TIDMARGP
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:
Christopher Neo
Alpha Returns Group plc Executive Director 020 3286 6388
ZAI Corporate Finance Ltd Peter Trevelyan-Clark / Tim
(NOMAD) 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 GBP660,640
(2015: loss GBP522,351). After a profit from discontinued operations of
GBP476,097 and foreign currency translation gains of GBP383,468, the
profit after tax and total comprehensive income was GBP203,498 (2015:
loss GBP473,292). The loss on operations after taxation attributable to
the equity holders of the Company (before the gain on translation of
foreign subsidiaries) was GBP420,824 (2015: GBP574,009). Losses of the
parent company were GBP209,996 (2015: GBP474,941).
Total assets amounted to GBP4,551,160 (2015: GBP5,050,763) with
GBP3,757,225 (2015: GBP3,049,490) net assets attributable to equity
holders of the Company and net cash of GBP2,149,378 (2015: GBP394,963).
The net cash position for 2015 is after excluding GBP1,287,573 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 (GBP450,000) 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 GBP281,250 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 GBP100,000. The investment in NTLG
had a market value of GBP187,500 at year end.
On 13 December 2016 the Company terminated its conditional 50%
investment in Jesoft International Limited and received HK$928,125
(GBP94,200) 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 GBP295,700 and the market value of those
shares of GBP69,600 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 GBP2,149,378 (2015: GBP394,963 excluding cash held by RBSL),
an investment portfolio of GBP1,686,348 (2015: GBP1,686,348) and equity
shareholders' funds of GBP3,757,225 (2015: GBP3,049,490).
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:
31 December 31 December
GROUP STATISTICS 2016 2015 Change %
Net asset value attributable to equity
holders GBP3,757,225 GBP3,049,490 23.2%
Net asset value per share attributable
to equity holders 0.55p 0.46p 19.6%
Closing share price 0.40p 0.60p (33.33%)
Cash GBP2,149,378 GBP394,963* 444.2%
*The net cash position for 2015 is after reclassifying GBP1,287,573 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
12 months
12 months to to Dec
Consolidated statement of comprehensive income Dec 2016 2015
Note GBP GBP
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 GBP209,996
(2015: 474,941).
The accompanying accounting policies and notes form an integral part of
these financial statements.
Consolidated statement of financial position
31 December 31 December
Note 2016 2015
GBP GBP
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 GBP GBP
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 Foreign Non-
Share Share option Revaluation currency Profit Total controlling
capital premium reserve reserve reserve and loss account equity interest Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
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 3,215 446,785 - - - - 450,000 - 450,000
Share based
payment
charge - - 6,242 - - - 6,242 - 6,242
Change in
minority
interest - - - - (639,250) 744,148 104,898 (939,594) (834,696)
Loss for the
year and
total
comprehensive
expense - - - 4,573 562,846 (420,824) 146,595 56,903 203,498
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 Share Merger Profit Total
capital premium reserve and loss account equity
GBP GBP GBP GBP GBP
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 3,215 446,785 - - 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 12 months
to Dec to Dec
2016 2015
GBP GBP
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
12 months to December
31 December 2016 2015
GBP GBP
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 GBPGBP. 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 GBP7,130 (2015: GBP7,130) along with net assets of GBP3,631,045
(2015: GBP3,384,799). 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 Year to
Dec 2016 Dec 2015
GBP GBP
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 Year to
31 December 2016 31 December 2015
GBP GBP
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 Year to
31 December 2016 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.
Share based payment Total Total
Name Fees charge 2016 2015
GBP GBP GBP GBP
C Y Chan 19,672 780 20,452 36,422
C Neo 20,984 780 21,764 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
74,718 1,560 76,278 110,385
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 Year to
Dec 2016 Dec 2015
GBP GBP
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 Year to
Dec 2016 Dec 2015
GBP GBP
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 GBP11,278 (2015: GBP6,193) 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
GBP GBP
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
GBP GBP
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
GBP GBP
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
GBP GBP
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:
GBP
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
GBP476,058.
7 PROFIT/(LOSS) PER SHARE
2016 2015
GBP GBP
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 Motor
equipment Leasehold improvements Vehicles Total
GBP GBP GBP GBP
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 Motor
equipment Leasehold improvements Vehicles Total
GBP GBP GBP GBP
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
rights Goodwill Total
GBP GBP GBP
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 - 638,780 638,780
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
GBP GBP
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 Country of Percentage of Principal activity
subsidiaries Incorporation ordinary shares
held
AVVA Group Limited BVI 100% Dormant
Alpha Returns Hong Hong Kong 100% Dormant
Kong Limited
ARGP Investments BVI 100% Investment holding
Limited company
Riche Bright Group BVI 100% Investment holding
Limited* company
Riche Bright Republic of 100% Dormant
Limited** Vanuatu
Riche Bright Hong Kong 100% Investment holding
Investments company
Limited**
Telistar Solutions Singapore 52.5% IT Solutions
Pte Limited***
Telistar Solutions Malaysia 47.25% IT Solutions
SDN BHD****
*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
Group Company
2016 2015 2016 2015
GBP GBP GBP GBP
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
GBP GBP GBP GBP
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
GBP GBP GBP GBP
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
Group Company
2016 2015 2016 2015
GBP GBP GBP GBP
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
GBP GBP
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 GBP476,434 and GBP295,699
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 GBP450,000. The
Group recognised an impairment provision against the
value of the investment in Oriental Ventures Limited
during the year of GBP281,250.
*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 GBP201,499
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
2016 Current Non-current
later than 5
Within 6 months 6 to 12 months 1 to 5 years years
GBP GBP GBP GBP
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
later than 5
Within 6 months 6 to 12 months 1 to 5 years years
GBP GBP GBP GBP
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
GBP GBP
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
GBP GBP
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 shares Share Capital Share
Ordinary Deferred Ordinary Deferred Total Premium
GBP GBP GBP GBP
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 661,594,511 168,462,426 66,160 1,285,464 1,351,624 7,069,224
Issue of
shares 5
April
2016 32,142,857 - 3,215 - 3,215 446,785
At 31
December
2016 693,737,368 168,462,426 69,375 1,285,464 1,354,839 7,516,009
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 GBP0.0067
The charge to the income statement for share passed payments for the
year ended 31 December 2016 was GBP6,242 (2015: GBP134,000).
Movements in the number of options outstanding and their related
weighted average exercise prices are as follows:
Weighted average exercise price
Number of options per share
At 1 January 2016 40,000,000 2.2
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 GBP118,033 (2015: GBP108,197) 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 GBPnil (2015: GBPnil) was due
as at the year end.
During the year a payment of GBPnil (2015: GBP4,145) 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 GBPnil (2015:
GBPnil) 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: GBP GBP
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 Exercise Exercise
options price dates
3/1/2019
-
Christopher Neo 3,000,000 0.5p 3/1/2024
3/1/2019
-
Chan Cheong Yee (Quattro) 1,000,000 0.5p 3/1/2024
3/1/2019
-
Tsang Fung Chu (Ellen) 1,000,000 0.5p 3/1/2024
3/1/2019
Group employees (including employees of Telistar Solutions -
Pte Ltd) and consultants to the Company 10,000,000 0.5p 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
http://www.alpharet.com
(END) Dow Jones Newswires
June 30, 2017 10:44 ET (14:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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