Grandshores Technology : Financial Report

Annual Report

CONTENTS

	Page
CORPORATE INFORMATION	2
CHAIRMAN STATEMENT	3
MANAGEMENT DISCUSSION AND ANALYSIS	4
BIOGRAPHICAL DETAILS OF THE DIRECTORS AND SENIOR MANAGEMENT	13
CORPORATE GOVERNANCE PRACTICES	16
DIRECTORS' REPORT	29
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT	41
INDEPENDENT AUDITOR'S REPORT	63
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME	72
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	73
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	75
CONSOLIDATED STATEMENT OF CASH FLOWS	77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	79
FINANCIAL SUMMARY	160

Grandshores Technology Group Limited Annual Report 2022

1

CORPORATE INFORMATION

BOARD OF DIRECTORS

EXECUTIVE DIRECTOR

Mr. Yao Yongjie (Chairman)

NON-EXECUTIVE DIRECTORS

Mr. Chua Seng Hai

Ms. Lu Xuwen

Ms. Yu Zhuochen

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Chu Chung Yue, Howard

Mr. Li Kanlin (appointed on 20 May 2022) Mr. Yu Wenzhuo

AUDIT COMMITTEE

Mr. Chu Chung Yue, Howard (Chairman) Mr. Li Kanlin (appointed on 20 May 2022) Mr. Yu Wenzhuo

REMUNERATION COMMITTEE

Mr. Li Kanlin (Chairman) (appointed on 20 May 2022) Mr. Yao Yongjie

Ms. Lu Xuwen

Mr. Chu Chung Yue, Howard Mr. Yu Wenzhuo

NOMINATION COMMITTEE

Mr. Yao Yongjie (Chairman) Ms. Lu Xuwen

Mr. Chu Chung Yue, Howard

Mr. Li Kanlin (appointed on 20 May 2022) Mr. Yu Wenzhuo

COMPANY SECRETARY

Mr. Wong Ngai

AUTHORISED REPRESENTATIVES

Mr. Yao Yongjie

Mr. Wong Ngai

REGISTERED OFFICE

Cricket Square

Hutchins Drive P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Unit 1503, 15/F, Greenfield Tower, Concordia Plaza, 1 Science Museum Road, Tsim Sha Tsui, Kowloon, Hong Kong

PRINCIPAL PLACE OF BUSINESS IN SINGAPORE

18 Kaki Bukit Place

Eunos Techpark

Singapore 416196

CAYMAN ISLANDS PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Conyers Trust Company (Cayman) Limited

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited

Level 54, Hopewell Centre

183 Queen's Road East

Hong Kong

AUDITOR

Crowe (HK) CPA Limited Certified Public Accountants 9/F, Leighton Centre

77 Leighton Road, Causeway Bay Hong Kong

PRINCIPAL BANKS

United Overseas Bank

DBS Bank (Hong Kong) Limited

Bank of Communications (Hong Kong Branch)

COMPANY'S WEBSITE

www.grandshorestech.com

STOCK CODE

1647

2

CHAIRMAN STATEMENT

Dear Shareholders,

On behalf of the board (the "Board") of directors (the "Directors") of Grandshores Technology Group Limited (the "Company") and its subsidiaries (collectively, the "Group"), I would like to present to our shareholders the annual report of the Group for the year ended 31 March 2022 (the "Review Year").

The Group's revenue for the Review Year was approximately S$44.7 million (31 March 2021: approximately S$49.1 million). The Group's gross profit decreased from approximately S$21.8 million for the year ended 31 March 2021 to approximately S$12.0 million for the Review Year. The Group's gross profit margin decreased from approximately 44.3% for the year ended 31 March 2021 to approximately 26.9% for the Review Year. The Group's (loss)/profit attributable to owners of the Company changed from profit of approximately S$5.3 million for the year ended 31 March 2021 to loss of approximately S$982,000 for the Review Year.

The deterioration of the Group's performance during the Review Year was mainly due to the decrease in income from Blockchain Technology Development and Application business. During the Review Year, Bitcoin price is highly volatile and the Group strategically reduced the volume of Bitcoin trading. The Group's revenue from trading of digital assets decreased from approximately S$11.5 million for the year ended 31 March 2021 to approximately S$1.2 million for the Review Year. Furthermore, as a result of the drop in Bitcoin price from approximately US$59,000 at the end of March 2021 to approximately US$46,000 at the end of the Review Year, the Group recognized a loss on fair value changes of digital assets inventories for the Review Year of approximately S$1.3 million as compared with a gain of approximately S$2.1 million for the year ended 31 March 2021.

The Group intends to continue the existing principal businesses that provides integrated building services and undertakes building construction works in Singapore. At the same time, the Group intends to expand and diversify our business by investing into new business opportunities which can enhance shareholder value as well as complement and leverage existing business lines.

Although the performance of the Group's Blockchain Technology Development and Application business is not satisfactory during the Review Year, our Directors stay positive about the future of the Blockchain Technology Development and Application business, considering the ongoing expansion of blockchain technology applications in different field and industries.

In May 2022, the Securities and Futures Commission has approved Grandshores Asset Management Limited, a wholly-owned subsidiary of the Company, to conduct Type 4 (advising on securities) and Type 9 (asset management) regulated activities as defined in Schedule 5 to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). The Group will gradually allocate resources to develop new financial services business, including asset management and other financial services.

I would like to take this opportunity to express my sincere gratitude to the management team and staff for their hard work and contributions, and to the shareholders, investors and business partners for their trust and support.

Yao Yongjie

Chairman

30 June 2022

Grandshores Technology Group Limited Annual Report 2022

3

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW AND OUTLOOK

The Group's revenue for the Review Year was approximately S$44.7 million (31 March 2021: approximately S$49.1 million). The Group's gross profit decreased from approximately S$21.8 million for the year ended 31 March 2021 to approximately S$12.0 million for the Review Year. The Group's gross profit margin decreased from approximately 44.3% for the year ended 31 March 2021 to approximately 26.9% for the Review Year.

According to Singapore Building and Construction Authority ("BCA"), the total construction demand (i.e. the value of construction contracts to be awarded) in 2022 is projected to be between S$27 billion and S$32 billion. The public sector is expected to contribute about 60 per cent of the total construction demand, between S$16 billion and S$19 billion. The private sector construction demand is anticipated to reach between S$11 billion and S$13 billion in 2022, comparable with the volume in 2021. Given the latest property cooling measures, residential building demand is anticipated to moderate year-on-year amid more cautious market sentiments. However, commercial building demand is expected to increase as hotels and attractions undergo refurbishment to prepare for inbound tourism revival, and older commercial premises are earmarked for redevelopment to enhance their asset values.

Over the medium-term, BCA expects the total construction demand to reach between S$25 billion and S$32 billion per year from 2023 to 2026. The public sector is expected to lead the demand and contribute S$14 billion to S$18 billion per year from 2023 to 2026. About half of the demand will come from building projects and the other half from civil engineering works. The private sector construction demand is projected to remain steady over the medium-term, reaching about S$11 billion to S$14 billion per year from 2023 to 2026, in view of healthy investment appetite amid Singapore's strong economic fundamentals.

The Group believes that the outlook for the construction sector will be challenging for 2022 in view of the continued uncertainties in the external environment and negative economic outlook in Singapore and major economies around the world impacted by Coronavirus Disease 2019 ("COVID-19"). All of these constraints make tenders far more competitive and profitability far lesser than were the cases previously. The Group is monitoring the situation closely and will maintain operational and financial prudence amidst a challenging economy. The Group will continue to manage its expenditure, review the business strategy constantly and look for opportunities in a cautious and prudent manner.

During the Review Year, Bitcoin price is highly volatile and the Group strategically reduced the volume of Bitcoin trading. The Group's revenue from trading of digital assets decreased from approximately S$11.5 million for the year ended 31 March 2021 to approximately S$1.2 million for the Review Year. Furthermore, as a result of the drop in Bitcoin price from approximately US$59,000 at the end of March 2021 to approximately US$46,000 at the end of the Review Year, the Group recognized a loss on fair value changes of digital assets inventories for the Review Year of approximately S$1.3 million as compared with a gain of approximately S$2.1 million for the year ended 31 March 2021.

The Group's industrial hemp business was not active during the Review Year.

4