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Alpha Returns Group plc (ARGP)

  Print      Mail a friend       Annual reports

Tuesday 30 June, 2015

Alpha Returns Group plc

Alpha Returns Group plc : Final Results

Alpha Returns Group plc : Final Results

Alpha Returns Group plc

("Alpha Returns" or the "Company")

Financial statements for the year ended 31 December 2014

30 June 2015

Alpha Returns today announces its audited results for the year ended 31 December 2014.

Copies of the Group's Annual Report and Accounts will be sent to shareholders and will be available on the Company's website http://alpharet.com later today. Further copies may be obtained directly from the Company's Registered Office at Alpha Returns Group plc, 3rd Floor, New Liverpool House, 15 Eldon Street, London EC2M 7LD.

The Directors of Alpha Returns are also pleased to announce that the notice of Annual General Meeting ("AGM") is today being posted to shareholders. The AGM will be held at 3rd Floor, New Liverpool House, 15 Eldon Street, London EC2M 7LD on 27 July 2015, 10am.

Copies of the Notice of AGM and Proxy Form will be available for download on the Company website at http://alpharet.com.

Contact details:

Alpha Returns Group plc  Christopher Neo

Executive Director
020 3286 6388
ZAI Corporate Finance Ltd (NOMAD) Peter Trevelyan Clark / Ivy Wang 020 7060 2220
Peterhouse Corporate Finance (Broker) Duncan Vasey / Lucy Williams 020 7220 9797


Chairman's Statement

The Asia-Pacific region

Alpha Returns, which is based in Hong Kong, is an investment company operating in the Asia Pacific (APAC) region. Although the developing economies in APAC have seen reduced activity, during the year under review, there have been benefits from lower oil prices and the area continues to account for one-third of global growth. The World Bank is forecasting growth, which during the period was 6.9%, to reduce to 6.7% in 2015. China grew by 7.4% in 2014, and is expected to slow to 7.1% in 2015. In comparison, US and UK GDP are expected to grow at 2.7% and 2.6% respectively in 2015. The results provided in these financial statements should be seen in the light of this economic data.

The Company's Investing Policy is set out in full in the Strategic Report and on the Company's website at alpharet.com/rule26.

Review of the year ended 31 December 2014

I am pleased to report the final audited consolidated results for the year ended 31 December 2014 of Alpha Returns Group plc (the "Company"). The final results for Group for the year ended 31 December 2014 show a loss of £71,412. Although the Company is an Investment Company which focuses on self-sustainable investment targets, and thus the Board of Directors are not involved in the day-to-day operations of its subsidiary undertakings, it is still required to consolidate the results of the subsidiaries under IFRS through the ability to exercise control through voting rights.

Financial Review

The loss for the year on continuing operations was £265,200 attributable to equity holders of the Company (2013: loss £328,149). Total assets amounted to £3,101,786 (2013: £865,246) attributable to equity holders of the Company, with net cash of £1,848,183, which includes a balance of £1,523,265 held by MYS as part of the liquidity asset requirements of the Hong Kong Securities and Futures Ordinance (2013: net cash of £572,295).

During the year, the Company raised a further £1,385,000 in cash, the majority of which was invested as set out below.

Losses of the Company were restricted to £237,127 as compared with 2013 loss of £328,149, as the Board continued to maintain a low cost base commensurate with a standalone Investment Company.

Review of Operations

On 31 March 2014 the Company made a 30% indirect investment in Oriental Ventures with a precondition (yet to be satisfied) that its wholly owned subsidiary would acquire MaxLife. This is a start-up coffee chain business operating in the PRC.

On 7 August 2014 Riche Bright Group, an investment vehicle jointly owned by the Company, acquired M Y Securities, a member of the Hong Kong Stock Exchange. On 8 August 2014 the Company announced that it had increased its holdings in Riche Bright Group to 60%. M Y Securities continues to operate under its pre-existing operational management and board control.

During the year, the Company also increased its interest in Telistar Solutions to 52.5%. Telistar Solutions, a Singapore based IT service solutions provider, is operated independently by its experienced management team.

Post Balance Sheet Events

On 24 April 2015 the Company made a conditional 50% indirect investment in Jesoft. This is a PRC corporate IT solutions provider that specializes in logistics and retail solutions.

Further details on post balance sheet events are provided in Note 24 to these statements.

Corporate governance

The Company runs Audit, AIM Compliance, Nominations and Remuneration committees. The roles and composition of these committees are set out in the Directors' Report to the financial statements.

Board changes

On 31 July 2014, I was appointed your Chairman in succession to Chan Cheong Yee who remains a director of the Company. On the same day, Gregory Collier resigned as a director but has continued as a consultant to the Company. On September 2014, Ellen Tsang was appointed a director of the Company.

Outlook

There has been important progress made over the last year and since the year end with the investments made by the Company. Whilst these are well-managed trading businesses, these are still early stage investments, so we anticipate significant gains for shareholders and the Group as a whole, as these companies grow.

Finally, I would like to take this opportunity to thank shareholders for their support throughout the year. We look forward to creating greater value for shareholders in the coming year.

Tony Drury
Chairman

30 June 2015


Strategic Report

The Directors present their Strategic Report on the Group for the year ended 31 December 2014, which has been prepared in accordance with the requirements of section 414A of the Companies Act 2006 (the "Act"). The purpose of this report is to inform Shareholders and provide them with sufficient information to enable them to assess the extent to which the Directors have performed their duty to promote the success of the Company in accordance with section 172 of the Act.

Business review

Following the disposal of its assets and the Company Voluntary Arrangement entered into in the prior year the Group has repositioned itself as an investing company focusing on investments in high-growth Asian economies. During the year the Company was able to raise funding and make further investments in MY Securities, Telistar and Maxlife. The Group closed the year with cash balances of £1,848,183 (2013:£572,295), an investment portfolio worth £2,919,130 (2013: £1,047,544) and net assets attributable to equity shareholders' of £3,101,786 (2013: £865,246).

In January 2014, the Company co-funded a BVI incorporated investment vehicle, Riche Bright Group Limited ("Riche Bright") to acquire 100% of M Y Securities Limited ("MYS"), a member firm of the Stock Exchange of Hong Kong Limited. In August 2014, Riche Bright completed the acquisition of MYS and the Company increased its holding in Riche Bright to 60% and by a further 10% post year end.

In February 2014, the Company purchased a further 15% shareholding in Telistar Solutions Pte. Ltd. ("Telistar"), a Singapore based IT service solutions provider for a total consideration of S$330,000, satisfied by the issue of 12,087,912 new ordinary shares of 0.01p each in the capital of the Company. In September 2014, the Company completed the final tranche of an earlier investment to bring our total shareholding in Telistar to 52.5% and later advanced a S$100,000 one year term loan.

In March 2014, the Company purchased a 30% interest in Oriental Ventures Limited, a BVI registered special purpose vehicle, with a precondition that its wholly owned subsidiary will acquire Shenzhen MaxLife Catering Management Co., Ltd., a start-up coffee chain business operating in the PRC. The consideration was HK$5,812,500 (then £451,000) with deferred consideration of 32,142,857 new ordinary shares of 0.01p in the Company to be issued on completion. The long-stop date for satisfaction of the preconditions has been extended to 30th September 2015.

Key performance indicators

The Directors measure the performance of the Company and wider Group of investments using the following indicators:

GROUP STATISTICS31 December 2014 31 December 2013 Change %
Net asset value attributable to equity holders £3,101,786 £865,246 +258%
Closing share price 3.875p 1.750p +121%

Investing policy

With its Asia-centric focus, Alpha Returns Group plc will actively seek to acquire and consolidate holdings in companies operating in high-growth Asian economies, with the intention to create and sustain long-term value. The Company may invest in any business sector within its targeted geographic focus.

The Directors see Asia - Pacific as having considerable growth potential for the foreseeable future and many of its prospects they have identified are in the region. The Directors will focus on investments and opportunities which would generally have some or all of the following characteristics, namely:

  • a majority of their revenue derived from the Asia -Pacific region, and strongly positioned to benefit from the region's growth;
  • a trading history which reflects past profitability or potential for significant capital growth going forward; and
  • where all or part of the consideration could be satisfied by the issuance of new Ordinary Shares or other securities in the Company. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate.

It is anticipated that the main driver of success for the Company will be its focus , during the investment screening process, on the management involved in the potential investee companies and the potential value creation that the team of people is capable of realising.. The Company will identify and assess potential investment targets and where it believes further investigation is required, intends to appoint appropriately qualified advisers to assist in the due diligence process.

The Company intends to be an active investor, and the Directors will seek representation on the board of the investee company where they feel that an investee company would benefit from their skill and expertise.

The Company intends to deliver shareholder returns principally through capital growth rather than capital distribution via dividends.

Future developments

As explained in the Chairman's Statement the Company has increased its investments in the Asia-Pacific region. As our investment portfolio grows, the Directors will gradually shift the focus from seeking new investment opportunities to nurturing existing investments and expects to announce on-going updates on the investments entered into in 2014 and 2015.

Principal business risks and uncertainties

The management of the business and the nature of the Company's strategy are subject to a number of risks. The key risk facing Alpha Returns Shareholders is that the value of the investments falls and that future returns to shareholder are therefore lower than they could have been. As the Company has 3 key investments at present any deterioration in trading of MY Securities, Telistar or Maxlife and a consequential fall in investment value is the biggest single risk faced. Similarly performance in excess of expectations on the 3 key investments is the single biggest upside adjustment factor that the Company faces.
The Group operates a system of internal control and risk management in order to provide assurance that the Board is managing risk whilst achieving its business objectives. No system can fully eliminate risk and, therefore, the understanding of operational risk is central to the management process.

Financial risk management objectives and policies

The Group's policy in respect of financial instruments and its risk profile is set out in Note 18 to the financial statements.

Assessment of business risk

The Board regularly reviews operating and strategic risks.  The Group's operating procedures include a system for reporting financial and non-financial information to the Board including:

  • reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks arising;

·           reports on the performance of investments;
·           reports on selection criteria of new investments;
·           discussion with senior personnel; and
·           consideration of reports prepared by third parties.

Christopher Neo
Executive Director
30 June 2015


     12 months to Dec 2014 12 months to Dec 2013
    Note£ £
Continuing operations          
Revenue       1,219,808 -
Cost of sales      

(361,209)

-

Gross profit       858,599  
Administration costs      

 
(996,243) (343,665)
Share based payments     20 (127,758) -
Other income       45,876 -
       

 

 

Operating loss       (219,526) (343,665)
           
Finance cost     5 - (1,269)
           
Finance income       40 17
           
Investment income       2,680 -
           
Gain on foreign exchange       58,915 16,768
       

 

 

Loss on continuing operations before taxation     2 (157,891) (328,149)
          
Taxation     6 (1,391) -
       

 

 

Loss on continuing operations after taxation       (159,282) (328,149)
           
Gain on translation of foreign subsidiaries       87,870 -
       

 

 

Loss after taxation and total comprehensive expense     

(71,412)

(328,149)

           
           
Attributable to:         
Equity holders of the company       (265,200) (328,149)
Non- controlling interests      

105,918

-

           
Basic and diluted loss per share    7    
          
Basic and diluted - continuing operations       (0.05p) (0.19p)
       

 

 

Total basic and diluted loss per share     

(0.05p)

(0.19p)

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company profit and loss account. The loss for the parent company for the year was £237,127.



   Note31 December 2014 31 December 2013
    £ £
Assets        
Non-Current Assets        
Property, plant and equipment   8 104,815 -
Intangible assets   9 1,317,857 -
Investments -Fair value through profit or loss   16 583,720 397,399
Deferred income tax assets   17

19,290

-

     

2,025,682

397,399

         
Current Assets        
Trade and other receivables   12 1,932,752 22,348
Cash and cash equivalents   13

1,848,183

572,295

      3,780,935 594,643
     

 

 

Total Assets    

5,806,617

992,042

         
Liabilities        
Trade and other payables   14 1,538,173 76,796
Borrowings   15

-

50,000

     

1,538,173

126,796

         
Total Liabilities     1,538,173 126,796
     

 

 

Net Assets    

4,268,444

865,246

         
Equity        
Share capital   19 1,348,580 1,332,843
Share premium   19 6,525,522 4,255,147
Share option reserve   20 127,758 -
Foreign currency translation reserve     87,870 -
Profit and loss account     (4,987,944) (4,722,744)
     

 

 

Attributable to equity shareholders of the company    

3,101,786

865,246

Non-controlling interests    

1,166,658

-

Total equity    

4,268,444

865,246

The financial statements were approved by the Board of Directors on 30 June 2015.



  Share
capital
Share premiumShares to be issuedLoan note equity reserveShare option reserveForeign currency reserveProfit
and loss account
Total equityNon- controlling interestTotal
  ££££££££££
Balance at 1 Jan 20131,285,6792,748,904200,836137,176--(4,394,594)(21,999)-(21,999)
Shares issued in year 47,1641,506,242(200,836)----1,352,570-1,352,570
Conversion of loan notes ---(137,176)---(137,176)-(137,176)
Loss for the year and total comprehensive expense ------(328,149)(328,149)-(328,149)
 

-

-

-

-

-

-

 

 

-

 

Balance at 31 Dec 2013

1,332,843

4,255,147

    -

    -

-

-

(4,722,744)

865,246

-

865,246

           
Shares issued in year 15,7372,270,375-----2,286,112-2,286,112
Share based payment charge ----127,758--127,758-127,758
Foreign Currency reserve --    ---87,870-87,870-87,870
Acquisitions during the year     -    --    -----1,060,7401,060,740
Loss for the year and total comprehensive expense

-

-

-

-

-

-

(265,200)

(265,200)

 

105,918

 

(159,282)

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 Dec 2014

1,348,580

6,525,522

    -

-

127,758

87,870

(4,987,944)

3,101,786

1,166,658

4,268,444

           



   12 months to Dec 2014   12 months to Dec 2013
  £   £
Cash flows from operating activities      
Loss after taxation  (159,282)   (328,149)
Adjustments for:       
Depreciation and amortisation  17,474   -
Profit on sale of property, plant and equipment  (430)   -
Share based payments  127,758   -
Loss on disposal of investment  371,713   -
(Increase)/decrease in trade and other receivables  (375,207)   16,322
(Decrease)/increase in trade and other payables  (238,014)   2,924
Foreign exchange differences  6,337   -
Taxation  1,391   -
Income tax paid  (4,525)   -
   

 

 

 

Net cash used in operating activities 

(624,498)

 

(308,903)

         
Cash flows from investing activities      
Acquisition of subsidiary, net of cash acquired  (651,121)   -
Purchase of property, plant and equipment  (86,251)   -
Disposal of property, plant and equipment  900   -
Purchase of investments  (479,097)   (397,399)
   

 

 

 

Net cash used in investing activities 

(1,215,570)

 

(397,399)

         
Cash flows from financing activities      
Net proceeds from issue of share capital  2,959,853   1,352,571
Proceeds from borrowings  -   50,000
Repayment of convertible loan  -   (303,963)
   

 

 

 

Net cash generated from financing activities 

2,959,853

 

1,098,608

         
Net increase in cash and cash equivalents 1,119,785   392,308
Cash and cash equivalents at beginning of period 572,296   179,989
Effect of foreign exchange rate changes on cash and cash equivalents 156,102   -
   

 

 

 

Cash and cash equivalents at end of period  

1,848,183

 

572,296

         

 

Nature of financial information

The financial information contained in this announcement does not constitute statutory accounts as defined under section 434 of the Companies Act 2006 but has been extracted from the Group's 2014 statutory financial statements. The auditors have reported on the 2014 financial statements; their report was unqualified but did contain an emphasis of matter paragraph on going concern. It contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2014 will be delivered to the Registrar of Companies after adoption at the Company's Annual General Meeting.

 

The Group's consolidated financial statements incorporate the financial statements of the parent company and all of its subsidiary investments drawn up to 31 December 2014. Although the Company is an investment Company which focuses on self-sustainable investment targets, and thus the Board of Directors are not involved in the day-to-day operations of its subsidiary undertakings, it is still required to consolidate the results of the subsidiaries under IFRS through the ability to exercise control through voting rights. Subsidiaries are thus entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities.


  1. Going concern

The financial statements have been prepared on the going concern basis.

In determining the appropriate basis of preparation of the financial statements, the Directors have considered whether the Group can continue in operational existence for the foreseeable future. At 31 December 2014 although the Group had adequate cash, the Company had cash resources of only £7,130 along with net assets of £3,178,995. The directors have prepared cash flow forecasts through to December 2016, which show that the Group will have sufficient available cash resources to provide for its future requirements. In preparing their forecasts they have given due regard to the risks and uncertainties affecting the business as set out in the Strategic Report and the liquidity risk disclosed in note 18, and they have made the following key assumptions:

  • that additional funds will be raised
  • that no new investment will be undertaken by the Group unless sufficient additional funding is in place

After making enquiries, the Directors have formed a judgement that there is a reasonable expectation that the Company can secure further adequate resources when needed, to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Group's financial statements.

2             Loss before taxation

Loss on continuing operations before taxation is stated after charging:

   Year to
Dec 2014
Year to
 Dec 2013
  £ £
Depreciation of plant, property and equipment    
-  owned by the group 17,143 -
Auditors' remuneration:    
Fees payable to the company's auditors for the audit of the company's annual accounts 25,000 9,000
Fees payable to  the company's auditors for other services:    
 - The audit of the company's subsidiaries, pursuant to legislation - -
 - Taxation services 1,500 1,500
 - Other services - -
Operating lease rentals    
-  other operating leases of the group

49,231

-

     

3             Directors and employees

Staff costs during the period were as follows: Year to
31 December 2014
Year to
31 December 2013
  £ £
    
Wages and salaries 163,243 72,976
Share based payment charge 63,880 -
Social security costs

5,772

-

 

232,895

72,976

The average number of employees (including directors) of the Company during the period was as follows:
  Year to
31 December 2014
Year to
31 December 2013
  Number Number
    
Administration

5

6

     

4             Directors

Key management are considered to be the Directors.  Remuneration in respect of directors is disclosed as follows. 

  Name of director FeesShare based payment chargeTotal
2014
Total
2013
    £££ £
  C Y Chan 19,67215,97035,642 27,049
  C Neo 8,52515,97024,495 7,869
  H K Leung 7,869-7,869 656
  A C Drury 19,589-19,589 1,839
  F C Tsang 2,623-2,623 -
  A G P Forrest --- 5,700
  H J Lim --- 7,213
  G Collier 5,25015,97021,220 9,000
    63,52847,910111,438 59,326

There were no pension contributions made or payable during the year and no cash or non-cash benefits were paid or payable.

5             Finance costs

  Year to
Dec 2014
Year to
 Dec 2013
  £ £
Finance costs   
On other loans wholly repayable within five years

-

1,269

 

-

1,269

6             Taxation

No provision has been made for corporation tax due to group trading losses being available for relief against the future profits of the Group at 31 December 2014.  No deferred tax has been recognised in respect of the losses as recoverability is uncertain. 

Analysis of the charge for the period;

  Year to
Dec 2014
Year to
 Dec 2013
  £ £
     
Current tax

1,391

-

The tax assessed for the period differs from that calculated at the standard rate of corporation tax in the UK.  The difference is explained below:

  Year to
Dec 2014
Year to
 Dec 2013
  £ £
Loss on continuing activities before taxation

(71,412)

(328,149)

    
Loss on ordinary activities multiplied by the relevant standard rate of corporation    
tax in the UK of 23.5% (Dec 2013: 24.5%) (16,782) (80,397)
Effects of:    
Expenses not deductible for tax purposes 544 -
Excess of depreciation and amortisation over capital allowances 14,291 -
Unutilised tax losses carried forward 1,947 80,397
Exceptional items

-

-

UK Tax charge for the period

-

-

     

The current tax charge of £1,391 relates to the Singapore corporation tax on the profits on the Telistar Group.

7             Loss per share

  2014 2013
 £ £
Loss attributable to equity holders of the Group:    
Loss from continuing operations (265,200) (328,149)
Loss from discontinued operations

 

-

Loss for the period attributable to equity holders of the Group

(265,200)

(328,149)

     
Weighted average number of ordinary shares in issue for basic and fully diluted earnings

585,326,862

168,324,866

     
Earnings per share attributable to equity holders of the Group:    
Basic and diluted loss per share from continuing operations

(0.05p)

(0.19p)

Basic and diluted loss per share for the period

(0.05p)

(0.19p)

     

For the current year and for the prior period the loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the purpose of calculating the diluted earnings per share are identical to those used for the basic loss per share. This is because the exercise of share options and warrants would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33. 

8             Property, plant and equipment

  Furniture, fittings and equipment 

Leasehold improvements
Motor VehiclesTotal
Cost££££
As at 1 January 2014 --- -
Acquired with subsidiaries 208,24115,970-224,211
Purchases during the year 27,889-58,36286,251
Disposal in period (698)--(698)
Foreign exchange adjustment

13,454

801

-

14,255

At 31 December 2014

248,886

16,771

58,362

324,019

      
Depreciation    
As at 1 January 2014 ----
Acquired with subsidiaries 176,93110,869-187,800
Depreciation charge for the year 13,9312,57097317,474
Disposal in period (232)--(232)
Foreign exchange adjustment

13,400

762

-

14,162

At 31 December 2014

204,030

14,201

973

219,204

      
Net Book Value as at 31 December 2014

44,856

2,570

57,389

104,815

      
Net Book Value as at 31 December 2013

-

-

-

-

The Directors consider the carrying amount of property, plant and equipment to be a reasonable approximation of fair value. 

9             Intangible assets

  Stock exchange trading rightsGoodwillTotal
Cost£££
As at 1 January 2014 ---
Acquired with subsidiaries 38,050-38,050
Purchases during the year -1,276,4071,276,407
Foreign exchange adjustment

3,400

-

3,400

At 31 December

41,450

1,276,407

1,317,857

     
Accumulated amortisation and impairment    
As at 1 January 2014

-

-

-

At 31 December

-

-

-

     
Net Book Value as at 31 December 2014

41,450

1,276,407

1,317,857

     
Net Book Value as at 31 December 2013

-

-

-

The Directors consider the carrying amount of intangible assets to be a reasonable approximation of fair value. 

10          Investments in subsidiaries

The Company investments in subsidiaries and associated undertaking were as follows:

  Company
  2014 2013
  £ £
As at 1 January 1,047,544 -
Purchases during the year

1,871,586

1,047,544

At 31 December

2,919,130

1,047,544

The Group's principal subsidiary undertakings during the year were as follows:

Principal subsidiariesCountry of IncorporationPercentage of ordinary shares heldPrincipal activity
Shidu Investments Limited England and Wales 100% Dormant
Shidu International Limited BVI 100% Investment Holding company
Riche Bright Group Limited BVI 60% Investment Holding company
Riche Bright Limited* Republic of Vanuatu 60% Service company
M Y securities Limited* Hong Kong 60% Securities brokerage
Telistar Solutions Pte Limited** Singapore 52.5% IT Solutions
Telistar Solutions SDN BHD*** Malaysia 52.5% IT Solutions

*100% owned by Riche Bright Group Limited.
** Investment held indirectly through Shidu International Limited.
***100% owned by Telistar Solutions Pte. Limited


11          Acquisition of subsidiaries

Riche Bright Group
On 15 January 2014 the Company made a capital contribution to acquire 30% of its co-founded investment vehicle Riche Bright Group Limited. Consideration for the acquisition was satisfied by cash of HK$5,613,079 and by the issue of 26,668,668 ordinary shares of 0.1 pence each in the company directly to Mr Mang King Chung Dennis, the ultimate beneficial owner of M Y Securities Limited and the issue of 18,074,745 ordinary shares at 1.9125 pence per share.

Then following the acquisition of MY Securities Limited by Riche Bright Group Limited on 7 August 2014 the Company took up the option to acquire an additional 30% for a total consideration of £1,037,000 on 8 August 2014.

The initial transaction on 15 January 2014 has been accounted for by the purchase method of accounting using the exchange rate of 12.20 Hong Kong dollars to the pound, with the additional investment following Riche Bright's acquisition of MYS on 8 August 2014 was at a rate of 13.14 Hong Kong dollars to the pound.

  Book valueFair value
 ££
Intangibles 38,050 38,050
Investments 15,220 15,220
Other receivables 2,320,218 2,320,218
Cash and cash-equivalents 1,570,418 1,570,418
Other payables

(1,160,419)

(1,160,419)

Net assets acquired

2,783,487

2,783,487

Purchase consideration   
Fair value of shares issued   902,350
Cash consideration*  

2,644,442

   

3,546,792

     
Goodwill  

763,306

     

* The cash consideration includes cash payments made by other parties subscribing for shares in Riche Bright Group Limited.

  1. Acquisition of subsidiaries (continued)

Telistar Solutions Pte. Limited
On 23 September 2014 the company paid the final tranche of S$412,000, through its subsidiary Shidu International Limited, of which S$165,000 was in cash and S$247,500 was settled by the issue of 3,520,900 new ordinary shares of 0.01p each at an agreed price of 3.429 pence to acquire a 52.5% in Telistar Solutions Pte Limited.

The first tranche was paid last year to acquire 18.75% and the second tranche to acquire a further 15% was paid in February 2014.  The second tranche was for S$330,000 and was satisfied by the issue of 12,087,912 new ordinary shares of 0.01p each for 1.875 pence per share.

The transaction has been accounted for by the purchase method of accounting using the exchange rate of 2.072 Singapore dollars to the pound.

The assets and liabilities acquired were:

  Book valueFair value
 ££
Property, plant and equipment 19,026 19,026
Other receivables 283,649 283,649
Cash and cash  equivalents 100,148 100,148
Other payables

(245,116)

(245,116)

Net assets acquired

157,707

157,707

     
Purchase consideration   
Fair value of shares issued 283,083 283,083
Cash consideration 387,725

387,725

 

670,808

670,808

     
Goodwill  

513,101

     

12          Trade and other receivables

 Group   Company
 2014 2013 2014 2013
 £ £ £ £
        
Trade receivables 1,677,715 - - -
Amounts owed by group undertakings - - 277,874 -
Client account* 15,777 - - -
Other receivables 97,026 19,948 40,828 17,512
Prepayments and accrued income

142,234

2,400

4,433

2,400

 

1,932,752

22,348

323,135

19,912

*The above account represents the balance of money held on trust for clients of MY Securities held in Client account held with HSBC owing to the Company. The total balance of the MYS - Client account at 31 December 2014 is £503,672.

No receivables were past due or provided for at the year-end or at the previous year end.

The Directors consider the carrying amount of trade and other receivables a reasonable approximation of their fair value. All of the Group's trade and other receivables have been reviewed for indicators of impairment.


13          Cash and cash equivalents

 Group   Company
 2014 2013 2014 2013
  £ £ £ £
         
Cash at Bank

1,848,183

572,295

7,130

7,130

The Directors consider that the carrying value of cash and cash equivalents represents their fair value.

14          Trade and other payables

 Group   Company
 2014 2013 2014 2013
  £ £ £ £
Current        
Trade payables 987,226 15,093 11,123 15,093
Trade payables - factored 101,362 - - -
Taxes and social security - - - -
Other payables 218,567 - - -
Accruals and deferred income

231,018

61,703

59,277

57,242

 

1,538,173

76,796

70,400

72,335

All trade and other payables are short term.  The Directors consider the carrying amount of trade and other payables to be a reasonable approximation of fair value. 

15          Borrowings

The Group's borrowings are disclosed in the statements of financial position as follows:

 Group   Company
 2014 2013 2014 2013
  £ £ £ £
Current        
Convertible loan stock - - - -
Other loans

-

50,000

-

-

 

-

-

-

-

The Directors consider the carrying amount of borrowings to be a reasonable approximation of fair value. 


16          Investments held at fair value through profit or loss

            GroupCompany
 2014 2013 2014 2013
 £ £ £ £
At 1 January - fair value 397,399 - - -
Acquisitions 186,321 397,399 - -
At 31 December - fair value 583,720 397,399 - -
Categorised as:        
Level 1 - quoted investments 68,207 49,640 - -
Level 3 - Unquoted investments 515,513 347,759 - -
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy.  Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. 

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the company are explained in the accounting policy note, "Investments held for trading".
LEVEL 3 FINANCIAL ASSETS

Reconciliation of Level 3 fair value measurement of financial assets:
  2014 2013
  £ £
Brought forward 347,759-
Purchases 634,252 347,759
Carried forward 515,513 347,759
Included in Purchases above is an amount of £451,000 that relates to the inital investment by the Company in Oriental Ventures Limited. On 31 March 2014 the Company entered into a Sale and Purchase Agreement ("SPA") with Wong Xin Yan ("Vendor") of 30% of the issued share capital of Oriental Ventures Limited. Oriental Ventures was formed to acquired Shenzen Maxlife Catering Management Limited ("Maxlife"), a start-up coffee chain business. Under the terms of the SPA the Company has the option to purchase a further 15% from the vendor, in 5% tranches.

Level 3 valuation techniques used by the Group are explained on page 26 (Fair value of financial instruments).

17          Deferred taxation

The Group had the following :  Estimated tax lossesTotal
Deferred tax analysis£££
As at 1 January 2014 -- -
Acquired with subsidiaries (2,751)20,25317,502
Foreign exchange adjustment

(21)

1,809

1,788

At 31 December 2014

(2,772)

22,062

19,290

18          Financial instruments

The Group's financial instruments comprise borrowings, cash and various items, such as trade receivables and trade payables that arise directly from its operations.  The main purpose of these financial instruments is to raise finance for the Group's operations. 

The main risks arising from its financial instruments are interest rate, liquidity, foreign currency and credit risk.  The board reviews and agrees policies for managing each of these risks and they are summarised below together with a sensitivity analysis.  These policies have remained unchanged from previous years.

Interest rate risk

The Group finances its operations through a mixture of loans and equity capital.  Borrowings are generally at floating rates of interest.  The Group does not enter into any interest rate derivative transactions to manage interest rate risk.  The Group had no interest bearing loans at the year-end or the prior period end and hence no interest rate exposure.

Liquidity risk

The Group seeks to manage financial risk by ensuring liquidity is available to meet foreseeable needs and by investing cash assets safely and profitably.

As at 31 December 2014 the Group's liabilities have contractual maturities which are summarised below:

31 December 2014CurrentNon-current
 Within 6 months6 to 12 months1 to 5 years

 
later than 5 years
 ££££
Other loans----
Trade and other payables

1,307,155

-

-

-

 

1,307,155

-

-

-

This compares to the maturity of the Group's financial liabilities in the previous reporting period as follows:

31 December 2013 Current Non-current
  Within 6 months 6 to 12 months 1 to 5 years

 
later than 5 years
  £ £ £ £
Other loans - 50,000 - -
Trade and other payables

15,093

-

-

-

 

15,093

50,000

-

-

Credit risk

The Group's exposure to credit risk is limited to the carrying amounts of financial assets recognised at the balance sheet date, as follows:

  2014 2013
  £ £
Trade and other receivables  1,774,741 19,949
Cash and cash equivalents  

1.848.183

572,295

   

3,622,924

592,244

The key management of the subsidiaries continuously monitor defaults of customers and other counterparties, identified either individually, or by group, and incorporates this information into its credit controls.  Where available at reasonable cost external credit ratings and/or reports on customers and other counter parties are obtained and used.  The Group's policy is to deal only with creditworthy counterparties.

The Group's management considers that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

None of the Group's financial assets are secured by collateral or other credit enhancements.

  1. Financial instruments (continued)

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any counterparties having similar characteristics.  The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Financial instruments measured at fair value

The Group adopted the amendments to IFRS 7 Improving Disclosures about Financial Instruments effective from 1 January 2009.  These amendments require the Group to present certain information about financial instruments measured at fair value in the statement of financial position specifically the fair value hierarchy.  The fair value hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair values of the financial assets and liabilities.  The fair value hierarchy has the following levels; Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).  No financial assets or liabilities are measured at fair value in the statement of financial position.

Categories of financial instruments

The carrying amounts of the Group's financial assets and liabilities as recognised at the balance sheet date of the reporting periods under review may also be categorised as follows:

   2014 2013
   £ £
Financial assets      
Investments held at fair value through profit or loss   583,720 397,399
Cash and bank balances   1,848,183 572,295
Loans and receivables  

97,026

19,949

   

2,528,929

989,643

       
       
Financial liabilities at amortised cost      
Borrowings   - 50,000
Trade and other payables  

1,307,155

15,093

   

1,307,155

65,093

       

Capital management policies and procedures

The Group's management objectives are:

  • To ensure the Group's ability to continue as a going concern, and
  • To provide an adequate return to shareholders

by pricing services commensurately with the levels of risk.

The Group monitors capital on the basis of the carrying amount of equity, less cash and cash equivalents as presented on the face of the balance sheet.  The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.  In order to maintain or adjust the capital structure the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets or reduce debt.


19          Share capital

The issued share capital of the Company is shown below:

  Number of sharesShare CapitalShare
  OrdinaryDeferredOrdinaryDeferredTotalPremium 
     ££££ 
Ordinary shares of 0.01p 473,790,650 - 47,379 - - -  
Deferred shares of 0.45p - 166,313,349 - 748,410 748,410 -  
Deferred shares of 24.99p - 2,149,077 - 537,054 537,054 -  
At 31 December 2013 473,790,650 168,462,426 47,379 1,285,464 1,332,843 4,255,146  
Investment in Riche Bright44,740,413-4,474-4,474618,765 
Investment in Telistar15,608,812-1,561-1,561276,314 
Issue of shares 10/3/201455,769,230-5,577-5,577719,423 
Issue of shares 19/6/201441,250,000-4,125-4,125655,875 
At 31 December 2014631,159,105168,462,42663,1161,285,4641,348,5806,525,523 
Split between:       
Ordinary shares of 0.01p631,159,105--- 6,525,523 
Deferred shares of 0.45p-166,313,349-748,410   
Deferred shares of 24.99p-2,149,077-537,054   

The Company has one class of ordinary shares which carry no right of fixed income.

On 15 January 2014 the Company issued 26,668,668 new ordinary shares of 0.01p each as part of settlement for the capital contribution to its co-funded investment vehicle, Riche Bright Group Limited ("Riche Bright"), for a total shareholding of 30per cent of the issued ordinary share capital.

On 28 February 2014 the Company issued 12,087,912 new ordinary shares of 0.01p each as part of settlement for the additional investment of a 15% shareholding in Telistar Solutions Pte Limited ("Telistar").

On 10 March 2014, the Company issued 55,769,230 new ordinary shares of 0.01p each for cash at 1.3 pence per share, raising £725,000 before expenses.

On 19 June 2014, the Company issued 41,250,000 new ordinary shares of 0.01p each for cash at 1.6 pence per share, raising £660,000 before expenses.

On 8 August 2014 the Company issued 18,071,745 new ordinary shares of 0.01p each as further investment of 30% of the issued ordinary shares in Riche Bright.

On 23 September 2014 the Company issued 3,520,900 new ordinary shares of 0.01p each as further investment in Telistar.

The deferred shares carry no right to payment of dividend or on a return of capital.

Share warrant

In December 2012 the Company issued Peterhouse Corporate Finance Limited a warrant which is exercisable over 3% of the Company's issued share capital from time to time. The warrant is exercisable at 0.625p per share until 3 December 2015.  The notional value of the warrant has not been reflected in these accounts as it is not considered material. The warrant was exercised on 25 February 2013.


20          Equity- settled share based payments

During the year the Company issued options over 40,000,000 ordinary shares with an exercise price of 2.2p per share.

The share options are exercisable between 17 January 2016 and 17 January 2021.

At the date of grant, the options were valued using the Black- Scholes option pricing model. The fair value per option granted and the assumptions used in the calculation were as follows:

Date of grant   17 January 2014
Expected volatility   136%
Expected life   3 years
Risk- free interest rate   1.36%
Expected dividend yield   -
Fair value of option  

£0.0067

The charge to the income statement for share passed payments for the year ended 31 December 2014 was £127,758 (2013: Nil).

Movements in the number of options outstanding and their related weighted average exercise prices are as follows:

  Number of optionsWeighted average exercise price per share
At 1 January 2014     
Granted  40,000,0002.2
Forfeited  --
Exercised  --
Expired  

-

-

At 31 December 2014 

40,000,000

2.2

The weighted average remaining contractual life of options as at 31 December 2014 was 6.05 years (2013: Nil).

21          Related party transactions

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not required to be disclosed. The remuneration of the Directors, who are they key management personnel of the Group, is set out in note 4.

During the year an amount of £112,763 (2013: £nil) was paid to GAEA Resources Limited for management and administration fees for the Company. GAEA resources is connected to Sze Thye Group, a substantial shareholder of the Company. An amount of £nil (2013: £nil) was due as at the year end.

During the year a payment of £4,145 (2013: £nil) was paid to C&T Associates CPA Limited for audit services. Ellen Tsang, a Director, is a partner of C&T Associates CPA Limited. An amount of £nil (2013: £nil) was due as at the year end.

22          Capital commitments and Contingent liabilities

At the balance sheet date, the Group had no known contingent liabilities and capital commitments other than those shown in the financial statements.


23          Operating leases

At 31 December the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

  Group
  2014 2013
Land & buildings:£ £
Less than one year 72,466 -
Between one and five years 45,294 -
More than five years

-

-

 

117,760

-

There were no operating lease commitments for the Company as at 31 December 2014 (2013: £nil).

24          Post year end events

On 16 February 2015, the Company exercised its final option to purchase an additional 10 per cent. interest in Riche Bright Group Limited ("Riche Bright"),  its joint-venture investment vehicle which itself owns 100 per cent. of MY Securities Limited ("MY Securities"). Headline consideration is HK$3,000,000 satisfied by the issue of 13,041,352 new ordinary shares of 0.01p each in the capital of the Company at a deemed price of 1.925 pence per share. The consideration amounts to approximately £502,000.

On 24 April 2015 the Company's wholly owned subsidiary ARGP Investments Ltd. ("ARGPI") entered into a conditional sale and purchase agreement ("SPA") for the acquisition of 50 per cent. of the issued share capital of Jesoft International, a BVI registered special purpose vehicle incorporated in December 2014 which has been formed to acquire, via a VIE (variable interest entity) structure, beneficial ownership of  Jesoft Computer Technology Co. Ltd. ("Jesoft PRC"). Jesoft PRC is a profitable PRC incorporated entity which was founded in 2005 and operates out of Guangzhou in the PRC.

Consideration for the 50 per cent. investment holding in Jesoft International is to be satisfied by the issue of new ordinary shares in ARGP in two tranches. 17,394,054 new ARGP ordinary shares have been issued as directed by Wupoxi Group Limited (the "Vendor") to Mr. Zhang Weixian, the ultimate beneficial owner of the Vendor, at an agreed price of 1.7 pence per share (the "Tranche 1 Shares"), equivalent to RMB 2.75 million, with a further RMB 2.75 million due on Completion through the issue of further new ordinary shares in Alpha Returns at the same price of 1.7 pence per share, the exact number of which will depend on the RMB/GBP exchange rate ruling at or around Completion.

On Completion, Jesoft International will be owned as to 20 per cent. each by the two existing beneficial owners of Jesoft PRC, 10 per cent. by the Vendor and 50 per cent by ARGPI.  The SPA is expressed to be subject to a number of conditions precedent, including:

  1. implementation of the VIE structure and completion of satisfactory due diligence by ARGPI, including a PRC legal opinion on the validity of the VIE structure; 
  2. the subscription by the Vendor for new shares in Jesoft International for HK$5.625 million (approximately £483,000);
  3. no material adverse change to the financial position of JeSoft PRC; and
  4. no breach of warranty.

On 12 May 2015, the Company announced that the long-stop date for satisfaction of the preconditions relating to the Company's 30 per cent. indirect investment in Oriental Ventures has been extended to 30th September 2015.

25          Ultimate controlling party

There was no single controlling party.





This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Alpha Returns Group plc via Globenewswire

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