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Alpha Returns Group plc (ARGP)

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Thursday 28 September, 2017

Alpha Returns Group plc

Alpha Returns Group plc : Half-year Report

Alpha Returns Group plc : Half-year Report

28 September 2017

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

Unaudited Interim Results for the Six Months Ended 30 June 2017

Alpha Returns Group Plc today announces its unaudited interim results for the six months ended 30 June 2017.

Chairman's Statement

Review of the Six Month Period ended 30 June 2017

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

Shareholders have approved an updated Investing Policy at the AGM that allows the Company to invest in liquid securities in order to attain a highly-invested status and avoid cash drag to enhance portfolio returns.

The Company's revised Investing Policy is set out in full at the end of this statement in Note 5 and on the Company's website at alpharet.com/rule26.

Financial Review

The unaudited results for the six month period ended 30 June 2017 show a loss on continuing operations after taxation of £96,209 (30 June 2016: profit £423,923, after including a gain on the disposal of the Company's investment in Riche Bright Securities Ltd. ("RBSL") of £665,035). The loss per share was 0.02p (30 June 2016: profit 0.02p) from continuing operations. After a loss on translation of foreign subsidiaries of £47,496 (2016: gain £204,219) and loss from discontinued operations of £nil (2016: £220,633), loss after tax and total comprehensive expense was £143,705 (2016: profit £407,509) of which £191,492 (2016: profit £263,192) was attributable to equity holders of the Company.

Total revenue was £2,190,877 (30 June 2016: £1,005,068).

At the end of the period under review net assets were £3,890,926, of which £3,552,885 were attributable to equity shareholders of the Company (31 December 2016: £4,047,479, attributable £3,757,225) giving net assets attributable to equity shareholders of approximately 0.5p per share. Included in this amount are cash and cash equivalents of £1,500,132.

Review of Operations

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).

Telistar has continued to perform to expectations, and the Company extended a long term loan to Telistar to fund business expansion. Trading at Maxlife has been difficult this year, and the Directors will continue to work with its management and monitor their progress.

The Company has also expanded its portfolio of listed securities in the period and the Directors plan to make additional investments this year.

Post Period Events

After the end of the period, the Company updated its Investment Policy at the AGM.

Board Changes

During the period 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.

Corporate Governance

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

Risk Assessment

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

Outlook

Following the update of the Company's Investing Policy, we now seek to expand our investment portfolio and will update shareholders as developments are made.

Quattro Chan
Interim Chairman

28 September 2017

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

For further information please call:

Alpha Returns Group plc
Christopher Neo, Executive Director                                                                  020 3286 6388

ZAI Corporate Finance (NOMAD)
Tim Cofman                                                                                                     020 7060 2220

Peterhouse Corporate Finance (Broker)
Duncan Vasey / Lucy Williams                                                                           020 7220 9797


Statement of Comprehensive Income

 

For the six months ended 30 June 2017

 
   Unaudited Unaudited Audited
   6 Months to 30 June 2017 6 Months to 30 June 2016 12 months to Dec 2016
  Note£ £ £
Continuing operations        
Revenue   2,190,877 1,005,068 2,691,071
Cost of sales   (1,830,994) (666,172) (1,759,809)
         
Gross profit   359,883 338,896 931,262
Administration costs  

 
(494,700) (575,280) (1,307,943)
Share based payments   - (6,241) (6,242)
Other income   71,649 53 88,924
Other losses   - - (201,499)
         
Operating (loss)   (63,168) (242,572) (495,498)
         
Gain on disposal of investments   - 665,035 -
         
(Loss)/Profit before financing   (63,168) 422,463 (495,498)
         
Finance cost   - - (26)
Finance income   4,098 236 1,144
Investment income   352 58 58
Gain on foreign exchange   468 6,506 38,710
Impairment loss   (37,500) - (193,750)
(Loss)/profit on continuing operations before taxation   (95,750) 429,263 (649,362)
        
Taxation   (459) (5,340) (11,278)
         
(Loss)/profit on continuing operations after taxation   (96,209) 423,923 (660,640)
         
Discontinued operations        
(Loss)/profit from operations reclassified as held for sale   - (220,633) 476,097
         
(Loss)/profit after taxation   (96,209) 203,290 (184,543)
         
(Loss)/profit attributable to:        
Equity holders of the company   (136,208) 131,296 (420,824)
Non-controlling interest   39,999 71,994 236,281
         
(Loss)/profit after taxation   (96,209) 203,290 (184,543)
         
(Loss)/Gain on translation of foreign subsidiaries   (47,496) 204,219 383,468
Available for sale financial assets   - - 4,573
         
Profit/(loss) after taxation and total comprehensive income/(expense)   (143,705) 407,509 203,498
         
Total comprehensive income attributable to:        
Equity holders of the company   (191,492) 263,192 146,595
Non- controlling interests   47,787 144,317 56,903
         
Basic and diluted profit/(loss) per share        
         
- Basic and diluted - continuing operations 3  

(0.02p)
 

0.02p
(0.06p)
- Basic and diluted - operations reclassified as held for sale    

-
 

(0.03p)
 

0.07p
         
- Total basic and diluted profit/(loss) per share    

(0.02p)
 

(0.01p)
 

0.01p




Statement of Financial Position

 

As at 30 June 2017
    Unaudited Unaudited Audited
    30 June   30 June 31 December
    2017 2016 2016

 
    £ £ £
Assets          
Non-Current Assets          
Property, plant and equipment     85,938 120,119 86,793
Intangible assets     638,780 638,780 638,780
Investments     995,076 1,243,785 856,008
      1,719,794 2,002,684 1,581,581
           
Current Assets          
Trade and other receivables     1,225,930 492,743 820,201
Cash and cash equivalents     1,500,132 2,159,193 2,149,378
      2,726,062 2,651,936 2,969,579
           
Total Assets     4,445,856 4,654,620 4,551,160
           
Liabilities          
Trade and other payables     554,930 277,520 503,681
      554,930 277,520 503,681
           
Total Liabilities     554,930 277,520 503,681
           
Net Assets     3,890,926 4,377,100 4,047,479
           
Equity          
Share capital     1,354,839 1,354,838 1,354,839
Share premium     7,516,009 7,516,010 7,516,009
Revaluation reserve     - 11,176 12,848
Share option reserve     268,000 267,999 268,000
Foreign currency translation reserve     (21,713) 343,510 33,571
Profit and loss account     (5,564,250) (5,283,008) (5,428,042)
           
Attributable to equity shareholders of the company     3,552,885 4,210,525 3,757,225
Non-controlling interests     338,041 166,575 290,254
Total equity     3,890,926 4,377,100 4,047,479


Statement of Changes in Equity

 

For the six months ended 30 June 2017
  Share
capital
Share premiumRevaluation reserveShare option reserveForeign currency reserveProfit
and loss account
Total equityNon- controlling interest Total
  ££££££££ £
Balance at 1 Jan 2016 1,351,624 7,069,224 8,275 261,758 109,975 (5,751,366) 3,049,490 1,172,945   4,222,435
                     
Shares issued in year 3,214 446,786 - - - - 450,000 -   450,000
Share based payment charge - - - 6,241 - - 6,241 -   6,241
Revaluation of investment - - 2,901 - - - 2,901 -   2,901
Foreign Currency reserve - - - - 233,535   233,535 (29,316)   204,219
Share buyback - - - - - (23,900) (23,900) (973,795)   (997,695)
Profit for the 6 months to 30 June 2016 - - - - - 492,258 492,258 (3,259)   488,999
                     
Balance at 30 June 2016 1,354,838 7,516,010 11,176 267,999 343,510 (5,283,008) 4,210,525 166,575   4,377,100
                     
                     
Balance at 1 Jan 2016 1,351,624 7,069,224 8,275 261,758 109,975 (5,751,366) 3,049,490 1,172,945   4,222,435
Shares issued in year 3,215 446,785 - - - - 450,000 -   450,000
Share based payment charge - - - 6,242 - - 6,242 -   6,242
Revaluation of investment - - 4,573 - - - 4,573 -   4,573
Foreign Currency reserve - - - - 562,846 - 562,846 (179,378)   383,468
Change in minority interest - - - - (639,250) 744,148 104,898 (939,594)   (834,696)
Loss for the year - - - - - (420,824) (420,824) 236,281   (184,543)
                     
Balance at 31 Dec 20161,354,8397,516,00912,848268,00033,571(5,428,042)3,757,225290,254 4,047,479
                     
Balance at 1 Jan 20171,354,8397,516,00912,848268,00033,571(5,428,042)3,757,225290,254   4,047,479
Revaluation of investment --(12,848)---(12,848)-   (12,848)
Foreign Currency reserve ----(55,284)-(55,284)7,788 (47,496)
Loss for the period and total comprehensive income -----(136,208)(136,208) 

39,999
  

(96,209)
                  
Balance at 30 June 20171,354,8397,516,009-268,000(21,713)(5,564,250)3,552,885338,041 3,890,926


Statement of Cash Flow

 

For the six months ended 30 June 2017
  Unaudited Unaudited Audited
  6 Months to June 2017   6 Months to June 2016 12 months to  December 2016
       
  £ £ £
Cash flows from operating activities     
Loss after taxation (97,517) 423,923 (184,543)
Adjustments for:      
Depreciation and amortisation 6,393 6,172 52,430
(Loss) on sale of property, plant and equipment - - (3,478)
Share based payments - 6,241 6,242
Gain on disposal of investment (29,288) (665,035) (495,170)
Impairment provision 37,500 - 193,750
Dividend income (90) - (58)
(Increase)/Decrease in trade and other receivables (205,971) 789,411 (309,841)
(Decrease)/Increase in trade and other payables 3,314 (849,031) (27,317)
Foreign exchange differences (94,414) (86,406) (76,892)
Interest received (3,386) - (111)
Taxation 459 5,340 16,646
Income tax paid (5,709) (8,867) (43,870)
       
Net cash used in operating activities(388,709) (378,252) (872,212)
       
Cash flows from investing activities      
Purchase of property, plant and equipment (6,310) (4,675) (16,286)
Disposal of property, plant and equipment - - 5,738
Purchase of investments (199,892) - (550,000)
Disposal of subsidiary - 2,709,678 3,366,820
Disposal of investment 40,925 - -
Investment income 87 - 58
Interest income 3,273 - 111
Loans issued (54,324) - -
       
Net cash used in investing activities(216,241) 2,705,003 2,806,441
       
Cash flows from financing activities     
Net proceeds from issue of share capital - - 450,000
Share buyback - (808,811) (858,663)
       
Net cash generated from financing activities- (808,811) (408,663)
       
Net increase/(decrease) in cash and cash equivalents(604,950) 1,517,940 1,525,566
Cash and cash equivalents at beginning of period2,149,378 394,963 394,963
Cash and cash equivalents in disposal group - 15,950 -
Effect of foreign exchange rate changes on cash and cash equivalents(44,296) 230,340 228,849
       
Cash and cash equivalents at end of period1,500,132 2,159,193 2,149,378
       

Notes to the Interim Results

For the six months ended 30 June 2017

  1. General information

The financial information set out in this consolidated interim report for the six months ended 30 June 2017 and the comparative figures for the six months ended 30 June 2016 are unaudited. The financial information for the six months ended 30 June 2017 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2016, prepared under International Financial Reporting Standards (IFRS), received an unmodified audit report, did not contain statements under sections 498(2) or section 498(3) of the Companies Act 2006 and have been filed with the Registrar of Companies.

  1. Basis of Preparation

The 30 June 2017 consolidated interim financial statements of Alpha Returns Group Plc are for the six months ended 30 June 2017. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group prepared under IFRS for the year ended 31 December 2016.

The comparative figures for the six months ended 30 June 2016 have been extracted from the accounting records of the Group and were prepared on a consistent basis with the results presented for the year ended 31 December 2016 and have been neither reviewed nor audited by the Group's auditors.

The accounting policies applied are consistent with those of the financial statements for the year ended 31 December 2016, as described in those financial statements and as expected to be adopted in the financial statements for the year ended 31 December 2017.

  1. Earnings per share

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

In the six months to 30 June 2017, the exercise price of the options and warrants exceeded the average market price of ordinary shares in the period, thus there is no dilutive effect on the weighted average number of ordinary shares or the diluted earnings per share.

Earnings per shareUnaudited Unaudited Audited
  6 Months to June 2017 6 Months to June 2016 12 months to December 2016
Net (loss)/profit for the period attributable to equity owners of the parent from continuing operations (136,208) 131,296 (420,824)
       
Weighted average number of shares in issue 693,737,368 676,959,503 685,394,277
       
Basic and diluted earnings per share (0.02p) 0.02p (0.06p)
      
  1. Investments held at fair value through profit and loss
 Unaudited Unaudited Audited
  6 Months to June 2017 6 Months to June 2016 12 months to December 2016
Non-current portion     
Fair value at 1 January 2017 856,008 790,883 790,883
Acquisitions 199,892 450,000 550,000
Disposal of investments (23,324) - (203,625)
Impairment review (37,500) 2,902 (281,250)
  995,076 1,243,785 856,008
Current portion     
Acquisitions - - -
       
Fair value at 30 June 2017995,076 1,243,785 856,008
      
Categorised as:      
Level 1 - quoted investments 349,892 21,652 210,824
Level 3 - unquoted investments 645,184 1,222,133 645,184
     

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.

  1. Investing Policy

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

The Directors see Asia-Pacific as having considerable growth potential for the foreseeable future and many of the prospects they have identified are in this region. The Directors will consider opportunities at all stage of development with a focus on early stage investments and the opportunities would be generally have some or all of the following characteristics, namely:

  • a majority of their revenue derived from the Asia-Pacific, and strongly positioned to benefit from the region's growth;
  • operating within an emerging industry with potential for rapid growth in sales;
  • a trading history which reflects past profitability or potential for significant growth going forward;
  • for developing companies, potential for increased profitability through expertise, economies of scale, savings and operation efficiencies; 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 where appropriate having regard to the size of the Company's investment, and the Directors will seek representation on the board of the investee company where they feel that an investee company would benefit from their skills and expertise.

Investments may be made in all types of assets falling within the remit of the Investing Policy and there will be no sector-driven investment restrictions. Investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project. The Company aims to structure its investments tax efficiently though the use of intermediate holdings vehicles in tax efficient jurisdictions.

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

In addition, the Company may from time to time invest in liquid securities in order to attain a highly-invested status and avoid cash drag to enhance portfolio returns. Such securities may include:

  • Government debt and exchange-traded corporate bonds;
  • Exchange-traded equity securities;
  • Index funds and exchange-traded funds; and
  • Mutual funds and other investment funds capable of redemption.

No more than fifty per cent. of the Company's gross assets will be invested in such liquid securities at the point of investment.

The Company intends to deliver Shareholder returns principally through capital growth rather than capital distributions via dividends. Given the focus on early stage investments, valuations will occur twice yearly to coincide with the preparation by the Company of its half-yearly report and annual accounts.

The Directors believe that their broad collective business and investing experience as set out on the Company's website will assist in the identification and evaluation of suitable opportunities and will enable the Company to achieve its investing objectives.




This announcement is distributed by Nasdaq 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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