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Alpha Returns Group plc (ARGP)

  Print      Mail a friend       Annual reports

Friday 30 June, 2017

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 2016

30 June 2017

Alpha Returns today announces its audited results for the year ended 31 December 2016.

Copies of the Group's Annual Report and Accounts will be posted to shareholders shortly 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 26 July 2017, 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

I am pleased to announce the results for the year 2016 for Alpha Returns. We made good progress in the year with the completion of the disposal of Riche Bright Securities Limited ("RBSL"). The Company now has significant investable cash balances and continues to explore new investment opportunities in the Asia Pacific region,

The year under review was remembered for UK's historic Brexit vote and the election of President Trump in the US. In Asia, we watched these political developments with interest. Closer to home, China's economy continued to undergo a momentous transformation from an export-driven manufacturer to a consumer-oriented economy.

Despite the deceleration in growth within the Asia Pacific Region ("APAC"), the region still remains the growth engine of the global economy with broadly positive outlook for the next few years. The IMF is projecting China to grow at 6.6% in 2017 (2016: 6.7%) compared to the World growth of 3.5% (2016: 3.1%).

The Company's investment portfolio presently includes a 52.5% interest in Singapore based Telistar, a 30% investment in PRC based Maxlife, and a 6.67% investment in Singapore based New Trend Lifestyle Group plc (AIM: NTLG).

Review of 2016

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

The final results for the year ended 31 December 2016 show a consolidated loss on continuing operations after taxation of £660,640  (2015: loss £522,351). After a profit from discontinued operations of £476,097 and foreign currency translation gains of £383,468, the profit after tax and total comprehensive income was £203,498 (2015: loss £473,292). The loss on operations after taxation attributable to the equity holders of the Company (before the gain on translation of foreign subsidiaries) was £420,824 (2015: £574,009). Losses of the parent company were £209,996 (2015: £474,941).

Total assets amounted to £4,551,160 (2015: £5,050,763) with £3,757,225 (2015: £3,049,490) net assets attributable to equity holders of the Company and net cash of £2,149,378 (2015: £394,963). 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). The Group has benefited from the weakness in sterling as much of our assets are held in foreign currencies.

On 31 March 2016, the Company completed the acquisition of a 30% interest in Oriental Ventures Limited ("OVL") with the issue of 32,142,857 new ordinary shares in addition to the first tranche cash consideration of HK$5.8 million (£450,000) paid in April 2014. OVL is the BVI registered holding company of Shenzhen Maxlife Lifestyle Commerce Co., Ltd. Maxlife continues to operate in the e-commerce space seeking to expand its product and service offerings. However the Board acknowledges that its progress had been slower than expected and therefore made an impairment of £281,250 following a review. Despite this, the Directors remain positive about Maxlife's prospects and continue to work with its management to develop its business.

On 31 May 2016 the Company, through Riche Bright Group Limited ("RBG"), completed the disposal of its shareholding in RBSL for a total cash consideration of HK$33,173,459. RBG subsequently repurchased its own shares from its 30% minority shareholders for cash at attributable net asset value of HK$9 million, thereby becoming a wholly owned subsidiary available for use as an intermediate bare holding company for future investments in accordance with the Company's investing policy.

On 31 August 2016, the Company acquired a 6.67% interest in New Trend Lifestyle Group Plc (AIM: NTLG) for £100,000. The investment in NTLG had a market value of £187,500 at year end.

On 13 December 2016 the Company terminated its conditional 50% investment in Jesoft International Limited and received HK$928,125 (£94,200) as repayment of the initial consideration of 17,394,054 ARGP ordinary shares issued to the vendor. This compares to the book value of the conditional investment of £295,700 and the market value of those shares of £69,600 at the time of termination.

During the year, Eric Leung resigned to focus on other business commitments and Tony Drury retired following the AGM. We thank the both of them for their contributions to the Company.

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.

2017

On 3 January 2017, the Board granted options over a total of 15,000,000 ordinary shares, representing 2.16 per cent of the Company's current issued ordinary share capital at an exercise price of 0.5 pence per share accordance with the terms of the Company's share option scheme.

At the start of 2017 we were pleased to welcome Brent Fitzpatrick to the Board as a Non-executive Director. Brent has considerable quoted company experience and brings a wealth of valuable experience to the Board.

Outlook

The Company has held most of its cash proceeds from the sale of RBSL to year end and continues to hold significant investable cash balances. The Directors now seek new investment opportunities and look to revise the Company's Investing Policy at the next Annual General Meeting.

Finally, I would like to take this opportunity to thank shareholders for their continued support for the Company. We look forward to update on developments in the near future.

Quattro Chan
Interim Chairman

Date: 30 June 2017



Strategic Report
The Directors present their results and report for Alpha Returns Group plc (the "Company") for the year ended 31 December 2016, 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 divested the investment in Riche Bright Securities Limited ("RBSL") and focussed their attention to develop the Company's other investments. The Group closed the year with cash balances of £2,149,378 (2015: £394,963 excluding cash held by RBSL), an investment portfolio of £1,686,348 (2015: £1,686,348) and equity shareholders' funds of £3,757,225 (2015: £3,049,490).

In March 2016, the Company completed the 30% investment in Oriental Ventures Limited, the BVI registered holding company of Shenzhen Maxlife Lifestyle Commerce Co., Ltd. ("Maxlife"). Maxlife is a Shenzhen based company that operates e-commerce platforms targeting mid-to-high end consumers in the PRC.

In May 2016, the Company through Riche Bright Group Limited ("RBG") completed the disposal of the entire equity interest of Riche Bright Securities Limited. In June 2016, RBG repurchased its own shares from its 30% minority shareholders with proceeds from the disposal, thereby becoming a wholly owned subsidiary of the Company.

In August 2016, the Company made a 6.67% investment in AIM-listed New Trend Lifestyle Group Plc.

In December 2016, the Company terminated the conditional 50% investment in Jesoft International Limited and received a cash repayment in lieu of the consideration shares issued to the vendor.

KEY PERFORMANCE INDICATORS

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

GROUP STATISTICS31 December

2016
31 December

2015
Change %
Net asset value attributable to equity holders £3,757,225£3,049,49023.2%
Net asset value per share attributable to equity holders 0.55p0.46p19.6%
Closing share price 0.40p0.60p(33.33%)
Cash £2,149,378£394,963*444.2%

*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
Date: 30 June 2017


Consolidated statement of comprehensive income

 

 
 12 months to
Dec 2016
12 months to Dec 2015
  Note£ £
Continuing operations      
Revenue   2,691,071 2,256,770
Cost of sales  

(1,759,809)

(1,388,507)

    931,262 868,263
Administration costs   (1,307,943) (1,251,988)
Share based payments 17 (6,242) (134,000)
Other income   88,924 28,880
Other losses 14 (201,499) (37,000)
Operating loss   (495,498) (525,845)
       
Finance cost  (26) (1)
Finance income   1,144 6
Investment income   58 6,515
Gain on foreign exchange   38,710 3,167
Impairment loss   (193,750) -
Loss on continuing operations before taxation 2 (649,362) (516,158)
      
Taxation 5 (11,278) (6,193)
   

 

 

Loss on continuing operations after taxation   (660,640) (522,351)
       
Profit from operations reclassified as held for sale 7 - 5,258
Profit from discontinued operations 7 476,097 -
       
Loss on operations after taxation   (184,543) (517,093)
       
Other comprehensive income      
Items that may be reclassified subsequently to profit or loss:      
Gain on translation of foreign subsidiaries   383,468 35,526
Available for sale financial assets   4,573 8,275
Other comprehensive income for the year   388,041 43,801
       
       
Profit/(loss) after taxation and total comprehensive income/(expense)   203,498 (473,292)
       
       
Profit attributable to:      
Equity holders of the company   (420,824) (574,009)
Non- controlling interests   236,281 56,916
    (184,543) (517,093)
       
Total comprehensive income attributable to:      
Equity holders of the company   567,419 30,380
Non- controlling interests   (179,378) 13,421
    388,041 43,801
       
Basic and diluted profit/(loss) per share 7    
Basic and diluted - continuing operations   (0.10p) (0.09p)
Basic and diluted - operations reclassified as held for sale   0.07p 0.00p
Total basic and diluted loss per share  

(0.03p)

(0.09p)

       

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 £209,996 (2015: 474,941).

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


Consolidated statement of financial position

 

 

 
Note31 December 2016 31 December 2015
   £ £
Assets      
Non-Current Assets      
Property, plant and equipment 8 86,793 107,477
Intangible assets 9 638,780 638,780
Investments - Available for sale 14 856,008 790,883
   

1,581,581

1,537,140

       
Current Assets      
Assets of disposal group classified as held for sale 6 - 2,498,400
Trade and other receivables 11 820,201 620,260
Cash and cash equivalents 12

2,149,378

394,963

    2,969,579 3,513,623
   

 

 

Total Assets  

4,551,160

5,050,763

       
Liabilities      
Liabilities of disposal group classified as held for sale 6 - 107,926
Trade and other payables 13

503,681

720,402

       
Total Liabilities   503,681 828,328
   

 

 

Net Assets  

4,047,479

4,222,435

       
Equity      
Share capital 16 1,354,839 1,351,624
Share premium 16 7,516,009 7,069,224
Revaluation reserve   12,848 8,275
Share option reserve   268,000 261,758
Foreign currency translation reserve   33,571 109,975
Profit and loss account   (5,428,042) (5,751,366)
   

 

 

Attributable to equity shareholders of the company  

3,757,225

3,049,490

Non-controlling interests  

290,254

1,172,945

Total equity  

4,047,479

4,222,435

The financial statements were approved by the Board of Directors on 30 June 2017.

C Neo                                                   
Director                 

Company registration number: 05212388

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


Company statement of financial position

    31 December 2016 31 December 2015
   Note£ £
         
Fixed assets        
Investments   10

1,686,348

1,686,348

         
Current assets        
Trade and other receivables   11 2,005,932 1,759,706
Cash and cash equivalents   12

7,130

7,130

      2,013,062 1,766,836
     

 

 

Total Assets     3,699,410 3,453,184
         
         
Current liabilities        
Trade and other payables   13 68,365 68,385
     

 

 

Total liabilities    

68,365

68,385

         
Net assets    

3,631,045

3,384,799

         
Capital and reserves        
Called up share capital   16 1,354,839 1,351,624
Share premium   16 7,516,009 7,069,224
Share option reserve     268,000 261,758
Profit and loss account     (5,507,803) (5,297,807)
         
Equity shareholders' funds    

3,631,045

3,384,799

The financial statements were approved by the Board of Directors on 30 June 2017.

C Neo                                                   
Director                 

Company registration number: 05212388

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 January 2015 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 3,044 543,702 - - - - 546,746 - 546,746
Share based payment charge - - 134,000 - - - 134,000 - 134,000
Acquisitions during the year - - - - - 65,637 65,637 (319,100) (253,463)
Loss for the year and total comprehensive expense - - -  

8,275
22,105 (574,009) (543,629) 70,337 (473,292)
 

 

 

 

 

 

 

 

 

 

Balance at 31 December 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

          
Shares issued in year 3,215446,785----450,000-450,000
Share based payment charge --6,242---6,242-6,242
Change in minority interest ----(639,250)744,148104,898(939,594)(834,696)
Loss for the year and total comprehensive expense ---4,573562,846(420,824)146,59556,903203,498
Balance at 31 December 2016

1,354,839

7,516,009

268,000

12,848

33,571

(5,428,042)

3,757,225

290,254

4,047,479



Company statement of changes in equity

  Share
capital
Share premiumMerger reserveProfit
and loss account
Total equity
  £££££
           
         
Balance at 1 January 2015 1,348,580 6,525,523 127,758 (4,822,866) 3,178,995
           
Shares issued in year 3,044 543,701 - - 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 December 2015

1,351,624

7,069,224

261,758

(5,297,807)

3,384,799

      
Shares issued in year 3,215446,785--450,000
Share based payment charge --6,242-6,242
Loss for the year and total comprehensive expense ---(209,996)(209,996)
 

 

 

 

 

 

Balance at 31 December 2016

1,354,839

7,516,009

268,000

(5,507,803)

3,631,045



Consolidated statement of cash flows

   12 months to Dec 2016 12 months to Dec 2015
  £ £
Cash flows from operating activities    
Loss after taxation  (184,543) (435,100)
Adjustments for:     
Depreciation and amortisation  52,430 20,451
(Profit)/Loss on disposal of investments  (495,170) 37,000
Profit/(Loss) on sale of property, plant and equipment  (3,478) 3,854
Share based payments  6,242 134,000
Impairment provision  193,750 -
Dividend income  (58) (88,383)
Increase/(decrease) in trade and other receivables  (309,841) 951,826
Increase in trade and other payables  (27,317) (815,618)
Foreign exchange differences  (76,892) (24,982)
Interest received  (111) -
Taxation  16,646 43,293
Income tax paid  (43,870) (14,844)
Net cash used in operating activities 

(872,212)

(188,503)

       
Cash flows from investing activities    
Purchase of investments, net of cash acquired  (550,000) (75,617)
Disposal of subsidiary  3,366,820 -
Purchase of property, plant and equipment  (16,286) (80,576)
Disposal of property, plant and equipment  5,738 102,221
Investment income  58 -
Interest income  111 -
Net cash generated from/ (used in) investing activities 

2,806,441

(53,972)

       
Cash flows from financing activities    
Net proceeds from issue of share capital  450,000 -
Share buy back  (858,663) -
Net cash used in financing activities (408,663) -
       
Net increase/(decrease) in cash and cash equivalents 1,525,566 (242,475)
Cash and cash equivalents at beginning of period 394,963 1,848,183
Cash and cash equivalents in disposal group - (1,287,573)
Effect of foreign exchange rate changes on cash and cash equivalents 228,849 76,828
Cash and cash equivalents at end of period  

2,149,378

394,963


Company statement of cash flows

   12 months to
31 December 2016
12 months to 31 December 2015
  £ £
Cash flows from operating activities    
Loss after taxation   (209,996) (474,941)
Adjustments for:      
Loss on disposal of investment   - 87,000
Share based payment   6,242 134,000
Increase in trade and other receivables   (268) (1,147,224)
Decrease in trade and other payables   (19) (2,015)
(Increase)/decrease in amounts due from related parties   (245,959) 1,403,180
   

 

 

Net cash used in operating activities  

(450,000)

-

       
Cash flows from investing activities      
Purchase of investments   - -
   

 

 

Net cash used in investing activities  

-

-

       
Cash flows from financing activities    
Net proceeds from issue of share capital  450,000 -
   

 

 

Net cash generated from financing activities 

450,000

-

       
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 2016 statutory financial statements. The auditors have reported on the 2016 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 2016 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. 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.

The presentational currency of the Group is £GBP. The functional currency of the entities within the Group is HKD$.

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 2016 although the Group had adequate cash, the Company had cash resources of only £7,130 (2015: £7,130) along with net assets of £3,631,045 (2015: £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 15, 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 2016
Year to
 Dec 2015
  £ £
Depreciation of plant, property and equipment    
-  owned by the group 52,430 49,031
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

44,576

56,472

     


3             DIRECTORS AND EMPLOYEES

Staff costs for the Group during the period were as follows:    
  Year to
31 December 2016
Year to
31 December 2015
  £ £
    
Wages and salaries 587,745 319,322
Share based payment charge 2,340 50,250
Social security costs

53,726

9,423

 

643,811

378,995


The average number of employees (including directors) of the Company during the period was as follows:
  Year to
31 December 2016
Year to
31 December 2015
  Number Number
Administration

4

5

     

4             DIRECTORS

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

NameFeesShare based payment chargeTotal
2016
Total
2015
  £££ £
C Y Chan 19,67278020,452 36,422
C Neo 20,98478021,764 28,225
H K Leung (resigned 30 April 2016) 2,623-2,623 7,869
A C Drury (retired on 22 July 2016) 23,570-23,570 30,000
F C Tsang 7,869-7,869 7,869
  74,7181,56076,278 110,385

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 2016. 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 2016
Year to
 Dec 2015
  £ £
Current tax

11,278

6,193

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 2016
Year to
 Dec 2015
  £ £
     
Loss on continuing activities before taxation

(649,362)

(517,093)

Loss on ordinary activities multiplied by the relevant standard rate of corporation    
tax in the UK of 20% (Dec 2015: 20%) (129,872) (103,419)
Effects of:    
Expenses not deductible for tax purposes 3,833 2,257
Excess of depreciation and amortisation over capital allowances 11,552 12,984
Unutilised tax losses carried forward 114,487 88,178
UK Tax charge for the period

-

-

The current tax charge of £11,278 (2015: £6,193) relates to the Singapore and Malaysia corporation tax on the profits on the Telistar Group.

6             ASSETS RECLASSIFIED AS HELD FOR SALE

During 2015 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 results of the activities related to Riche Bright Securities Limited are as follows:

 2016 2015
 £ £
Revenue 19,052 686,664
Administrative expenses (250,955) (708,375)
Other income 11,331 64,070
Tax expense

-

(37,101)

Net profit/(loss) attributable to activities associated with assets held for sale

(220,572)

5,258

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

Group

 2016 2015
 £ £
Operating cash flows 201,424 (116,473)
Investing cash flows (1,984) (100,000)
Financing cash flows

-

(84,383)

Total cash flows

199,440

(300,859)

Assets of disposal group classified as held for sale:

 2016 2015
 £ £
Property, plant and equipment 7,731 9,402
Intangible assets 44,216 43,579
Investments 17,687 17,431
Cash and cash equivalents 1,502,673 1,287,573
Other current assets

630,254

502,788

Total assets

2,202,561

1,860,773


Liabilities of disposal group classified as held for sale:

 2016 2015
 £ £
Trade and other payables 103,103 105,816
Other current liabilities

396,188

2,110

Total liabilities

499,291

107,926

The profit on disposal is calculated as follows:

 £
Consideration 3,161,906
Original cost of investment (2,465,237)
Profit on disposal

696,669

The profit on disposal together with the net loss attributable to discontinued operations gives a profit from discontinued operations of £476,058.

7             PROFIT/(LOSS) PER SHARE

  2016 2015
 £ £
Loss attributable to equity holders of the Group:    
Loss from continuing operations (660,640) (579,267)
(Loss)/profit from discontinuing operations

476,097

5,258

Profit/(loss) for the period attributable to equity holders of the Group

(184,543)

(574,009)

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

685,394,277

654,029,897

Earnings per share attributable to equity holders of the Group:    
Basic and diluted loss per share from continuing operations (0.10p) (0.09p)
Basic and diluted loss per share from discontinuing operations (0.07p) 0.00p
Basic and diluted loss per share for the period 0.03p (0.09p)
     

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 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


  Furniture, fittings and equipment 

Leasehold improvements
Motor VehiclesTotal
 ££££
Cost        
As at 1 January 2016 132,530 3,846 50,110 186,486
Purchases during the year 14,301 - - 14,301
Disposal in period (4,727) - - (4,727)
Foreign exchange adjustment 16,202 473 9,929 26,604
At 31 December 2016

158,306

4,319

60,039

222,664

      
Depreciation    
As at 1 January 2016 76,057 1,281 1,671 79,009
Depreciation charge for the year 36,268 1,440 12,008 49,716
Disposal in period (2,669) - - (2,669)
Foreign exchange adjustment 9,327 158 330 9,815
At 31 December 2016

118,983

2,879

14,009

135,871

      
Net Book Value as at 31 December 2016

39,323

1,440

46,030

86,793

     

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 2015 41,450 1,276,407 1,317,857
Reclassified to the Disposal group (41,450) (637,627) (679,077)
As at 1 January 2016-638,780638,780
Foreign exchange adjustment 2,766 - 2,766
Disposal in period

(2,766)

-

(2,766)

At 31 December 2016

-

638,780

638,780

     
Accumulated amortisation and impairment   
At 1 January and 31 December 2015 ---
At 1 January and 31 December 2016

-

-

-


Net Book Value as at 31 December 2016

-

638,780

638,780

     
Net Book Value as at 31 December 2015

-

638,780

638,780

The stock exchange trading rights were related to Riche Bright Securities Limited. Following the disposal the Group no longer retains these trading rights.

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
  2016 2015
  £ £
As at 1 January 1,686,348 2,919,130
Purchases during the year - 257,398
Disposals during the year

-

(1,490,180)

At 31 December

1,686,348

1,686,348

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 100% Investment holding company
Riche Bright Limited** Republic of Vanuatu 100% Dormant
Riche Bright Investments Limited** Hong Kong 100% Investment holding company
Telistar Solutions Pte Limited*** Singapore 52.5% IT Solutions
Telistar Solutions SDN BHD**** Malaysia 47.25% IT Solutions

*On 30 June 2016, Riche Bright Group Limited bought the 30% minority shares increasing the company's holding from 70% to 100%.
**100% owned by Riche Bright Group Limited.
***Investment held indirectly through ARGP Investments Limited.
****90% owned by Telistar Solutions Pte. Limited.

11          TRADE AND OTHER RECEIVABLES

 GroupCompany 
 2016 2015 2016 2015
 £ £ £ £
Trade receivables 510,370 442,881 - -
Amounts owed by group undertakings - - 1,999,064 1,753,106
Other receivables 121,893 72,126 5,037 5,037
Prepayments and accrued income

187,938

105,253

1,831

1,563

 

820,201

620,260

2,005,932

1,759,706

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.

12          CASH AND CASH EQUIVALENTS

 Group   Company
 2016 2015 2016 2015
  £ £ £ £
         
Cash at Bank

2,149,378

394,963

7,130

7,130

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

13          TRADE AND OTHER PAYABLES

 Group   Company
 2016 2015 2016 2015
  £ £ £ £
Current        
Trade payables 192,261 21,944 11,122 11,123
Trade payables - factored 165,714 63,221 - -
Taxes and social security 7,430 57,421 - -
Other payables 57,868 420,652 - 19
Accruals and deferred income

80,408

157,164

57,243

57,243

 

503,681

720,402

68,365

68,385

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.

14       INVESTMENTS - AVAILABLE FOR SALE

 GroupCompany
 2016 2015 2016 2015
 £ £ £ £
At 1 January - fair value 790,883 583,721 - -
Acquisitions 550,000 301,894 - -
Disposal (295,699) (16,580) - -
Movement in fair value of investments 92,074 - - -
Impairment (281,250) (78,152) - -
At 31 December - fair value 856,008 790,883 - -
Categorised as:        
Level 1 - quoted investments 210,824 18,750 - -
Level 3 - Unquoted investments 645,184 772,133 - -

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:
  2016 2015
  £ £
Brought forward 772,133 513,434
Purchases 450,000 295,699
Disposal* (295,699) -
Impairment (281,250) (37,000)
Carried forward 645,184 772,133
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 5 April 2016 the Company issued 32,142,857 new ordinary shares of 0.01p at 1.4p each as settlement for the second and final tranche consideration for the acquisition of 30 per cent. interest in Oriental Ventures Limited which amounted to £450,000. The Group recognised an impairment provision against the value of the investment in Oriental Ventures Limited during the year of £281,250.

*On 20 December 2016 the Company terminated the sales and purchase agreement of shares of Jesoft International Limited. This resulted in a loss on disposal of £201,499 to the Group.

Level 3 valuation techniques used by the Group are explained on page 21 (Fair value of financial instruments). All Level 3 investments are included at cost given the difficulty in obtaining a reasonable fair value for each of the investments.

15          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.

Foreign currency risk
The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the functional currency of the Group entities.

Interest rate risk
The Group finances its operations through a mixture of loans and equity capital. 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 2016 the Group's liabilities have contractual maturities which are summarised below:

31 December 2016CurrentNon-current
 Within 6 months6 to 12 months1 to 5 yearslater than 5 years
 ££££
Other loans----
Trade and other payables

421,436

-

-

-

 

421,436

-

-

-

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

31 December 2015 Current Non-current
  Within 6 months 6 to 12 months 1 to 5 years later than 5 years
  £ £ £ £
Other loans - - - -
Trade and other payables

561,139

-

-

-

 

561,139

-

-

-

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:

  2016 2015
  £ £
Trade and other receivables  632,263 515,007
Cash and cash equivalents  

2,149,378

394,963

   

2,781,641

909,970

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 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:

   2016 2015
   £ £
Financial assets:      
Investments - Available for sale   856,008 790,883
Cash and bank balances   2,149,378 394,963
Loans and receivables  

632,263

72,126

   

3,637,649

1,257,972

       
Financial liabilities at amortised cost:      
Trade and other payables  

496,250

563,238

   

496,250

563,238

       

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.

16          SHARE CAPITAL

The issued share capital of the Company is shown below:

  Number of sharesShare CapitalShare
  OrdinaryDeferredOrdinaryDeferredTotalPremium
     ££££
Ordinary shares of 0.01p 661,594,511 - 66,160 - 66,160 7069,224
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 2015 661,594,511168,462,42666,1601,285,4641,351,6247,069,224
Issue of shares 5 April 201632,142,857-3,215-3,215446,785
At 31 December 2016693,737,368168,462,42669,3751,285,4641,354,8397,516,009

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

On 5 April 2016 the Company issued 32,142,857 new ordinary shares of 0.01p each as settlement for the second and final tranche consideration for the acquisition of 30 per cent. interest in Oriental Ventures Limited.

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

17          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 2016 was £6,242 (2015: £134,000).

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 2016  40,000,0002.2
Granted  --
Forfeited  --
Exercised  --
Expired  

-

-

At 31 December 2016 

40,000,000

2.2

At 31 December 2016 all options are exercisable (2015: none).

The weighted average remaining contractual life of options as at 31 December 2016 was 4.05 years (2015: 5.05 years).

18          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 key management personnel of the Group, is set out in note 4.

During the year an amount of £118,033 (2015: £108,197) was paid to GAEA Resources Limited for management and administration fees for the Company. GAEA is connected to Sze Thye Group Limited, a substantial shareholder of the Company. An amount of £nil (2015: £nil) was due as at the year end.

During the year a payment of £nil (2015: £4,145) 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 (2015: £nil) was due as at the year end.

Under a share repurchase agreement dated 30 June 2017, Riche Bright Group Limited ("RBG") repurchased for cancellation a total of 300,000 shares, representing 30% RBG's then issued share capital, for a total consideration of HK$9 million. Included in the sellers was Miss Tong Shyn Leng with 13 per cent of RBG's then issued share capital who is a related party to the transaction as she was a significant shareholder of RBG.

19          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.

20          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
  2016 2015
Land & buildings:£ £
Less than one year 44,576 56,472
Between one and five years - -
More than five years

-

-

 

44,576

56,472

21          POST YEAR END EVENTS

On 3 January 2017 the Company granted options over a total 15,000,000 ordinary shares, representing 2.16 per cent. of the Company's current issued ordinary share capital at an exercise price of 0.5p per share in accordance with the terms of the share option scheme. Share option details are as follows:

  No. of options Exercise price Exercise dates
Christopher Neo 3,000,000 0.5p 3/1/2019 - 3/1/2024
Chan Cheong Yee (Quattro) 1,000,000 0.5p 3/1/2019 - 3/1/2024
Tsang Fung Chu (Ellen) 1,000,000 0.5p 3/1/2019 - 3/1/2024
Group employees (including employees of Telistar Solutions Pte Ltd) and consultants to the Company 10,000,000 0.5p 3/1/2019 - 3/1/2024
       
Total 15,000,000    

22          ULTIMATE CONTROLLING PARTY

There was no single controlling party.




This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq 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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