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Alpha Returns Group plc (ARGP)

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Wednesday 30 September, 2015

Alpha Returns Group plc

Alpha Returns Group plc : Half-yearly report

Alpha Returns Group plc : Half-yearly report

30 September 2015

Alpha Returns Group Plc
("Alpha Returns" or "the Company")

Unaudited Interim Results for the Six Months Ended 30 June 2015

Alpha Returns Group Plc today announces its unaudited interim results for the six months ended 30 June 2015.

Chairman's Statement

Review of the Six Month Period ended 30 June 2015

Alpha Returns is an investment company which operates in the Asia Pacific (APAC) region and is based in Hong Kong. The Company aims to create long-term shareholder value through early stage investments in high-growth Asian economies.

The Company's Investing Policy is set out in full at the end of this statement and on the Company's website at alpharet.com/rule26.

Financial Review

The unaudited results for the six month period ended 30 June 2015 show a profit after taxation of £54,914 (30 June 2014: £122,860 loss). The loss per share was 0.02p (30 June 2014: 0.09p).

Total revenue was £1,728,423 (30 June 2014: £85,198).

During the period the Company issued 13,041,352 new ordinary shares to acquire an additional 10% interest in Riche Bright Group Limited. An additional 17,394,054 new ordinary shares were issued in part consideration for a new investment, further details of which are provided below. At the end of the period under review net assets were £4,624,679 (31 December 2014: £4,268,444 and 30 June 2014: £2,562,145).

Review of Operations

On 16 February 2015, the Company exercised its final option to purchase an additional 10% interest in Riche Bright Group Limited ("Riche Bright"), bringing the Group's total interest in Riche Bright to 70%. Riche Bright is a joint-venture investment vehicle of the Company which owns 100% of M Y Securities Limited ("MYS"). MYS was renamed Riche Bright Securities Limited ("RB Securities") after the end of the period.

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 Limited, a BVI registered special purpose vehicle 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 PRC corporate IT solutions provider that specializes in logistics and retail solutions.

At the end of the period, the Company's investments also included a 52.5% interest in Telistar Solutions Pte Ltd ("Telistar"), a Singapore based IT service solutions provider, and a conditional investment in OVL/MaxLife, further details of which are provided below. RB Securities and Telistar are profitable businesses that continue to be operated independently by their respective management teams.

Post Period Events

After the end of the period, in July 2015, Oriental Ventures Limited ("OVL") completed its acquisition of Shenzhen MaxLife Catering Management Co., Ltd. ("MaxLife"), a PRC coffee chain business. The Company has a conditional 30% investment in OVL which remains subject to a number of preconditions including three consecutive months of profitable trading. The Company has further extended the long-stop date to 31 December 2015 for fulfilment of the preconditions attached to the investment. Deferred consideration, to be satisfied by the issue of 32,142,857 new ordinary shares in Alpha Returns, is payable on completion.

Board Changes

There were no Board changes during the period under review.

Corporate Governance

The Company operates Audit, AIM Compliance, Nominations and Remuneration committees. The roles and composition of these committees are kept under regular review.

Risk Assessment

The Directors consider that the main risk is a loss of some or all value at one or more of its investee companies. The Executive Directors maintain a close liaison with the management of each company to limit, as far as possible, this exposure to risk.

Outlook

Recently we have experienced disruptive market volatility due to concerns over China's growth prospects and its surprise devaluation of the Renminbi. The Board continues to closely monitor the market conditions and its effects on our investments, especially RB Securities. Nonetheless, your directors remain committed to the creation of shareholder value and confident that the Company's investments are well placed to deliver good performance over the longer-term.

Tony Drury
Chairman

30 September 2015

A copy of this interim report will shortly be available on the Company's website at alpharet.com/rule26.

For further information please call:

Alpha Returns Group Plc
Christopher Neo, Executive Director
 

0203 286 6388

 
ZAI Corporate Finance
Peter Trevelyan- Clark / Ivy Wang
 

0207 060 2220
Peterhouse Corporate Finance (Broker)
Duncan Vasey/Lucy Williams
 

0207 220 9797

Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2015

     Unaudited Unaudited Audited
     6 Months to 30 June 2015 6 Months to 30 June 2014 12 months toDec 2014
    Note£ £   £
Continuing operations            
Revenue       1,728,423 - 1,219,808
Cost of sales       (754,136) - (361,209)
             
Gross profit       974,287 - 858,399
Administration costs      

 
(1,010,609) (207,442) (996,243)
Share based payments       (67,000) - (127,758)
Other income       201,224 85,185 45,876
             
Operating profit/(loss)       97,902 (122,257) (219,526)
             
Loss on disposal of investments       - - (371,713)
             
             
Profit/(loss) before financing       97,902 (122,257) (591,239)
             
Finance cost       - (616) -
Finance income       5 13 40
Investment income       226 - 2,680
Gain on foreign exchange       1,895 - 58,915
Profit/(loss) on continuing operations before taxation       100,028 (122,860) (157,891)
            
Taxation       (45,114) - (1,391)
             
Profit/(loss) on continuing operations after taxation       54,914 (122,860) (159,282)
             
Gain on translation of foreign subsidiaries       ( 61,379) - 87,870
            
Profit/(loss) after taxation and total comprehensive income/(expense)      (6,465) (122,860) (71,412)
               
               
Attributable to:             
Equity holders of the company       (94,536) (122,860)   (265,200)
Non- controlling interests       88,071 -   105,918
               
Basic and diluted loss per share             
              
- Basic and diluted - continuing operations     3  

(0.02p)
  

(0.09p)
  (0.05p)
               
- Total basic and diluted loss per share       

(0.02p)
  

(0.09p)
   

(0.05p)

Consolidated Statement of Financial Position
As at 30 June 2015

    Unaudited Unaudited Audited
    30 June 30 June 31 December
    2015 2014 2014

 
    £ £ £
Assets            
Non-Current Assets              
Property, plant and equipment     131,103 - 104,815
Intangible assets     1,317,457 - 1,317,857
Investments     581,586 1,768,680 583,720
Investments in associate     295,699 - -
Deferred income tax assets     - - 19,290
      2,325,845 1,768,680 2,025,682
           
Current Assets          
Trade and other receivables     1,937,290 36,246 1,932,752
Financial assets available for sale     111,379    
Cash and cash equivalents     1,280,138 1,295,313 1,848,183
      3,328,807 1,331,558 3,780,935
           
Total Assets     5,654,652 3,100,238 5,806,617
           
Liabilities          
Trade and other payables     1,029,973 128,257 1,538,173
Borrowings     - 409,836 -
      1,029,013 538,093 1,538,173
           
Total Liabilities     1,029,973 538,093 1,538,173
           
Net Assets     4,624,679 2,562,145 4,268,444
           
Equity          
Share capital     1,351,624 1,346,421 1,348,580
Share premium     7,069,224 6,061,328 6,525,522
Share option reserve     194,758 - 127,758
Foreign currency translation reserve     33,896 - 87,870
Profit and loss account     (4,960,452) (4,845,604) (4,987,944)
           
Attributable to equity shareholders of the company     3,689,050 2,562,145 3,101,786
Non-controlling interests     935,629 - 1,166,658
Total equity     4,624,679 2,562,145 4,268,444

 

Consolidated Statement of Changes in Equity
For the six months ended 30 June 2015

  Share
capital
 Share
premium
 Shares
to be
issued
 Loan
note
equity
re-
serve
 Share
option
re-
serve
 Foreign
currency
re-
serve
 Profit
and
loss
account
 Total
equity
 Non-
con-
trolling
interest
 Total
  £ £ £ £ £ £ £ £ £ £
Balance
at
1 Jan
2014



1,322,843
 4,255,147 - - - - (4,722,744) 865,246 - 865,246
Shares
issued
in year
13,578 1,806,182 - - - - - 1,819,760 - 1,819,760
Loss for
the
6
months
to
30 June
2014
- - - - - - (122,860) (122,860) - (122,860)
                 -  
Balance
at
30 June
2014



1,346,421
 6,061,329 - - - - (4,845,604) 2,562,145 - 2,562,145
                    
                     
Balance
at
1 Jan
2014




1,322,843
 4,255,147 - - - - (4,722,744) 865,246 - 865,246
Shares
issued
in year
15,737 2,270,375 - - - - - 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
Acqui-
sitions
during
the year
- - - - - - - - 1,060,740 1,060,740
Loss
for
the year
- - - - - - (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
                    
Shares
issued
in the
period
3,044 543,702 - - - - - 546,746 - 546,746
Share
based
payment
charge
- - - - 67,000 - - 67,000 - 67,000
Foreign
Currency
reserve
- - - - - (53,974) - (53,974) (7,405) (61,379)
Acqui-
sitions
during
the year
- - - - - - - 68,054 (319,100) (251,046)
Profit
for the
period
and total
com-
prehen-
sive
income
- - - - - - (40,562) (40,562)  

95,476
  

54,914
                     
Balance
at
30 June
2015



1
,351,624
 7,069,224 - - 194,758 33,896 (4,960,452) 3,689,050 935,629 4,624,679

Consolidated Statement of Cash Flow
For the six months ended 30 June 2015

  Unaudited Unaudited Audited
  6 Months to June 2015 6 Months to June 2014 12 months to December 2014
           
 £ £   £
Cash flows from operating activities       
Loss after taxation 54,914 (122,860) (159,282)
Adjustments for:      
Depreciation and amortisation 9,489 - 17,474
Profit on sale of property, plant and equipment - - (430)
Share based payments 67,000 - 127,758
Loss on disposal of investment - - 375,207
Decrease in trade and other receivables (77,054) (13,898) (238,014)
(Decrease)/Increase in trade and other payables (482,364) 51,461 249,881
Foreign exchange differences 5,423 - 6,337
Taxation 45,114 - 1,391
Income tax paid (24,902) - (4,525)
        
Net cash used in operating activities(402,380) (85,297) (624,498)
           
Cash flows from investing activities     
Acquisition of subsidiary, net of cash acquired - - (651,121)
Purchase of property, plant and equipment (38,010) - (86,251)
Disposal of property, plant and equipment - - 900
Purchase of investments - - (479,097)
Purchase of financial assets (114,907) (1,371,281) -
        
Net cash used in investing activities(152,917) (1,371,281) (1,215,570)
           
Cash flows from financing activities     
Net proceeds from issue of share capital 847 1,819,759 2,959,853
Proceeds from borrowings - 359,836 -
        
Net cash generated from financing activities847 2,179,595 2,959,853
           
Net (decrease)/increase in cash and cash equivalents(554,450) 723,018 1,119,785
Cash and cash equivalents at beginning of period1,848,183 572,296 572,296
Effect of foreign exchange rate changes on cash and cash equivalents(13,595) - 156,102
        
Cash and cash equivalents at end of period1,280,138 1,295,313 1,848,183
           

NOTES TO THE FINANCIAL INFORMATION

  1. General information

The financial information set out in this consolidated interim report for the six months ended 30 June 2015 and the comparative figures for the six months ended 30 June 2014 are unaudited. The financial information for the six months ended 30 June 2015 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2014, prepared under International Financial Reporting Standards (IFRS), received an unqualified audit report. The report did however contain an emphasis of matter paragraph on going concern, but did not contain statements under sections 498(2) or section 498(3) of the Companies Act 2006 and have been filed with the Registrar of Companies.

  1. Basis of Preparation

The 30 June 2015 consolidated interim financial statements of Alpha Returns Group Plc are for the six months ended 30 June 2015. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group prepared under IFRS for the year ended 31 December 2014.

The comparative figures for the six months ended 30 June 2014 have been extracted from the accounting records of the Group and were prepared on a consistent basis with the results presented for the year ended 31 December 2014 and have been neither reviewed nor audited by the Group's auditors.

The accounting policies applied are consistent with those of the financial statements for the year ended 31 December 2014, as described in those financial statements, and as expected to be adopted in the financial statements for the year ending 31 December 2015.

  1. Earnings per share

The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue.

The loss attributable to equity shareholders and weighted average number of ordinary shares for the purposes of calculating diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.

Earnings per share     Unaudited Unaudited Audited
      6 Months to June 2015 6 Months to June 2014 12 months to December 2014
Net profit/(loss) for the period attributable to equity owners of the parent      

(94,536)
  

(122,860)
  

(265,200)
Weighted average number of shares in issue     649,515,679 584,362,232 585,326,862
Basic and diluted earnings per share     (0.02p) (0.09p) (0.05p)
           

4. Investments held at fair value through profit and loss

      Unaudited Unaudited Audited
      6 Months to June 2015 6 Months to June 2014 12 months to December 2014
Fair value at 1 January 2015      

583,720
  

397,399
  

397,399
Acquisitions     111,379 1,371,281 186,321
Net gain on disposal of investments     (2,134) - -
Movement in fair value of investments     - - -
Fair value at 30 June 2015     692,965 1,768,680 583,720
Categorised as:          
Level 1 - quoted investments     177,452 49,460 68,207
Level 3 - unquoted investments     515,513 1,719,220 515,513
           

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.

5. 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 the prospects they have identified are in this region. The Directors will focus on early stage investments and the opportunities would be generally have some or all of the following characteristics, namely:

  • A majority of their revenue derived from the Asia-Pacific, 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 skills and expertise.

Investments may be made in all types of assets falling within the remit of the Investing Policy and there will be no sector-driven investment restrictions. Investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project.

New investments will be held for the medium to longer term, although shorter term disposal of any investments cannot be ruled out. There will be no limit on the number of projects into which the Company may invest and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be reverse takeover pursuant to Rule 14 of the AIM Rules. Where the Company builds a portfolio of related assets it is possible that there may be cross-holdings between such assets.

The Company intends to deliver Shareholder returns principally through capital growth rather than capital distributions via dividends.

The Directors believe that their broad collective business and investing experience in the areas of investment and trading natural resources will assist in the identification and evaluation of suitable opportunities and will enable the Company to achieve its investing objectives.




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

HUG#1955597

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