INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED

For the purpose of this report, the terms "we" and "our" denote MHA in relation to UK legal, professional and regulatory responsibilities and reporting obligations to the members of Grand Fortune High Grade Limited. For the purposes of the table on page 12 that sets out the key audit matters and how our audit addressed the key audit matters, the terms "we" and "our" refer to MHA. The Group financial statements, as defined below, consolidate the accounts of Grand Fortune High Grade Limited and its subsidiaries (the "Group"). The "Parent Company" is defined as Grand Fortune High Grade Limited, as an individual entity.

Opinion

We have audited the financial statements of Grand Fortune High Grade Limited for the year ended 30 April 2023.

The financial statements that we have audited comprise:

·    the Consolidated Statement of Comprehensive Income

·    the Consolidated Statement of Financial Position

·    the Consolidated Statement of Changes in Equity

·    the Consolidated Statement of Cash Flows

·    Notes 1 to 16 to the consolidated financial statements, including significant accounting policies

The financial reporting framework that has been applied in the preparation of the Group's financial statements is applicable law and international Financial Reporting standards (IFRSs) as adopted by the European Union.

In our opinion the financial statements:

·    give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2022 and of the Group's loss for the year then ended;

·    have been properly prepared in accordance with international accounting standards; and

Our opinion is consistent with our reporting to those charged with governance

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing and applicable law. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our ethical responsibilities in accordance with those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the Directors' assessment of the Group's and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

·    The consideration of inherent risks to the Group's and the Parent Company's operations and specifically their business model.

·    The evaluation of how those risks might impact on the available financial resources.

·    Evaluation of the Directors' assessment of the Group's ability to continue to adopt going concern basis of accounting standards including a review of budgets and cash flow forecasts to October 2024.

·    Liquidity considerations including examination of cash flow projections at Group and Parent Company level to October 2024.

·    The evaluation of the base case scenarios and stress scenarios, in respect of the Group and the Parent Company, and the respective sensitivities and rationale.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Overview of our audit approach

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those matters which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

Our application of materiality  

Our definition of materiality considers the value of error or omission on the financial statements that, individually or in aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial statements.  Misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Materiality is used in planning the scope of our work, executing that work and evaluating the results. 

Materiality in respect of the Group was set at £69,000 (2022: £42,000) which was determined on the basis of 5% (2021: 2% of total assets) of the Group's net assets.. Net assets was deemed to be the appropriate benchmark for the calculation of materiality as this is a key area of the financial statements because this is the metric by which the performance and risk exposure of the Group and Parent Company is principally assessed. In our opinion this is therefore the benchmark with which the users of the financial statements are principally concerned.

Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce, to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole.  

Performance materiality for the Group was set at £48,300 (2022: £30,000) which represents 70% (2022: 65%) of the above materiality levels.

The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of the systems and controls and the level of misstatements arising in previous audits. 

We agreed to report any corrected or uncorrected adjustments exceeding £3,450 in respect of the Group to the Board of Directors as well as differences below this threshold that in our view warranted reporting on qualitative grounds. 

Overview of the scope of the Group and Parent Company audits

Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. This assessment takes into account the size, risk profile, organisation / distribution and effectiveness of group-wide controls, changes in the business environment and other factors such as recent internal audit results when assessing the level of work to be performed at each component.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate quantitative and qualitative coverage of significant accounts in the consolidated financial statements, of the 3 reporting components of the group, we identified 3 components in the Cayman Islands, Hong Kong and People's Republic of China which represent the principal business units within the Group.

Full scope audits - All 3 components were subject to full scope audits.

The control environment

We evaluated the design and implementation of those internal controls of the Group, including the Parent Company, which are relevant to our audit, such as those relating to the financial reporting cycle. [

Reporting on other information 
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.  

We have nothing to report in this regard.

Responsibilities of directors  

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.  

In preparing the financial statements, the directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or Parent Company or to cease operations, or have no realistic alternative but to do so.  

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

Auditor responsibilities for the audit of the financial statements 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 

A further description of our responsibilities for the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.  

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it.

Identifying and assessing potential risks arising from irregularities, including fraud

The extent of the procedures undertaken to identify and assess the risks of material misstatement in respect of irregularities, including fraud, included the following:

·    We considered the nature of the industry and sector, the control environment and business performance . Through discussion with the directors, we obtained an understanding of the legal and regulatory frameworks applicable to the Group focusing on laws and regulations that could reasonably be expected to have a direct material effect on the financial statements, and legislation or those that had a fundamental effect on the operations of the Group including the regulatory and supervisory requirements of the Financial Conduct Authority (FCA).

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

·    We enquired of the directors and management concerning the Group's and the Parent Company's policies and procedures relating to:

-     identifying, evaluating and complying with the laws and regulations and whether they were aware of any instances of non-compliance;

-     detecting and responding to the risks of fraud and whether they had any knowledge of actual or suspected fraud; and

-     the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.

·    We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur by evaluating management's incentives and opportunities for manipulation of the financial statements. This included utilising the spectrum of inherent risk and an evaluation of the risk of management override of controls. We determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce costs, creating fictitious transactions to hide losses or to improve financial performance.

Audit response to risks identified

In respect of the above procedures:

·    we corroborated the results of our enquiries through our review of the minutes of the Group's and the Parent Company's board meetings, inspection of legal and regulatory correspondence and correspondences from the regulators the FCA;

·    audit procedures performed by the engagement team in connection with the risks identified included:

-     reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations expected to have a direct impact on the financial statements.

-     testing journal entries, including those processed late for financial statements preparation, those posted by infrequent or unexpected users, those posted to unusual account combinations;

-     evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for bias;

-     enquiry of management around actual and potential litigation and claims, and

-     obtaining confirmations from third parties to confirm existence of a sample of balances.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
GRAND FORTUNE HIGH GRADE LIMITED (CONTINUED)

·    we communicated relevant laws and regulations and potential fraud risks to all engagement team members, including experts and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Other requirements  

We were appointed by the Directors on 19 July 2023. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 1 year. 

We did not provide any non-audit services which are prohibited by the FRC's Ethical Standard to the Group or the Parent Company, and we remain independent of the Group and the Parent Company in conducting our audit.  

Use of our report 

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed. 

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (('ESEF RTS'). This auditor's report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. 

"Jason Mitchell"

Jason Mitchell MBA BSc FCA
(Senior Statutory Auditor) 

for and on behalf of MHA, Statutory Auditor 

Maidenhead, United Kingdom  

27 October 2023 

MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)