 19 years oexperience 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, Lee Metal Group Ltd and Nordic

Group Limited.


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22

Key Management

Cai Ane - General Manager

Cai Ane has been our General Manager (Production)

since May 2000 and is responsible or overseeing theproduction 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 o Dachuan extile 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 production o 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.

Ms Cai is the wie o our Executive Chairman and CEO,

Weng Wenwei.

Lee Teck Kheng - Chie Financial Ofcer

LeeTeckKhengwasappointedasChiefFinancial

Ofcer o the Group in November 2011. Mr. Lee is

based in Singapore and is responsible or overseeingthe nancial, accounting and taxation matters o the

Group. Prior to this, rom 2007 to 2011, Mr Lee was

Group Financial Controller o Sei Woo echnologies

Limited Singapore. From 1999 to 2007, Mr Lee was

theGroupFinancialControllerofKIGSingapore,where apart rom his duties in leading the nancial

and accounting unctions o the Groups regional

operations, he also undertook additional responsibility

astheChiefFinancialOcerofKIGGlassBerhad,

a Malaysia Bursa-listed company.

From 1979 to 1997, he held various management

positions in nance, overseeing the entire spectrum

o nance and accounting, tax, risk management and

investor relations, across a wide range o industries

including multi-national and government-linked

corporations.

Mr Lee has been a ull member o the Institute o

Certied Public Accountants o Singapore (ICPAS)

since 1989. He received his Bachelor o Commerce

(Accountancy) degree rom Nanyang University in 1979.

Tse Shek China Financial Controller

se Shek was appointed as China Financial Controller

o the Group in November 2011. Mr. se is based

in Quanzhou and is responsible or management

o nance, accounting, human resources and

administration o all subsidiaries o the Group in China.

Mr se has extensive experience with more than 27

years working in the accountancy and nancial services

industries including holding several management

positions in various organizations. From March 2009

until joining the Group, Mr se worked as an Acting

Financial Controller at GP Batteries International Ltd,

responsible or nancial and operational management

o a number o production plants. Prior to this,

he was Finance Manager at Whitehill ElectrochemicalCompany Ltd (owned by GP Batteries International Ltd).

MrTsegraduatedfromHongKongPolytechnicwithan Endorsement Certicate and Higher Certicate

in Accountancy. He also has a Master in Business

Administration rom the University o South Australia

which he completed in April 1999 and a Diploma in

LegalStudiesfromeUniversityofHongKongin

August 2001.

Wei Xueen - Sales Manager

Wei Xueen has been our Sales Manager since February

2003 and is responsible or 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 aer-sales service. Prior to

joining our Group in February 2003, she worked in

Quanzhou Licheng Dachuan extile Factory

in March 2000 where she was responsible

or ollowing up with customers on trade receivables.In March 1999, she joined Quanzhou Green Garments

Co., Ltd. as a procurement

sta and le 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 le in September 1993.

She obtained a graduation certication (BusinessAdministration) rom Continuing Education School o

Huaqiao University in 1992.


25/92


Group Structure

Great Group Holdings Limited

Fujian GreatFashion

Industry Co..Ltd

QuanzhouGreat Garments

Co., Ltd

Great HoldingLimited

Great BrandManagement

Limited

GrixproInternational

rading Limited

Grixpro Trading(Xiamen)Limited

Great Worldwide(rading)Limited

Great Fashionrading (Shanghai)

Limited



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Corporate Inormation

Board o DirectorsWeng WenweiExecutive Chairman and CEOWeng WenjuExecutive DirectorTeoh Teik KeeNon-Independent Non-ExecutiveDirectorLim Yeow Hua @ Lim You QinLead Independent DirectorLee Kim Lian, JulianaIndependent Director

Audit Committee

Lim Yeow Hua @ Lim You QinChairmanTeoh Teik KeeLee Kim Lian, Juliana

Remuneration CommitteeLee Kim Lian, JulianaChairmanLim Yeow Hua @ Lim You QinTeoh Teik Kee

Nomination CommitteeLee Kim Lian, JulianaChairmanTeoh Teik KeeLim Yeow Hua @ Lim You Qin

Registered Ofce36 Carpenter StreetSingapore 059915

Principal Ofce and ContactDetails

Xiantang District, Changtai Street,Licheng District, Quanzhou City,Fujian Province, China

Company SecretariesOng Wei Jin, LL.B. (Hons)Goh Wei Lin, LL.B. (Hons)

Share Registrar and ShareTranser AgentBoardroom Corporate & AdvisoryServices Pte. Ltd.50 Rafes Place #32-01Singapore Land TowerSingapore 048623

Independent AuditorsNexia TS Public AccountingCorporation100 Beach Road#30-00 Shaw TowerSingapore 189702

Director-in-charge:Philip Tan Jing ChoonCPA Singapore

Internal AuditorsBDO Consultants Pte Ltd.21 Merchant Road #05-01,Royal Merukh S.E.A BuildingSingapore 058267

Principal BankersBank o China, Quanzhou Branch

Bank o China Building, FengzeStreet, Quanzhou City, FujianProvince, the PRC

Industrial Bank Co., Ltd.,Quanzhou Branch

Industrial Bank Building, FengzeStreet, Quanzhou City, Fujian

Province, the PRC

China Construction Bank, QuanzhouLicheng Sub-branch

Wenling Street Zhongduan,Quanzhou City, Fujian Province,the PRC

Industrial and Commercial Banko China, Quanzhou Licheng Sub-branch

Wenling Street Zhongduan,Quanzhou City, Fujian Province,the PRC

Huaxia Bank, Quanzhou Branch

No. 81, Wengling Street, Licheng

District, Quanzhou City, FujianProvince, the PRC

HSBC (Hong Kong)G/F, 82-84 Nathan Road, Tsim ShaTsui, Kowloon, Hong Kong

Bank o Quanzhou Kaiyuan Sub-branch

48, East Street, Licheng District,

Quanzhou City, Fujian Province,the PRC

Shanghai Pudong DevelopmentBank, 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, QuanzhouJiangnan Sub-branch

Troop 73141 Apartment, XingxianStreet, Licheng District, QuanzhouCity, Fujian Province, the PRC

China Everbright Bank, QuanzhouLicheng Sub-branch

Youth Building, #288, TiananStreet, Fengzhe District, QuanzhouCity, Fujian Province, the PRC

China Construction BankCorporation, Singapore Branch9 Rafes Place#33-01/02 Republic Plaza

Singapore 048619

OCBC Bank65 Chulia Street #01-00OCBC CentreSingapore 04951324


27/92

Financial Contents

Corporate Governance Report26

Directors Report 37

Statement by Directors 40

Independent Auditors Report 41

Consolidated Statement ofComprehensive Income 42

Balance Sheets 43

Consolidated Statement ofChanges in Equity 44

Consolidated Statement of Cash Flows 45

Notes to the Financial Statements 46

Statistics of Shareholdings 84

Notice of Annual General Meeting 85

Proxy Form


28/92

26

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. Te 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 rading Limited (the SGX-S). Te 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 MAERS

Principle 1: Te Boards conduct o its aairs

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

unctions o the Board include:

supervisesthemanagementofthebusinessesandaairsoftheGroup

reviewsand approvesthe Groupsstrategic plans,key operational initiatives, major funding andinvestment

proposals

identiesprincipalrisksoftheGroupsbusinessesandensurestheappropriatesystemsareinplacetomanage

theserisks

reviewsthenancialperformanceoftheGroup

evaluatestheperformanceandcompensationofseniormanagementpersonnel;and

assumesresponsibilityforcorporategovernancepractices.

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

which include an Audit Committee (AC), a Nominating Committee (NC) and a Remuneration Committee (RC)

(collectively,theBoardCommittees).esecommitteesfunctionwithinclearlydenedtermsofreferencesandoperating

procedures,whicharereviewedonaregularbasis.eeectivenessofeachcommitteeisalsoconstantlymonitored.

Te Board meets on a quarterly basis and whenever necessary to discharge their duties. Dates o the Board meetings are

normally set by the directors well in advance. Meetings o the Board and Board Committees may be conducted by way

o telephone conerencing, i necessary.

enumberofmeetingsheldbytheBoardandBoardCommitteesandattendanceforthenancialyear31December

2011 (FY2011) up to the date o this Report are summarized in the table below:

Board AC RC NC

Number o meetings held 5 4 1 1

Directors No. o meetings attended

Name o Directors

Weng Wenwei 5 4(4) 1(4) 1

WengWenju 4 2(4) 1(4) 1(4)

TeohTeikKee (1) 5 4 1 1

LeeKimLian,Juliana(2) 5 4 1 1

Lim Yeow Hua @ Lim You Qin(3) 5 4 1 1

Notes:

1. RedesignatedasaNon-IndependentNon-ExecutiveDirectorandceasedtobetheLeadIndependentDirectoreective15August2011.

2. Appointed as Chairman o the RC on 15 August 2011.

3. Appointed as Lead Independent Director and Chairman o the AC on 15 August 2011.

4. Attendance by invitation.

Corporate Governance ReportForthenancialyearended31December2011


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Principle 2: Board Composition and Balance

eBoardcurrentlyhasvemembers,comprisingtwo(2)executivedirectors,one(1)non-independentnon-executive

director and two (2) independent directors, all o whom have the relevant core competence and diversity o experiencetoenablethemtocontributeeectivelytotheGroup.BriefprolesofeachDirectorinoceatthedateofthisReportare

set out in pages 20 to 21 o this Annual Report.

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

WengWenwei ExecutiveChairmanandChiefExecutiveOcer(CEO)

WengWenju ExecutiveDirector

TeohTeikKee Non-IndependentNon-ExecutiveDirector

Lim Yeow Hua @ Lim You Qin Lead Independent Director

LeeKimLian,Juliana IndependentDirector

eBoardconstantlyexaminesitssizeand,withaviewtodeterminingtheimpactofthenumberuponeectiveness,decides on what it considers an appropriate size or itsel. Te composition o the Board will be reviewed on an annual

basis by the NC to ensure 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.

Te NC had reviewed the independence o the Directors or FY2011 in accordance with the Codes criteria o

independence and is o the view that the two non-executive Directors, namely Lim Yeow Hua @ Lim You Qin and

LeeKimLian,JulianaareindependentdirectorswithinthemeaningoftheCode.

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 exercise o control o the quality, quantity and timeliness o inormation ow between the Board and management.

Te 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

Lim Yeow Hua @ Lim You Qin as the Lead Independent Director. Te 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,orwheresuchcontactisnotpossibleorinappropriate.Hence,theBoardisoftheopinionthatsucientchecksand

safeguardsareinplacetoensurethattheprocessofdecisionmakingisindependentandbasedoncollectivedecisions

without individual exercising any considerable power or inuence.

AsChairmanoftheBoard,WengWenweibearsresponsibilityfortheeectiveworkingoftheBoard.Heisresponsible

or, amongst others, ensuring that Board meetings are held when necessary, setting the Board meeting agenda in

consultationwithChiefFinancialOcer,assistinginensuringcompliancewiththeGroupsguidelinesoncorporate

governance, acting as acilitator at Board meetings and maintaining regular dialogue with the management on all

operational matters.

Te 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. Te Company Secretary also

attends all meetings o the Board and Board Committees. In addition, there is constant communication between Board

membersandkeydecisionsrequireapprovalfromallDirectorspriortoimplementation.

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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28


Principle 4: Board Membership

Te Nominating Committee (NC) is established or the purposes o ensuring that there is a ormal and transparent

processforallBoardappointments.eNCischairedbyMs.LeeKimLian,Juliana(IndependentDirector)withtheollowing directors as members:


TeohTeikKee

WengWenwei(CeasedtobeamemberofNCeective9March2012)

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

(a) To make recommendations tothe Boardoftheappointment ofnewexecutive and non-executivedirectors,

including making recommendations on the composition of the Board generally and the balance between

executive and non-executive Directors appointed to the Board.

(b) ToregularlyreviewtheBoardstructure,sizeandcompositionandmakerecommendationstotheBoardwith

regardstoanyadjustmentsthataredeemednecessary.

(c) o 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

ornotsuchnomineehastherequisitequalicationsandwhetherornothe/sheisindependent.

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

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

() o 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.

Te 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 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.

(h) ToberesponsibleforassessingtheeectivenessoftheBoardasawholeandforassessingtheeectivecontribution

andcommitmentofeachindividualDirectortotheeectivenessoftheBoard.eresultsoftheperformance

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

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

Te 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. Te NC had recommended the re-appointment o the ollowing Director who will be retiring at

the orthcoming AGM:

i. MrWengWenjuii. Ms.LeeKimLian,Juliana


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eBoardhadacceptedtheNCsrecommendationandaccordingly,theabovementionedDirectorswillbeoering

themselves or re-election.

Inconsideringthenomination,theNChastakenintoaccountofthecontributionoftheDirectorswithreferencetotheir

attendanceandparticipationatBoardandBoardCommitteemeetingsaswellastheprociencywithwhichtheyhave

discharged their responsibilities.

Te dates o appointment and last re-election o each director are set out below.

Directors DesignationDate o InitialAppointment

Date o lastReelection

Weng Wenwei Executive Chairman & CEO 29February2008 25 April 2011

WengWenju Executive Director 23 December 2008 24September2009

TeohTeikKeeNon-Independent

Non-Executive Director18June2009 23 April 2010

Lim Yeow Hua @ Lim You Qin Lead Independent Director 18June2009 25 April 2011

LeeKimLian,Juliana Independent Director 18June2009 23 April 2010

Principle 5: Board Perormance

eNChasestablishedaprocessforassessingtheeectivenessoftheBoardasawholeandforassessingthecontribution

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

composition o the Board, the Boards access to inormation, accountability, Board processes and Board perormance in

relationtodischargingitsprincipalresponsibilitiesintermsofthenancialindicatorsassetoutintheCode.

Te Board and the NC have endeavored to ensure that each Director appointed to the Board possesses the experience,

knowledgeandskillscriticaltotheGroupsbusiness,soastoenabletheBoardtomakesoundandwell-considered

decisions.

Principle 6: Access to inormation

ToassisttheBoardinfulllingitsresponsibilities,themanagementprovidestheBoardwithamanagementreport

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

independentaccesstoexecutivesocersoftheCompany(ExecutiveOcers),includingtheCompanySecretaryat

all times. Te Company Secretary and/or his nominee attend all Board and Board Committee meetings and ensure thatBoard procedures and all other rules and regulations applicable to the Company are complied with.

Changes to regulations are closely monitored by the Management and or changes which have an important bearing on

the Company or the Directors disclosure obligations, the Directors are brieed during the Board meetings.

eDirectorsandthechairmanoftherespectiveBoardCommittees,whetherasagrouporindividuallyareabletoseek

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


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30


(B) REMUNERAION MAERS

Principle 7: Procedures or Developing Remuneration Policies

eRCcomprisesthreemembers,themajorityofwhomareIndependentdirectors.ItischairedbyMs.LeeKimLian,

Juliana(IndependentDirector)withthefollowingdirectorsasmembers:


TeohTeikKee

Te RC is regulated by a set o written terms o reerence approved by the Board and has access to independent

professionaladvice,ifnecessary.eRCrecommendstotheBoard,aframeworkofremunerationanddetermines

thespecicremunerationpackagesandtermsofemploymentforeachoftheDirectorsandexecutiveocersofthe

Group as well as those employees related to the executive directors and controlling shareholders o the Group, such

recommendation covering all aspects o remuneration, including but not limited to directors ees, salaries, allowances,

bonuses,optionsandbenets-in-kind.

For the year under review, the RC held one (1) meeting.

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

remunerationpackage.

Principle 8: Level and Mix o Remuneration

Insettingremunerationpackages,theCompanytakesintoaccountpayandemploymentconditionswithinthesame

industry and in comparable companies, as well as the Groups relative perormance and the perormance o individual

Directors.

Te remuneration o the Executive Chairman and CEO, is as disclosed in the Companys Prospectus dated 16 September

2009.Hisserviceagreementisforaninitialperiodofthree(3)years,witheectfrom25September2009.

OurGrouphasalsopreviouslyenteredintovariouslettersofemploymentwithalloftheExecutiveOcers.Suchletters

typicallyprovideforthesalariespayabletothe ExecutiveOcers,theirworkinghours,medicalbenets,groundsof

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

ebreakdownofremunerationoftheDirectorsandExecutiveOcersforFY2011issetoutbelow.

Remuneration Band and NameDirector

Fees

Salaryand otherbenets Bonus otal

Directors

Below S$250,000

Weng Wenwei 22% 78% 100%

WengWenju 32% 68% 100%

Lim Yeow Hua @ Lim You Qin 100% 100%

TeohTeikKee 100% 100%

LeeKimLian,Juliana 100% 100%

Key Executives

Below S$250,000

Cai Ane 100% 100%

Wei Xueen 100% 100%

LeeTeckKheng 100% 100%

TseShek 100% 100%

Voon Choon Nie 92% 8% 100%

Te Company does not have any employees who are immediate amily members o a Director, the CEO or substantial

shareholder,whoseremunerationhaveexceededS$150,000duringthenancialyearended31December2011.

Directors ees are approved by shareholders at every Annual General Meeting o the Company.

(C) ACCOUNABILIY AND AUDI

Principle 10: Accountability

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

sustainable value to our shareholders. Te 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.

Promptfulllmentofstatutoryreportingrequirementsisbutonewaytomaintainourshareholderscondenceandtrust in the Board and the managements capability and integrity. As part o building and maintaining shareholders

condence,reportingofconsolidatednancialresults,viaSGXNET,wasmadewellwithinthetime-framestipulatedin

the SGX Listing Manual.

emanagementcurrentlyprovidestheBoardwithappropriatelydetailedmanagementaccountsoftheGroupsnancial

perormance, position and prospects on a regular basis.

Principle 11: Audit Committee

eACcomprisesthreemembers,themajorityofwhomareIndependentdirectors.ItischairedbyMr.LimYeowHua

@ Lim You Qin (Lead Independent Director) with the ollowing directors as members:

LeeKimLian,Juliana

TeohTeikKee


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32


Te AC will assist the Board in discharging their responsibility to saeguard the assets, maintain adequate accounting

records,anddevelop andmaintaineective systems of internal control, withtheoverall objective ofensuringthat

managementcreatesandmaintainsaneectivecontrolenvironmentintheCompany.eACwillprovideachannel

o communication between the Board o Directors, the management and the independent auditors o the Company on

matters relating to audit.

Te Audit Committee meets as and when required (and at least quarterly) to perorm the ollowing unctions:

(a) Toreviewwiththeindependentauditors,theirindependenceandobjectivityannually;theauditplan,including

thenatureandscopeoftheauditanditscosteectivenessbeforetheauditcommences;theirevaluationofthe

systemofinternalaccountingcontrols;theirauditreport;theirmanagementletterandmanagementsresponse;

andanysignicantnancialreportingissuesandjudgmentssoastoensureintegrityofthenancialstatements

oftheCompanyandanyformalannouncementsrelatingtotheCompanysnancialperformance.

(b) Toreviewthequarterly,half-yearlyandfullyearnancialresultsbeforesubmissiontotheBoardforapproval.

(c) Toreviewtheassistanceandco-operationgivenbythemanagementandtheocersoftheGrouptotheauditors.

(d) o review the internal audit programme and ensure co-ordination between the internal and independent

auditors and management.

(e) Toreviewthescopeandresultsoftheinternalauditproceduresandtheinternalauditorsreportontheirndings

directly to the AC.

() o discuss problems and concerns, i any, arising rom audits, and any matters which the auditors may wish todiscuss (in the absence o management, where necessary).

(g) ToreporttotheBoarditsndingsfromtimetotimeonmattersarisingandrequiringtheattentionofAC.

(h) Toreviewinterestedpersontransaction(ifany)fallingwithinthescopeofChapter9oftheSGXListingManual,

and to ensure that they are carried out on normal commercial terms and in accordance with the internal control

procedures.

(i) o approve the internal control procedures and arrangements or all current and uture related party transactions

to ensure that they are carried out on arms length basis and on normal commercial terms which will not be

prejudicialtotheinterestsoftheCompanyandshareholders.

(j) Toreviewpotentialconictsofinterests,ifany.

(k) Toreviewallnon-auditservicesprovidedbytheauditorstoensurethattheywouldnot,intheACsopinion,

aecttheindependenceoftheauditors.

(l) ToundertakesuchotherreviewsandprojectsasmayberequestedbytheBoard.

(m) ToundertakesuchotherfunctionsanddutiesasmayberequiredbystatuteortheListingManual,andbysuch

amendments made thereto rom time to time.

(n) TomakerecommendationstotheBoardontheappointment,re-appointmentandremovaloftheindependent

auditors, and approving the remuneration and terms o engagement o the independent auditors.

(o) ToreviewtheadequacyoftheCompanysinternalnancialcontrols,operationalandcompliancecontrols,and

riskmanagementpoliciesandsystemsestablishedbythemanagement.


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Pursuant to the above, it is the opinion o 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 o reerence, ull access to and

co-operation o the Groups management, as well as reasonable resources to enable it to discharge its unction properly.

Te AC has ull discretion to invite any Director or management personnel to attend its meetings.

e Groups independent auditor, Nexia TS, is an accounting rm registered with the Accounting and Corporate

RegulatoryAuthority.eACissatisedthatNexiaTSandtheauditengagementpartnerassignedtotheaudithave

adequate resources and experience to meet its audit obligations. In this connection, the Company has complied with

Rules 712 and 715 o the Listing Manual.

No non-audit services were provided by the independent auditors during FY2011. Te AC had recommended the

re-appointment o Nexia S Public Accounting Cooperation as independent auditors at the orthcoming AGM.

Principle 12: Internal Controls

eBoardacknowledgesthatitisresponsiblefortheoverallinternalcontrolframeworkandisfullyawareoftheneed

to put in place a system o internal controls within the Group to saeguard shareholders interests and the Groups assets,

butrecognizesthatnocosteectiveinternalcontrolsystemwillprecludeallerrorsandirregularities.Internalcontrolcan

provide only reasonable and not absolute assurance against material misstatement or loss.

Duringthenancialyear,theGroupsinternalauditorshadconductedannualreviewoftheeectivenessoftheGroups

internal controls. Te external auditors during the conduct o their normal audit procedures may also report on matters

relating to internal controls. Any material non-compliance and recommendation or improvement were reported tothe AC. Te AC, with the participation o the Board, has reviewed the adequacy o the Groups internal controls that

addresstheGroupsnancial,operationalandcompliancerisk. eAChasalso reviewedand continuestomonitor

theeectivenessoftheactionstakenbythemanagementontherecommendationsmadebytheinternalandexternal

auditors in this respect.

Based on external and internal auditors report, the actions taken by the management, the on-going review and

continuingeortsatenhancingcontrolsandprocesses,theBoard,withtheconcurrenceoftheAC,isoftheopinionthat,

in the absence o any evidence to the contrary, the system o internal controls in place are adequate in meeting the needs

o the Group in its current business environment.

Principle 13: Internal Audit

eGroupoutsourcesitsinternalauditfunctiontoBDOConsultantsPteLtd,amemberrmofBDOInternational.

eInternalAuditorreportsdirectlytotheAConauditmattersandperformsitsworksinlinewith theStandardsfor

the Proessional Practice o Internal Auditing set by Te Institute o Internal Auditors. Te AC reviews and approves

the annual internal audit plan as well as the internal audit reports and activities. Te AC is o the view that the Internal

Auditor has adequate resources to perorm its unctions and has, to the best o its ability, maintained its independence

rom the activities that it audits.

eAC,onanannualbasis,willassesstheeectivenessoftheInternalAuditbyexaminingthescopeoftheInternal

Auditworkanditsindependence,theinternalauditorsreportsanditsrelationshipwiththeexternalauditors.


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34


(D) COMMUNICAION WIH SHAREHOLDERS

Principle 14: Communication with Shareholders

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

CompaniesAct,theBoardspolicyisthatshareholdersareinformedofallmajordevelopmentsthatimpacttheGroup

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 SGXNE and the press

Companys annual general meetings

All shareholders o the Company receive annual reports and are inormed o shareholders meetings through noticespublished 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. Te Directors regard AGMs as an opportunity to communicate directly withshareholders and encourage greater shareholder participation.

Te 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. Te Board welcomes questions rom shareholders who have an opportunity

to raise issues either inormally or ormally beore or at the AGM.

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

workofthesecommittees.eCompanysindependentauditorswillalsobepresenttoassisttheDirectorsinaddressing

queries by shareholders.

(E) MAERIAL CONRACS

Save as disclosed in paragraph G Interested Party ransactions, 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 SECURIIES

Te Company has adopted internal codes in relation to dealings in the Companys securities pursuant to the SGX-S Best

PracticesGuidethatareapplicabletoallitsocers.eDirectorsandocersareprohibitedtotradeintheCompanys

securities,duringtheperiodbeginningone(1)monthandtwo(2)weeksbeforethedateoftheannouncementofthefull

year and quarterly results respectively and ending on the date o the announcement o the relevant results. In addition,

theocersoftheCompanyareadvisednottodealwiththeCompanyssecuritiesforashorttermconsiderationsandare expected to observe the insider trading laws at all times even when dealing in securities within the permitted trading

periods.


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(G) INERESED PARY RANSACIONS

Te Group has established procedures to ensure that all transactions with interested persons are reported in a timely

mannertotheAuditCommitteeandthattransactionsareconductedonanarmslengthbasisthatarenotprejudicialtothe interests o the shareholders. When a potential conict o interest occurs, the Director concerned will be excluded

rom discussions and rerain rom exercising any inuence over other members o the Board.

Te aggregate value o interested person transactions or the year ended 31 December 2011 is as ollows:

Name o interested person

Aggregate value o all interestedperson transaction during the

nancial year under reviewexcluding transactions less than

S$100,000 and transactions

conducted under shareholdersmandate pursuant to Rule 920

Aggregate value o all interestedperson transactions conductedunder shareholders mandate

pursuant to Rule 920

excluding transactionsless than S$100,000

Loan to Mr Weng Wenwei

(Please reer to our Q1 2011

announcement or urther details)

RMB10.5 million NA

Entry into a consultancy agreement

withPeekaStrategicPteLtd,in

which our Non Independent and

Non Executive Director Mr. eoh

TeikKeeholdsasubstantialinterest.

S$ 125,850 NA

Purchases rom Quanzhou HonghaoColour Printing Co., Ltd , a company

in which our Director Mr Weng

Wenjuowns50%oftheinterest.

RMB1.7 million NA

MrWengWengweihad,inconnectionwithbankingfacilitiesgrantedbyvariousbankstoourGroup,providedpersonal

guarantees to secure such acilities. No ees were paid or are payable by our Group to Mr Weng Wengwei in connection

with such guarantees.

(H) RISK MANAGEMEN

eCompanydoesnothaveaRiskManagementCommittee.eexecutivedirectorsandseniormanagementassumetheresponsibilitiesoftheriskmanagementfunction.eyregularlyassessandreviewtheGroupsbusinessandoperational

environmentinordertoidentifyareasofsignicantbusinessandnancialrisks,suchascreditrisks,foreignexchange

risks,liquidityrisksandinterestratesrisks,aswellasappropriatemeasurestocontrolandmitigatetheserisks.

RisksarisingfromtheGroupsnancialoperationsareseparatelydiscussedinNote27totheFinancialStatementson

pages69to79.


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36


(I) USE OF IPO PROCEEDS

Te Net IPO proceeds (aer 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 thisreport, the net IPO proceeds have been utilized as ollows:

In S$000

Originalamount

allocated

A

Revisedamount

allocated*

B

Amountutilized as at

the date othis report

C

Balanceamount

B C

Construction o new premises at

theJiangnanHigh-TechInformation

Industrial Zone, Quanzhou City,

FujianProvince 8,000 10,416 10,416

Expansion o production capacity

and acilities 3,000 584 584

Promoting GRA.UNIC and

increasingmarketingeort 3,000 3,000 3,000

Enhancing research and development

capabilities 1,000 1,000 539 461

Generalworkingcapitalrequirements 844 844 844

otal 15,844 15,844 15,383 461

* Te revised amount allocated and amount utilized are not in accordance with the stated use in the Companys prospectus dated16September2009.

As announced on 24 February 2012, the Company has re-allocated approximately S$ 2.4 million out o the amount

originallyallocatedforexpansionofproductionfacilitiesto constructionof newpremisesatJiangnanHigh-Tech

InformationIndustrialZone.eCompanyobtainedthepropertyownershipcerticateon9February2012.Asat

31 December 2011, the Company has incurred approximately RMB 148 million (approximately equivalent to

S$ 30 million at an average exchange rate o 1SGD to RMB 5.0) on the construction o new premises.

eCompanywillmakeperiodicannouncementsontheuseofproceedswhentheremainingproceedsarematerially

disbursed.

(J) BES PRACICES GUIDE

Te Company has complied materially with the Best Practices Guide issued by SGX-S.


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Directors ReportForthenancialyearended31December2011

edirectorspresenttheirreporttothememberstogetherwiththeauditednancialstatementsoftheGroupforthe

nancialyearended31December2011andthebalancesheetoftheCompanyasat31December2011.

DIRECORSedirectorsoftheCompanyinoceatthedateofthisreportareasfollows:

Mr Weng Wenwei

MrWengWenju

MrTeohTeikKee

Mr Lim Yeow Hua @ Lim You Qin

MsLeeKimLian,Juliana

ARRANGEMENS O ENABLE DIRECORS O ACQUIRE SHARES AND DEBENURESNeitherattheendofnoratanytimeduringthenancialyearwastheCompanyapartytoanyarrangementwhoseobject

wastoenablethedirectorsoftheCompanytoacquirebenetsbymeansoftheacquisitionofsharesin,ordebenturesof,

the Company or any other body corporate.

DIRECORS INERESS IN SHARES OR DEBENURESAccordingtotheregisterofdirectorsshareholdings,noneofthedirectorsholdingoceattheendofthenancialyear

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 deemedto have an interest

At

31.12.2011

At

1.1.2011

At

31.12.2011

At

1.1.2011Company

(No. o ordinary shares)

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

MrWengWenju 1,960,000 1,960,000 - -

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 interest in theshares o the subsidiaries held by the Company.

edirectors interests inthe ordinarysharesof theCompany asat 21January2012 were thesameas those asat

31 December 2011.

DIRECORS CONRACUAL BENEFISSincetheendofthepreviousnancialyear,nodirectorhasreceivedorbecomeentitledtoreceiveabenetbyreasonofa

contractmadebytheCompanyorarelatedcorporationwiththedirectororwitharmofwhichheisamemberorwith

acompanyinwhichhehasasubstantialnancialinterest,exceptasdisclosedintheaccompanyingnancialstatements

and in this report.


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38


SHARE OPIONSGreat Group Perormance Share Scheme

Te 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

GeneralMeetingon18June2009.ePSSisadministeredbytheRemunerationCommittee(Committee)ofthe

Company, comprising the independent directors and a non-independent non-executive director o the Company, namely,

LimYeowHua@LimYouQin,LeeKimLian,JulianaandTeohTeikKee.epurposeofthePSSistoprovidean

opportunity or Directors (including Non-Executive Directors) and employees o the Group, who have met perormance

targets,toberemuneratednotjustthroughcashbonusesbutalsobyanequitystakeintheCompanysoastomotivate

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

comprisedinsuchAwardsshallonlybedelivered,upontheCommitteebeingsatisedthattheprescribedperformance

targets have been achieved. Tere are no vesting periods beyond the perormance achievement periods. Te selection o

participantandthenumberofshareswhicharethesubjectofeachAwardtobegrantedtoaparticipantinaccordance

withthePSSshallbedeterminedattheabsolutediscretionoftheCommittee,whichshalltakeintoaccountcriteria

suchasrank,jobperformance,yearsofserviceandpotentialforfuturedevelopment,contributiontothesuccessand

developmentoftheGroupandtheextentofeortrequiredtoachievetheperformancetargetwithintheperformance

period.eCommitteeshalldecide,inrelationtoeachAwardtobegrantedtoaparticipant;(a)thedateonwhichthe

Awardistobevested;(b)thenumberofshareswhicharethesubjectoftheAward;(c)prescribedperformancetargets;

(d)theperformanceperiodduringwhichtheprescribedperformancetargetsaretobesatised;and(e)theextentto

whichtheCompanyssharesunderthatawardshallbereleasedontheprescribedperformancetargetsbeingsatised.

Awardsmaybegrantedatanytimeinthecourseofanancialyear.

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

oftheissuedsharecapitaloftheCompanyonthedayprecedingtherelevantdateofawards.Subjecttosuchadjustment

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

totalnumberofsharesinrespectofwhichtheCompanymaygrantAwardsunderthePSSmaybeoeredinaggregate

totheassociatesofcontrollingshareholders(asdenedinthePSS)andthetotalnumberofsharestobeoeredtoeach

o its associates must not exceed 10% o the total number o shares in respect o which the Company may grant Awards

inthefuture.erewerenoAwardsgrantedduringthenancialyear.

ere were no options granted during the nancial year to subscribe for unissued shares of the Company or its

subsidiaries.

NoshareswereissuedduringtheyearbyvirtueoftheexerciseofoptionstotakeupunissuedsharesoftheCompanyor

its subsidiaries.

erewerenounissuedsharesoftheCompanyoritssubsidiariesunderoptionattheendofthenancialyear.

AUDI COMMIEEemembersoftheAuditCommitteeattheendofthenancialyearwereasfollows:

Mr Lim Yeow Hua @ Lim You Qin (Chairman)

MrTeohTeikKee

MsLeeKimLian,Juliana

AllmembersoftheAuditCommitteeareindependentnon-executivedirectorsexceptforMrTeohTeikKeewhoisa

non-independent non-executive director.


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AUDI COMMIEE CONDTe Audit Committee carried out its unctions in accordance with Section 201B(5) o the Singapore Companies Act,

SGX Listing Manual and the Code o Corporate Governance including the ollowing:

reviewedtheauditplanandresultsoftheinternalauditorsexaminationandevaluationoftheGroupssystemsof

internalaccountingcontrols;

reviewedtheauditplanoftheCompanysindependentauditorandanyrecommendationoninternalaccounting

controlsarisingfromthestatutoryaudit;

reviewedtheassistancegivenbytheCompanysmanagementtotheindependentauditor;

reviewedthebalancesheetof theCompanyandtheconsolidatednancialstatementsof theGroupforthe

nancial year ended 31 December 2011 before their submission to the Board of Directors, as well as the

independentauditorsreportonthebalancesheetoftheCompanyandtheconsolidatednancialstatementsof

theGroup;

reviewedthequarterlyandannualannouncementsaswellastherelatedpressreleasesontheresultsandnancial

positionoftheCompanyandtheGroup; metwiththeindependentauditor,othercommittees,andmanagementinseparateexecutivesessionstodiscuss

anymattersthatthesegroupsbelieveshouldbediscussedprivatelywiththeAuditCommittee;

evaluatedthequalityoftheworksperformedbytheindependentauditoroftheGroup;

reviewedthere-appointmentoftheindependentauditoroftheGroup;and

reviewedinterestedpersontransactions(asdenedinChapter9oftheSGXlistingmanual).

Te Audit Committee has ull access to and has the co-operation o the management and has been given the resources

required or it to discharge its unction properly. It also has ull authority and the discretion to invite any director and

executiveocertoattenditsmeetings.eindependentandinternalauditorshaveunrestrictedaccesstotheAudit

Committee.

eAuditCommitteeissatisedwiththeindependenceandobjectivityoftheindependentauditorandhasrecommended

to the Board o Directors that the independent auditor, Nexia S Public Accounting Corporation, be nominated or

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

INDEPENDEN AUDIORTe independent auditor, Nexia S Public Accounting Corporation, has expressed its willingness to accept

re-appointment.

On behal o the directors

Weng WenweiDirector

Weng WenjuDirector

19 March 2012


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40

Statement by DirectorsForthenancialyearended31December2011

In the opinion o the directors,

(a) thebalancesheetoftheCompanyandtheconsolidatednancialstatementsoftheGroupassetoutonpages42

to83aredrawnupsoastogiveatrueandfairviewofthestateofaairsoftheCompanyandoftheGroupasat

31 December 2011 and o the results o the business, changes in equity and cash ows o the Group or the

nancialyearthenended;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.

edirectorshave,onthedateofthisstatement,authorisedthesenancialstatementsforissue.

On behal o the directors

Weng WenweiDirector

Weng WenjuDirector

19 March 2012


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Independent Auditors Reportto the Members o Great Group Holdings Limited

REPOR ON HE FINANCIAL SAEMENSWehaveauditedthe accompanyingnancialstatementsofGreatGroupHoldingsLimited(theCompany)and its

subsidiaries (the Group) set out on pages 42 to 83, which comprise the consolidated balance sheet o the Group and the

balance sheet o the Company as at 31 December 2011, the consolidated statement o comprehensive income, statement

ofchangesinequityandstatementofcashowsoftheGroupforthenancialyearthenended,andasummaryof

signicantaccountingpoliciesandotherexplanatoryinformation.

Managements Responsibility or the Financial StatementsManagementisresponsibleforthepreparationofnancialstatementsthatgivesatrueandfairviewinaccordance

with the provisions o the Singapore Companies Act (the Act) and Singapore Financial Reporting Standards, and or

devisingandmaintainingasystemofinternalaccountingcontrolssucienttoprovideareasonableassurancethatassets

aresafeguardedagainstlossfromunauthoriseduse ordisposition;andtransactionsareproperlyauthorisedandthat

theyarerecordedasnecessarytopermitthepreparationoftrueandfairprotandlossaccountsandbalancesheetsand

to maintain accountability o assets.

Auditors ResponsibilityOurresponsibilityistoexpressanopiniononthesenancialstatementsbasedonouraudit.Weconductedourauditin

accordance with Singapore Standards on Auditing. Tose standards require that we comply with ethical requirements

andplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthenancialstatementsarefreefrom

material misstatement.

An audit involves performing procedures to obtain evidence about the amounts and disclosures in the nancial

statements.eproceduresselecteddependontheauditorsjudgement,includingtheassessmentoftherisksofmaterial

misstatementofthenancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditor

considersinternalcontrolrelevanttotheentityspreparationofthenancialstatementsthatgiveatrueandfairview

in order to design audit procedures that are appropriate in the circumstances, but not or the purpose o expressing anopinionontheeectivenessoftheentitysinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessof

accounting policies used and the reasonableness o accounting estimates made by management, as well as evaluating the

overallpresentationofthenancialstatements.

Webelievethattheauditevidencewehaveobtainedissucientandappropriatetoprovideabasisforourauditopinion.

OpinionInouropinion,theconsolidatednancialstatementsoftheGroupandthebalancesheetoftheCompanyareproperly

drawn up in accordance with the provisions o the Act and Singapore Financial Reporting Standards so as to give a true

andfairviewofthestateofaairsoftheGroupandoftheCompanyasat31December2011,andtheresults,changesin

equityandcashowsoftheGroupforthenancialyearendedonthatdate.

REPOR ON OHER LEGAL AND REGULAORY REQUIREMENSInouropinion,theaccountingandotherrecordsrequiredbytheActtobekeptbytheCompanyhavebeenproperlykept

in accordance with the provisions o the Act.

Nexia S Public Accounting Corporation

PublicAccountantsandCertiedPublicAccountants

Director incharge: Philip an Jing Choon

Appointed since nancial year ended 31 December 2011

Singapore

19 March 2012


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42

Consolidated Statement of Comprehensive IncomeForthenancialyearended31December2011

Note2011

RMB0002010

RMB000

Revenue 4 679,775 625,818Cost o sales (558,091) (516,215)Grossprot 121,684 109,603

Other (losses)/gains, net 5 (1,876) 404

Expenses- Selling and distribution (17,575) (8,666)- Administrative (32,176) (16,136)- Finance 8 (6,617) (2,485)Protbeforeincometax 63,440 82,720

Income tax expense 9 (10,497) (7,669)otal comprehensive income, representing net prot,

attributable to equity holders o the Company 52,943 75,051

Earnings per share attributable to equity holders o the CompanyRMB cents per share

- Basic and diluted 10 20 28

Te accompanying notes orm an integral part o these fnancial statements


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Balance SheetsAs at 31 December 2011

Group Company

Note2011

RMB0002010

RMB0002011

RMB0002010

RMB000

ASSESCurrent assetsCash and cash equivalents 11 92,286 125,053 308 1,271rade and other receivables 12 323,221 282,493 22,092 31,315Inventories 13 57,816 25,348 - -Other current assets 14 2,651 2,642 268 151Derivativenancialassets 15 343 916 - 147

476,317 436,452 22,668 32,884

Noncurrent assets

Investments in subsidiaries 16 - - 209,975 209,967Property, plant and equipment 17 164,440 73,213 99 8Intangible assets 18 17,294 17,619 2 -Deposit or machinery and equipment 5,679 3,010 - -

187,413 93,842 210,076 209,975

otal assets 663,730 530,294 232,744 242,859

LIABILIIES

Current liabilitiesrade and other payables 19 35,393 38,407 13,717 8,992Borrowings 20 214,364 113,894 - -Current income tax liabilities 2,761 3,864 - -Derivativenancialliabilities 15 80 941 - -

otal liabilities 252,598 157,106 13,717 8,992NE ASSES 411,132 373,188 219,027 233,867

EQUIY

Capital and reserves attributable toequity holders o the Company

Share capital 21 104,766 104,766 104,766 104,766Restructuring reserve 22 114,040 114,040 114,040 114,040Retainedprots 23 192,326 154,382 221 15,061

otal equity 411,132 373,188 219,027 233,867



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44

Consolidated Statement of Changes in EquityForthenancialyearended31December2011

Attributable to equity holders o the CompanyShare

capital

Restructuring

reserve

Retained

prots

otal

equityNote RMB000 RMB000 RMB000 RMB000

Group

2011Beginningofnancialyear 104,766 114,040 154,382 373,188otal comprehensive income or the

nancialyear - - 52,943 52,943Dividend relating to 2010 paid 24 - - (14,999) (14,999)Endofnancialyear 104,766 114,040 192,326 411,132

2010Beginningofnancialyear 104,766 114,040 94,336 313,142otal comprehensive income or the

nancialyear - - 75,051 75,051Dividendrelatingto2009paid 24 - (15,005) (15,005)Endofnancialyear 104,766 114,040 154,382 373,188



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Consolidated Statement of Cash FlowsForthenancialyearended31December2011

Group2011

RMB0002010

RMB000Note

Cash fows rom operating activitiesNetprot 52,943 75,051Adjustmentsfor:- Income tax expense 10,497 7,669- Amortisation and depreciation 3,139 2,384-Fairvalue(loss)/gainonderivativenancialinstruments (288) 25- Interest expense 6,617 2,485- Interest income (1,534) (195)

71,374 87,419Changeinworkingcapital

- rade and other receivables (40,728) (85,453)- Inventories (32,468) 5,031- Other current assets (9) (1,087)- rade and other payables (3,014) 29,931- Bills payables 35,140 18,575Cash generated rom operations 30,295 54,416Interest received 1,534 195Income tax paid (11,600) (8,844)

Net cash provided by operating activities 20,229 45,767

Cash fows rom investing activitiesAdditions to property, plant and equipment (93,880) (55,793)

Additions to intangible assets (161) (1,374)Deposits or machinery and equipment (2,669) (3,010)

Net cash used in investing activities (96,710) (60,177)

Cash fows rom nancing activitiesProceeds rom borrowings 342,227 206,232Repayment o borrowings (276,897) (157,142)Interest paid (6,617) (2,485)Short-termbankdepositspledged (18,794) (5,791)Dividends paid to equity holders o the Company (14,999) (15,005)Net cash provided by nancing activities 24,920 25,809

Net (decrease)/increase in cash and cash equivalents (51,561) 11,399Cashandcashequivalentsatbeginningofnancialyear 113,030 101,631

Cash and cash equivalents at end o nancial year 11 61,469 113,030



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46

Notes to the Financial StatementsForthenancialyearended31December2011

esenotesformanintegralpartofandshouldbereadinconjunctionwiththeaccompanyingnancialstatements.

enancialstatementsoftheGroupandtheCompanyforthenancialyearended31December2011wereauthorised

forissueinaccordancewitharesolutionofthedirectorson19March2012.

1 CORPORAE INFORMAIONGreat Group Holdings Limited (the Company) is listed on the Singapore Exchange and incorporated and

domiciledinSingapore.eaddressofitsregisteredoceis36CarpenterStreet,Singapore059915.eprincipal

placeofbusinessislocatedatNo.77TaikangRoad,XiangtangCommunity,ChangtaiStreet,LichengDistrict,

QuanzhouCity,FujianProvince,thePeoplesRepublicofChina(PRC).

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

disclosed in Note 16.

Te Companys immediate and ultimate holding corporation is G & W Investment Management Co., Ltd,

incorporated in the British Virgin Islands.

2 SUMMARY OF SIGNIFICAN ACCOUNING POLICIES2.1 Basis o preparation esenancial statementshavebeen prepared in accordance withSingapore FinancialReporting Standards

(FRS).enancialstatementshavebeenpreparedunderthehistoricalcostconvention,exceptasdisclosedin

the accounting policies below.

epreparationofnancialstatementsinconformitywithFRSrequiresmanagementtoexerciseitsjudgement

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

estimatesandassumptions.eareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignicanttothenancialstatements,aredisclosedinNote3.

Interpretations and amendments to published standards eective in 2011

On1January2011,theGroupadoptedtheneworamendedFRSandInterpretationstoFRS(INTFRS)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 IN FRS.

Te adoption o these new or amended FRS and IN FRS did not result in substantial changes to the Groups

andCompanysaccountingpoliciesandhadnomaterialeectontheamountsreportedforthecurrentorprior

nancialyears.

2.2 Group accounting (a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has power

togovernthenancialandoperatingpolicies,generallyaccompaniedbyashareholdinggiving

risetoamajorityofthevotingrights.eexistenceandeectofpotentialvotingrightsthatare

currently exercisable or convertible are considered when assessing whether the Group controls

another entity. Subsidiaries are consolidated rom the date on which control is transerred to the

Group. Tey are de-consolidated rom the date on which control ceases.

Inpreparingtheconsolidatednancialstatements,transactions,balancesandunrealisedgainsontransactions between group entities are eliminated. Accounting policies o subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the Group.


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Notes to the Financial StatementsForthenancialyearended31December2011

2 SUMMARY OF SIGNIFICAN ACCOUNING POLICIES COND2.2 Group accounting contd (a) Subsidiaries (contd)

(ii) Acquisitions

Te acquisition method o accounting is used to account or business combinations by the Group,

except or business combination under common control.

For business combinations under acquisition method o accounting, the consideration transerred

or the acquisition o a subsidiary comprises the air value o the assets transerred, the liabilities

incurred and t

great group holdings 2011 annual report

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