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Alpha Returns Group plc (ARGP)

  Print      Mail a friend       Annual reports

Tuesday 28 June, 2016

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 2015

28 June 2016

Alpha Returns today announces its audited results for the year ended 31 December 2015.

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, 27/28 Eastcastle Street, London W1W 8DH.

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 22 July 2016, 10am.

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

For further information:

Alpha Returns Group plc  Christopher Neo

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

Chairman's Statement

It gives me great pleasure to announce the results for the year 2015 for Alpha Returns. The results reported in the year to 31 December 2015 do not reflect the positive return made on the disposal of Riche Bright Securities Limited ("RBSL") because of the prescribed accounting treatment, but the position we find ourselves in today is very healthy with a substantial net gain on disposal testament to the strength of our management team, the commitment of our support staff and the ability to make investments with realisable growth prospects.

Whilst the UK's decision to leave the EU has had an immediate, and possibly permanent, impact on the market here in London, the fact that Asia continues to grow means Alpha Returns is very well positioned to continue to provide positive returns to shareholders.

A number of the economies in the Asia Pacific Region ("APAC") have outperformed more advanced countries, despite the global downturn. They have benefitted from continuing lower energy costs and relatively stable governments. The area continues to account for one-third of global growth. The IMF is projecting China to slow to 6.5% in 2016 (2015: 6.9%), but that still outstrips World growth of 3.2% (2015: 3.1%).

Our current portfolio also has a good range of companies in terms of geographical spread, industry, size and the stage of their development, with 52.5% interest in Singapore based Telistar, and a 30% investment in PRC based Maxlife.

Review of 2015

The figures presented have consolidated the results of our subsidiaries excluding RBSL. Whilst the investment in RBSL was realised for a significant gain which will be taken to the 2016 accounts, the other investments in our portfolio are all in growth phase, so any profits generated are ploughed back in to the individual businesses.

The final results for the year ended 31 December 2015 show a consolidated loss after taxation and total comprehensive expenses of £497,404 (2014; (£71,412) with losses of the parent company of £474,941 (2014: £237,127).

The loss for the year on continuing operations was £574,009 (2014: £265,200) attributable to equity holders of the Company. Total assets amounted to £5,050,763 (2014: £5,806,617) with £3,049,490 (2014: £2,846,736) net assets attributable to equity holders of the Company and net cash of £394,963 (2014: £1,848,000). The net cash position for 2015 is after excluding £1,287,573 of cash relating to RBSL following its reclassification as a disposal group (see Note 6 for further details).

Early in the year the Company exercised a final option to increase its holdings in Riche Bright Group to 70% which proved significant given the sale of RBSL on 30 October 2015 through Riche Bright Group. The disposal was completed post year end on 31 May 2016 for a total consideration of HK$33,173,459 in cash, with proceeds still held in HK$. This compares to the initial investment of HK$25,450,944.

The Company also made a conditional 50% investment in Jesoft Computer Technology via a VIE (variable interest entity) structure. Jesoft Computer Technology is a corporate IT solutions provider based in Guangzhou, PRC.

As an investment company the Directors are not involved in the day-to-day operations of its investee companies. The Company's Investing Policy is set out in full in the Strategic Report and on the Company's website at http://alpharet.com/rule26.
2016

On 31 March 2016 the Company completed its 30% investment in Oriental Ventures and Maxlife. Maxlife has transformed its core business into the operations of a subscription based e-commerce platform targeting mid-to-high end consumers in the PRC. Members subscribe to a 24-month contract with monthly subscription fees collected through an auto-debit arrangement and benefit from a 200% money-back guarantee against any counterfeit goods purchased from Maxlife's e-commerce platform.

On 30 April 2016 our Non-Executive Director, Eric Leung resigned. I would like to thank Eric for his contributions to Alpha Returns and wish him all the best in his future endeavours. We continue to have a strong team here at Alpha Returns, but we may also look to expand the Board at some point in the future.

As previously mentioned, on 31 May 2016 our 70% subsidiary RBG completed the disposal of RBSL.

Outlook

The Company continues to make good progress and create shareholder value. The Company now holds significant cash balances for future investments. In April 2016 I visited Hong Kong and chaired a series of meetings and will be returning in the autumn. I believe that the Company has an excellent potential to continue to create shareholder value.

Tony Drury
Chairman

28 June 2016



Strategic report

The Directors present their results and report for Alpha Returns Group plc (the "Company") for the year ended 31 December 2015, 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.

The Company's independent Auditor is required to report on whether information given in the Strategic report is consistent with the Financial Statements. The independent Auditor's report can be found on page 10.

BUSINESS REVIEW

During the year the Directors focussed their attention on the Company's existing investments and worked with the management of our investee companies to formulate growth strategies. The Group closed the year with cash balances of £394,963* (2014: £1,848,183) excluding cash held by Riche Bright Securities Limited ("RBSL") in 2015, an investment portfolio worth £1,686,348 (2014: £2,919,130) and equity shareholders' funds of £3,049,490 (2014: £2,846,736).

In February 2015, the Company increased its holdings in Riche Bright Group Limited ("RBG") to 70%. In July 2015, MY Securities Limited was rebranded Riche Bright Securities Limited ("RBSL"). In October 2015, the Company through RBG contracted to dispose of the entire equity interest of RBSL.

In April 2015, the Company entered into a conditional sale and purchase agreement for the acquisition of 50% of the issued share capital of Jesoft International Limited ("Jesoft BVI"), a BVI registered special purpose vehicle incorporated to acquire, via a VIE (variable interest entity) structure, beneficial ownership of Jesoft Computer Technology Co., Ltd. ("Jesoft PRC"). Jesoft PRC is a Guangzhou based company that provides corporate IT solutions to various industries within the PRC including retailers, direct sales, online commerce, logistics and automotives.

KEY PERFORMANCE INDICATORS

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

GROUP STATISTICS31 December

2015
31 December

2014
Change %
Net asset value attributable to equity holders £3,049,490 £2,846,736 7.1%
Net asset value per share attributable to equity holders 0.46p 0.45p 2.2%
Closing share price 0.60p 3.875p (84.5%)
Cash £394,963* £1,848,183 (78.6%)

*The net cash position for 2015 is after reclassifying £1,287,573 of cash and cash equivalents relating to the disposal group. See Note 6 for further details.

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 made good progress with its investments in the Asia-Pacific region, and with the completion of the disposal of RBSL in 2016, the Company is now well positioned to explore new investment opportunities in the region.

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 2 key investments at present any deterioration in trading of Telistar or Maxlife and a consequential fall in investment value is the biggest single risk faced. Similarly performance in excess of expectations on the 2 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 16 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
28 June 2016


Consolidated statement of comprehensive income     
   12 months to
Dec 2015
12 months to Dec 2014
  Note£ £
Continuing operations      
Revenue   2,256,770 1,219,808
Cost of sales  

(1,388,507)

(361,209)

    868,263 858,599
Administration costs   (1,251,988) (996,243)
Share based payments 18 (134,000) (127,758)
Other income 28,880 45,876
Other losses 15 (37,000) -
 

 

 

Operating loss(525,845) (219,526)
     
Finance cost  (1) -
Finance income   6 40
Investment income   6,515 2,680
Gain on foreign exchange   3,167 58,915
   

 

 

Loss on continuing operations before taxation 2 (516,158) (157,891)
     
Taxation 5 (6,193) (1,391)
 

 

 

Loss on continuing operations after taxation (522,351) (159,282)
     
Profit from operations reclassified as held for sale 6 5,258 -
     
Loss on operations after taxation (517,093) (159,282)
     
Attributable to:   
Equity holders of the company (574,009) (265,200)
Non- controlling interests 56,916 105,918
     
Basic and diluted loss per share 7    
Basic and diluted - continuing operations   (0.09p) (0.05p)
Basic and diluted - operations reclassified as held for sale   0.00p -
Total basic and diluted loss per share  

(0.09p)

(0.05p)

     
Other comprehensive income   
Gain on translation of foreign subsidiaries 19,689 87,870
 

 

 

Loss after taxation and total comprehensive expense

(497,404)

(71,412)

     

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 £474,941 (2014: 237,127).

The accompanying accounting policies and notes form an integral part of these financial statements.



      
Consolidated statement of financial position Note31 December 2015 Restated
31 December 2014
   £ £
Assets      
Non-Current Assets      
Property, plant and equipment 9 107,477 104,815
Intangible assets 10 1,276,407 1,317,857
Investments - Available for sale 15 790,883 583,720
Deferred income tax assets  

-

19,290

   

2,174,767

2,025,682

       
Current Assets      
Assets of disposal group classified as held for sale 6 1,860,773 -
Trade and other receivables 12 620,260 1,932,752
Cash and cash equivalents 13

394,963

1,848,183

    2,875,996 3,780,935
   

 

 

Total Assets  

5,050,763

5,806,617

       
Liabilities      
Liabilities of disposal group classified as held for sale 6 107,926 -
Trade and other payables 14

720,402

1,538,173

       
Total Liabilities   828,328 1,538,173
   

 

 

Net Assets  

4,222,435

4,268,444

       
Equity      
Share capital 17 1,351,624 1,348,580
Share premium 17 7,069,224 6,525,522
Revaluation reserve   8,275 -
Share option reserve   261,758 127,758
Foreign currency translation reserve   109,975 87,870
Profit and loss account   (5,751,366) (5,242,994)
   

 

 

Attributable to equity shareholders of the company  

3,049,490

2,846,736

Non-controlling interests  

1,172,945

1,421,708

Total equity  

4,222,435

4,268,444

The financial statements were approved by the Board of Directors on 28 June 2016.

C Neo                                                   
Director                 

The accompanying accounting policies and notes form an integral part of these financial statements



Company statement of financial position   31 December 2015 31 December 2014
   Note£ £
         
Fixed assets        
Investments   11

1,686,348

2,919,130

         
Current assets        
Trade and other receivables   12 1,759,706 323,135
Cash and cash equivalents   13

7,130

7,130

      1,766,836 330,265
     

 

 

Total Assets     3,453,184 3,249,395
         
         
Current liabilities        
Trade and other payables   14 68,385 70,400
     

 

 

Total liabilities    

68,385

70,400

         
Net assets    

3,384,799

3,178,995

         
Capital and reserves        
Called up share capital   17 1,351,624 1,348,580
Share premium   17 7,069,224 6,525,523
Share option reserve     261,758 127,758
Profit and loss account     (5,297,807) (4,822,866)
     

 

 

Equity shareholders' funds    

3,384,799

3,178,995

The financial statements were approved by the Board of Directors on 28 June 2016.

C Neo                                                   
Director                 

The accompanying accounting policies and notes form an integral part of these financial statements


Consolidated statement of changes in equity

  Share
capital
Share premiumShare option reserveRevaluation reserveForeign currency reserveProfit
and loss account
Total equityNon- controlling interestTotal
  £££££££££
Balance at 1 Jan 2014 1,332,843 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
Acquisitions during the year - - - - - - - 1,060,740 1,060,740
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

Prior year adjustment (see note 9) - - - - - (255,050) (255,050) 255,050 -
 

 

 

 

 

 

 

 

 

 

Restated balance at 31 Dec 2014

1,348,580

6,525,522

127,758

-

87,870

(5,242,994)

2,846,736

1,421,708

4,268,444

          
Shares issued in year 3,044543,702----546,746-546,746
Share based payment charge --134,000---134,000-134,000
Revaluation of investment ---8,275--8,275-8,275
Foreign Currency reserve ----22,105-22,10513,42135,526
Acquisitions during the year -----65,63765,637(319,100)(253,463)
Loss for the year and total comprehensive expense --- 

-
-(574,009)(574,009)56,916(517,093)
Balance at 31 Dec 2015

1,351,624

7,069,224

261,758

8,275

109,975

(5,751,366)

3,049,490

1,172,945

4,222,435



Company statement of changes in equity

  Share
capital
Share premiumMerger reserveProfit
and loss account
Total equity
  £££££
           
         
Balance at 1 Jan 2014 1,332,843 4,255,147 - (4,585,739) 1,002,251
           
Shares issued in year 15,737 2,270,376 - - 2,286,113
Share based payment charge - - 127,758   127,758
Loss for the year and total comprehensive expense - - - (237,127) (237,127)
 

 

 

 

 

 

Balance at 31 Dec 2014

1,348,580

6,525,523

127,758

(4,822,866)

3,178,995

      
Shares issued in year 3,044543,701--546,745
Share based payment charge --134,000-134,000
Loss for the year and total comprehensive expense ---(474,941)(474,941)
 

 

 

 

 

 

Balance at 31 Dec 2015

1,351,624

7,069,224

261,758

(5,297,807)

3,384,799



Consolidated statement of cash flows

   12 months to Dec 2015 12 months to Dec 2014
  £ £
Cash flows from operating activities    
Loss after taxation  (435,100) (159,282)
Adjustments for:     
Depreciation and amortisation  20,451 17,474
Loss/(profit) on disposal of investments  37,000 -
Loss/(profit) on sale of property, plant and equipment  3,854 (430)
Share based payments  134,000 127,758
Dividend income  (88,383) -
Decrease/(increase) in trade and other receivables  951,826 (375,207)
(Increase)/decrease in trade and other payables  (815,618) (238,014)
Foreign exchange differences  (24,982) 6,337
Taxation  43,293 1,391
Income tax paid  (14,844) (4,525)
      
Net cash used in operating activities 

(188,503)

(624,498)

       
Cash flows from investing activities    
Acquisition of subsidiary, net of cash acquired  - (651,121)
Purchase of property, plant and equipment  (80,576) (86,251)
Disposal of property, plant and equipment  102,221 900
Purchase of investments  (75,617) (479,098)
Net cash used in investing activities 

(53,972)

(1,215,570)

       
Cash flows from financing activities    
Net proceeds from issue of share capital  - 2,959,853
Net cash generated from financing activities - 2,959,853
       
Net (decrease)/increase in cash and cash equivalents (242,475) 1,119,785
Cash and cash equivalents at beginning of period 1,848,183 572,296
Cash and cash equivalents in disposal group (1,287,573) -
Effect of foreign exchange rate changes on cash and cash equivalents 76,828 156,102
     
Cash and cash equivalents at end of period  

394,963

1,848,183

       

Company statement of cash flows

   12 months to
31 December 2015
  12 months to 31 December 2014
  £   £
Cash flows from operating activities      
Loss after taxation   (474,941)   (237,127)
Adjustments for:        
Loss on disposal of investment   87,000   -
Share based payment   134,000   127,758
Increase in trade and other receivables   (1,147,224)   (303,223)
Decrease in trade and other payables   (2,015)   (1,935)
Decrease in amounts due from related parties   1,403,180   -
   

 

 

 

Net cash used in operating activities  

-

 

(414,527)

         
Cash flows from investing activities        
Purchase of investments   -   (970,473)
   

 

 

 

Net cash used in investing activities  

-

 

(970,473)

         
Cash flows from financing activities      
Net proceeds from issue of share capital  -   1,385,000
   

 

 

 

Net cash generated from financing activities 

-

 

1,385,000

         
Net increase/(decrease) increase in cash and cash equivalents -   -
Cash and cash equivalents at beginning of period 7,130   7,130
   

 

 

 

Cash and cash equivalents at end of period  

7,130

 

7,130

         

 

NATURE OF FINANCIAL INFORMATION AND  BASIS OF PREPARATION

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 2015 statutory financial statements. The auditors have reported on the 2015 financial statements; their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2015 will be delivered to the Registrar of Companies after adoption at the Company's Annual General Meeting.

As in prior periods, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. A third statement of financial position in respect of the Company, as at the date of transition to IFRS, has been presented as required by IAS 1 (revised) as these are the Company's first financial statements prepared in accordance with IFRS. As set out in note 3 certain adjustments have been made to the comparative figures for prior periods as a result of the transition to IFRS.  The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.

These consolidated financial statements have been prepared under the historical cost convention.

Notes to the group financial statements
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 2015 although the Group had adequate cash, the Company had cash resources of only £7,130 along with net assets of £3,384,799. The directors have prepared cash flow forecasts through to December 2017, 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 16, and they have made the following key assumptions:

  • that additional funds will be raised; and
  • 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 2015
Year to
 Dec 2014
  £ £
Depreciation of plant, property and equipment    
-  owned by the group 49,031 17,143
Auditors' remuneration:    
Fees payable to the Group's auditors for the audit of the Company's annual accounts 10,000 10,000
Fees payable to  the Group's auditors for other services:    
 - The audit of the Company's subsidiaries, pursuant to legislation 15,000 15,000
 - Taxation services 1,500 1,500
Operating lease rentals    
-  other operating leases of the group

56,472

49,231

     

3             DIRECTORS AND EMPLOYEES

Staff costs for the Group during the period were as follows:    
  Year to
31 December 2015
Year to
31 December 2014
  £ £
    
Wages and salaries 319,322 163,243
Share based payment charge 50,250 63,880
Social security costs

9,423

5,772

 

378,995

232,895


The average number of employees (including directors) of the Company during the period was as follows:
  Year to
31 December 2015
Year to
31 December 2014
  Number Number
Administration

5

5

     

4             DIRECTORS

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

 NameFeesShare based payment chargeTotal
2015
Total
2014
    £££ £
  C Y Chan 19,67216,75036,422 35,642
  C Neo 11,47516,75028,225 24,495
  H K Leung (resigned 30 April 2016) 7,869-7,869 7,869
  A C Drury 30,000-30,000 19,589
  F C Tsang 7,869-7,869 2,623
  G Collier (resigned 31 July 2014) --- 21,220
    76,88533,500110,385 111,438

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

5             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 2015.  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 2015
Year to
 Dec 2014
  £ £
Current tax

6,193

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 2015
Year to
 Dec 2014
  £ £
     
Loss on continuing activities before taxation

(517,093)

(71,412)

Loss on ordinary activities multiplied by the relevant standard rate of corporation    
tax in the UK of 20% (Dec 2014: 23.5%) (103,419) (16,782)
Effects of:    
Expenses not deductible for tax purposes 2,257 544
Excess of depreciation and amortisation over capital allowances 12,984 14,291
Unutilised tax losses carried forward 88,178 1,947
UK Tax charge for the period

-

-

The current tax charge of £6,193 (2014: 1,391) relates to the Malaysia corporation tax on the profits on the Telistar Group.

6             OPERATIONS FROM ASSETS RECLASSIFIED AS HELD FOR SALE

During the year the Group announced the conditional sale by its 70 per cent owned joint venture investment vehicle Riche Bright Group Limited of Riche Bright Securities Limited ("RBSL"). On 31 May 2016 the Group announced the completion of the disposal of RBSL

The assets and liabilities related to RBSL have been presented as held for sale following the agreement dated 30 October 2015 to sell RBSL. The completion date is 31 May 2016.

Group

 £
Operating cash flows (116,473)
Investing cash flows (100,003)
Financing cash flows

(84,383)

Total cash flows

(300,859)

   

Assets of disposal group classified as held for sale:

 £
Property, plant and equipment 9,402
Intangible assets 43,579
Investments 17,431
Cash and cash equivalents 1,287,573
Other current assets

502,788

Total assets

1,860,773

Liabilities of disposal group classified as held for sale:

 £
Trade and other payables 105,816
Other current liabilities

2,110

Total liabilities

107,926


The results of the activities related to Riche Bright Securities Limited are as follows:

  £
Revenue 686,664
Administrative expenses (708,375)
Other income 64,070
Tax expense

(37,101)

Net profit attributable to activities associated with assets held for sale

5,258

   

7             LOSS PER SHARE

  2015 2014
 £ £
Loss attributable to equity holders of the Group:    
Loss from continuing operations (579,267) (265,200)
Profit from operations reclassified as held for sale

5,258

-

Loss for the period attributable to equity holders of the Group

(574,009)

(265,200)

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

654,029,897

585,326,862

Earnings per share attributable to equity holders of the Group:    
Basic and diluted loss per share from continuing operations (0.09p) (0.05p)
Basic and diluted loss per share from operations classified as held for sale 0.00p -
Basic and diluted loss per share for the period (0.09p) (0.05p)
     

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             PRIOR YEAR ADJUSTMENT

In the period ended 31 December 2014, the non-controlling interest in the goodwill arising on acquisition of Riche Bright Securities Limited by Riche Bright Group Limited was included in the equity attributable to equity shareholders of the Company. This resulted in an overstatement of equity attributable to equity shareholders of the Company and an understatement of equity attributable to non-controlling interests, which has been corrected by a prior year adjustment. The effect on the comparative figures for the period ended 31 December 2014 is to restate the equity attributable to equity shareholders and non-controlling interests to £2,846,736 and £1,421,708, from £3,101,786 and £1,166,658, respectively.


9             PROPERTY, PLANT AND EQUIPMENT

  Furniture, fittings and equipment 

Leasehold improvements
Motor VehiclesTotal
 ££££
Cost        
As at 1 January 2015 248,886 16,772 58,362 324,020
Purchases during the year 77,444 3,846 50,110 131,400
Disposal in period (13,074) (7,569) (61,359) (82,002)
Impairment (658) - - (658)
Foreign exchange adjustment 6,055 324 2,997 9,376
Disposal group classified as held for sale

(186,123)

(9,527)

-

(195,650)

At 31 December 2015

132,530

3,846

50,110

186,486

      
Depreciation    
As at 1 January 2015 204,031 14,201 973 219,205
Depreciation charge for the year 49,490 1,282 11,897 62,669
Disposal in period (7,376) (5,046) (11,249) (23,671)
Impairment (658) - - (658)
Foreign exchange adjustment 7,290 371 50 7,711
Disposal group classified as held for sale

(176,720)

(9,527)

-

(186,247)

At 31 December 2015

76,057

1,281

1,671

79,009

      
Net Book Value as at 31 December 2015

56,473

2,565

48,439

107,477

     
Net Book Value as at 31 December 2014

44,856

2,570

57,389

104,815

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

10          INTANGIBLE ASSETS

  Stock exchange trading rightsGoodwillTotal
 £££
Cost   
As at 1 January 2015 41,450 1,276,407 1,317,857
Disposal group

-

-

-

At 31 December 2015

41,450

1,276,407

1,317,857

     
Accumulated amortisation and impairment   
At 1 January and 31 December 2015

-

-

--


Net Book Value as at 31 December 2015

41,150

1,276,407

1,317,857

     
Net Book Value as at 31 December 2014

41,450

1,276,407

1,317,857

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


11          INVESTMENTS IN SUBSIDIARIES

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

  Company
  2015 2014
  £ £
As at 1 January 2,919,130 1,047,544
Purchases during the year 257,398 1,871,586
Disposals during the year

(1,490,180)

-

At 31 December

1,686,348

2,919,130

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

Principal subsidiariesCountry of IncorporationPercentage of ordinary shares heldPrincipal activity
AVVA Group Limited BVI 100% Dormant
Alpha Returns Hong Kong Limited Hong Kong 100% Dormant
ARGP Investments Limited BVI 100% Investment holding company
Riche Bright Group Limited BVI 70% Investment holding company
Riche Bright Limited* Republic of Vanuatu 70% Dormant
Riche Bright Investments Limited* Hong Kong 70% Proprietary forex trading (dormant since Feb 2016)
Telistar Solutions Pte Limited** Singapore 52.5% IT Solutions
Telistar Solutions SDN BHD*** Malaysia 47.25% IT Solutions

*100% owned by Riche Bright Group Limited.
**Investment held indirectly through ARGP Investments Limited.
***90% owned by Telistar Solutions Pte. Limited

During the year the Company dissolved its 100% subsidiary Shidu Investments Limited on 7 July 2015. 


12          TRADE AND OTHER RECEIVABLES

 GroupCompany 
 2015 2014 2015 2014
 £ £ £ £
Trade receivables 442,881 1,677,715 - -
Amounts owed by group undertakings - - 1,753,106 277,874
Client account* - 15,777 - -
Other receivables 72,126 97,026 5,037 40,828
Prepayments and accrued income

105,253

142,234

1,563

4,433

 

620,260

1,932,752

1,759,706

323,135

*This account represents the balance of money held on trust for clients of RBSL held in specially designated Client accounts held with bank accounts in Hong Kong owing to RBSL. The total balance of the RBSL Client accounts at 31 December 2015 was £698,571.

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
 2015 2014 2015 2014
  £ £ £ £
         
Cash at Bank

394,963

1,848,183

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
 2015 2014 2015 2014
  £ £ £ £
Current        
Trade payables 21,944 987,226 11,123 11,123
Trade payables - factored 63,221 101,362 - -
Taxes and social security 57,421 - - -
Other payables 420,652 218,567 19 -
Accruals and deferred income

157,164

231,018

57,243

59,277

 

720,402

1,538,173

68,385

70,400

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       INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

 GroupCompany
 2015 2014 2015 2014
 £ £ £ £
At 1 January - fair value 583,720 397,399 - -
Acquisitions 244,163 186,321 - -
Impairment (37,000) - - -
At 31 December - fair value 790,883 583,720 - -
Categorised as:        
Level 1 - quoted investments 68,207 68,207 - -
Level 3 - Unquoted investments 722,676 515,513 - -

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.

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:
  2015 2014
  £ £
Brought forward 515,513 347,759
Purchases 244,163 167,754
Impairment (37,000) -
Carried forward 722,676 515,513
Included above are amounts of £476,434 and £295,699 that relate to the initial investments by the Company in Oriental Ventures Limited and Jesoft International Limited, respectively.

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 fully acquire Shenzhen Maxlife Catering Management Limited ("Maxlife"). The 30% investment in Oriental Ventures was completed on 31 March 2016. Maxlife has since transformed its core business into the operations of a subscription based e-commerce platform targeting mid-to-high end consumers in the PRC.

On 24 April 2015 the Company entered into a conditional sale and purchase agreements ("SPA") for the acquisition of 50% of the issued share capital of Jesoft International Limited, a BVI registered special purpose vehicle incorporated in December 2014 which has been formed to acquire, via a variable interest entity structure, beneficial ownership of Jesoft Computer Technology Co. Ltd. 

Level 3 valuation techniques used by the Group are explained on page 32 (Fair value of financial instruments).

16          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 2015 the Group's liabilities have contractual maturities which are summarised below:

31 December 2015CurrentNon-current
 Within 6 months6 to 12 months1 to 5 yearslater than 5 years
 ££££
Other loans----
Trade and other payables

561,139

-

-

-

 

561,139

-

-

-

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

31 December 2014 Current Non-current
  Within 6 months 6 to 12 months 1 to 5 years later than 5 years
  £ £ £ £
Other loans - - - -
Trade and other payables

1,307,155

-

-

-

 

1,307,155

-

-

-

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:

  2015 2014
  £ £
Trade and other receivables  515,007    1,774,741
Cash and cash equivalents  

394,963

1,848,183

   

909,970

3,622,924

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.

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:

   2015 2014
   £ £
Financial assets:      
Investments held at fair value through profit or loss   790,883 583,720
Cash and bank balances   394,963 1,848,183
Loans and receivables  

72,126

97,026

   

1,257,972

2,528,929

       
Financial liabilities at amortised cost:      
Trade and other payables  

563,238

1,307,155

   

563,238

1,307,155

       

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.

17          SHARE CAPITAL

The issued share capital of the Company is shown below:

  Number of sharesShare CapitalShare
  OrdinaryDeferredOrdinaryDeferredTotalPremium
     ££££
Ordinary shares of 0.01p 631,159,105 - - - - 6,525,522
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 2014 631,159,105168,462,42663,1161,285,4641,348,5806,525,522
Issue of shares 23 February 201513,041,352-1,304-1,304249,742
Issue of shares 30 April 201517,394,054-1,740-1,740293,960
At 31 December 2015661,594,511168,462,42666,1601,285,4641,351,6247,069,224

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

On 23 February 2015 the Company issued 13,041,352 new ordinary shares of 0.01p each as settlement for the additional investment in Riche Bright Group Limited.

On 30 April 2015 the Company issued 17,394,054 new ordinary shares of 0.01p each as part of settlement for an investment of a 50% shareholding in Jesoft International Limited held by ARGP Investments Limited. This 50% shareholding will be acquired on completion of a further issuance of new ordinary shares, the exact number of which will depend on the RMB/GBP exchange rate ruling at the issue date.

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

18          EQUITY- SETTLED SHARE BASED PAYMENTS

During 2014 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 2015 was £134,000 (2014: £127,758).

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 2015  40,000,0002.2
Granted  --
Forfeited  --
Exercised  --
Expired  

-

-

At 31 December 2015 

40,000,000

2.2

The weighted average remaining contractual life of options as at 31 December 2015 was 5.05 years (2014: 6.05 years).

19          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 £108,197 (2014: £112,763) 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 (2014: £nil) was due as at the year end.

During the year a payment of £4,145 (2014: £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 (2014: £nil) was due as at the year end.

20          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.


21          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
  2015 2014
Land & buildings:£ £
Less than one year 56,472 72,466
Between one and five years - 45,294
More than five years

-

-

56,472

117,760

22          POST YEAR END EVENTS

On 19 January 2016 the Company announced that the long-stop date for satisfaction of the conditions precedent relating to the Company's 50 per cent indirect investment in Jesoft International has been extended to 30 June 2016.

On 1 April 2016 the Company announced the completion of its 30 per cent investment in Oriental Ventures, a BVI registered special purpose vehicle formed to acquire Maxlife, originally announced on 31 March 2014. The second and final tranche consideration is to be satisfied by the issue of 32,142,857 new ordinary shares in Alpha Returns (the "Consideration Shares") (£168,750 at the 31 March 2016 closing price of 0.525p), representing approximately 4.63 per cent. of the Company's enlarged issued ordinary share capital, to Mr Wong Xin Yan, the Vendor of the 30 per cent. Oriental Ventures shareholding. First tranche consideration of HK$5,812,500 cash (then c. £451,000) was paid to the Vendor of Oriental Ventures in April 2014, giving total consideration for the 30 per cent. holding of approximately £620,000.

On 5 April 2016 the Company unconditionally allotted 32,142,857 new ordinary shares to Mr Wong Xin Yan, as the second and final tranche consideration for the acquisition of 30 per cent interest in Oriental Ventures Limited. 

On 31 May 2016 the Company completed the disposal of RBSL by its 70 per cent owned joint venture vehicle Riche Bright Group Limited for total cash consideration of HK$33,173,459.

23          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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