TIDMARGO
RNS Number : 1584Y
ARGO Group Limited
28 August 2009
?
Argo Group Limited
("Argo" or the "Company")
Interim Results for the six months ended 30 June 2009
Argo today announces its interim results for the six months ended 30 June 2009.
The Company will today make available its interim report for the six month
period ended 30 June 2009 on the Company's website www.argogrouplimited.com.
The company was incorporated on 14 February 2008 and acquired the Argo
businesses on 13 June 2008. Whilst the comparative trading period is therefore
from 14 February 2008 to 30 June 2008, financial data in respect of the Argo
business has only been consolidated from 13 June 2008.
Key Highlights for the six month period ended 30 June 2009
- Encouraging performance across the Argo credit funds
- Achievement of portfolio rebalancing and restructuring objectives in spite of
significant reduction in performance fee income
- Revenues of USD5.8 million (period to June 2008: USD1.5 million)
- Operating profit of USD1.5 million (period to June 2008: USD2.0 million)
- Profit before tax of USD2.0 million (period to June 2008: USD2.1 million)
- Healthy balance sheet: net assets of USD43.7 million (December 2008: USD41.0
million)
Commenting on the results, Kyriakos Rialas, Chief Executive of Argo said:
"We successfully navigated the Company through six difficult trading months by
controlling costs and managing liquidity to benefit the bottom line margin
performance. All our credit funds have seen positive returns with one even
earning a small performance fee. Redemptions have stabilised and the Group is
well capitalised for the current scale of operations. We remain committed to
delivering on our strategy by delivering attractive steady returns while
rebuilding assets under management."
Enquiries
Argo Group Limited
Andreas Rialas
Shamillia Sivathambu
020 7535 4000
Panmure Gordon
Dominic Morley
020 7459 3600
Chairman's statement
The company was incorporated on 14 February 2008 and acquired the Argo
businesses on 13 June 2008. Whilst the comparative trading period is therefore
from 14 February 2008 to 30 June 2008, financial data in respect of the Argo
business has only been consolidated from 13 June 2008.
Key Highlights for the six month period ended 30 June 2009
- Encouraging performance across the Argo credit funds
- Achievement of portfolio rebalancing and restructuring objectives in spite of
significant reduction in performance fee income
- Revenues of USD5.8 million (period to June 2008: USD1.5 million)
- Operating profit of USD1.5 million (period to June 2008: USD2.0 million)
- Profit before tax of USD2.0 million (period to June 2008: USD2.1 million)
- Healthy balance sheet: net assets of USD43.7 million (December 2008: USD41.0
million)
Business review
Argo is pleased to report the interim results for the half year ended 30 June
2009. The Company was incorporated in February 2008 in the Isle of Man and began
trading as a new group holding company on 13 June 2008, creating a shorter
comparative period of 13 June to 30 June 2008. It listed on the AIM market in
November 2008.
Argo's primary business is to deliver a diversified approach to investing in
emerging markets. Its investment objective is to provide investors with absolute
returns in the five funds that it manages by investing in, inter alia, fixed
income, special situations, local currencies and interest rate strategies,
private equity, real estate, quoted equities, high yield corporate debt and
distressed debt, although not every fund invests in each of these asset classes.
Argo has a performance track record dating back to 2000.
For the six month period ended 30 June 2009 the Group generated revenues of
USD5.8 million (period to 30 June 2008: USD1.5 million) with management fees
accounting for USD5.5 million (period to 30 June 2008: USD0.9 million). Revenues
reflected lower performance fee income of USD0.2 million (period to 30 June
2008: USD0.6 million) during the period due to the application of the high
water-mark across the Funds. The Argo Fund Limited ("TAF") and Argo Global
Special Situations Fund SP ("AGSSF"), a segregated portfolio of the Argo Capital
Investors Fund SPC, will need to increase their NAV as at 31 July 2009 by 60%
and 35% respectively in order to reach their high-water mark. Earnings per share
were USD0.02 (period to 30 June 2008: USD0.03).
Assets under management ("AUM") decreased during the six month period ended 30
June 2009 by 28.1% to USD477.5 million from their level at 31 December 2008. The
decrease of USD187 million was a result of lower market valuations and
redemptions in TAF and AGSSF. The unrealised market value reductions to a number
of assets across the Argo investment portfolios following the dislocation in
credit markets in the second half of 2008 was a further contributing factor to
the decline in AUM. To enhance value for shareholders, the Group subscribed
USD11 million of existing cash resources for new shares in TAF on 5 June 2009.
This allowed the Fund to improve the return on assets by taking advantage of
lower market valuations and achieve better returns than the prevailing rates
available from bank deposits.
The Directors, having given due and careful consideration, have decided not to
pay an interim dividend.
Operational review
Redemption pressure eased over the first half of the year although asset-raising
conditions remained challenging. As previously announced, TAF's board of
directors decided to implement a 'gate' on redemptions effective 19 November
2008. Under the terms of the gate, the Fund would meet redemption requests
amounting to 10% of TAF's total number of shares at each next dealing date until
all redemptions were satisfied. The gate became unnecessary in June and we
expect this development to encourage new investor interest to the Fund.
The newly created subsidiary, AGSSF Holdings Limited ("AHL"), which was approved
by AGSSF's board of directors in February to hold approximately 40% of AGSSF's
existing net assets, performed well in the six-month period ended 30 June 2009.
It delivered a year-to-date return of 5.47%, in part driven by more favourable
mark-to-market valuations. AHL represents assets that are currently more
difficult to liquidate.
The Group was also successful in recovering value from TAF and AGSSF's less
liquid assets during the period. In February and March 2009, the Funds
successfully realised two of their less liquid investments with positive
results, namely, an Argentine distressed position that came out of bankruptcy
and the exercise of a capital protection clause of an investment in preference
shares of a Nigerian bank. In April 2009, a further investment was realised
through the Funds' position in one of Ukraine's largest banks.
As part of the Company's efforts to restructure and rebalance portfolios to meet
changing market conditions, the Argo Multi Strategy Fund was renamed Argo
Distressed Credit Fund Limited ("ADCF) in April 2009. This was instituted to
better reflect the Fund's evolved investment remit of capitalising on new
opportunities emerging from dislocated credit markets.
Additionally, in a move to trim operating costs, the Company reduced staff
salaries by 15% effective 1 April 2009 and we continue to monitor the expense
base closely.
Fund performance
Performance across the range of Argo Funds was mostly encouraging for the half
year ended 30 June 2009 with TAF, ADCF, AGSSF and the AHL portfolio delivering
positive year-to-date returns for the period. The resurgence of emerging markets
in the first six months of the year gave some of the Funds' assets the
opportunity to benefit from higher market valuations. But while the return of
confidence to these markets was encouraging, we felt the rally had run a little
ahead of fundamental developments towards the latter part of the six month
period and therefore erred on the side of caution. We positioned the Funds in
line with this view by not closing all short positions.
Argo Funds
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| Fund | Launch | 30 | 30 | 2008 | Since | Annualised | Sharpe | Down | AUM |
| | date | June | June | Year | inception | performance | ratio | months | |
| | | 2009 | 2008 | total | | | | | |
| | | year-to-date | year-to-date | | | | | | |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| | | % | % | % | % | CAGR % | | | US$m |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| The Argo Fund | Oct-00 | 5.30 | 2.70 | -39.86 | 102.56 | 9.35 | 0.48 | 12 of | 122.3 |
| | | | | | | | | 105 | |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| Argo Global | Aug-04 | 5.47 | 5.21 | -26.88 | 28.12 | 5.84 | 0.24 | 13 of | 143.6 |
| Special | | | | | | | | 59 | |
| Situations Fund | | | | | | | | | |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| AGSSF Holdings | Feb-09 | 5.80 | N/A | N/A | 5.80 | 14.70 | 1.55 |2 of 5 | 66.2 |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| Argo Distressed | Oct-08 | 6.03 | N/A | 0.49 | 5.83 | 7.17 | 0.73 |3 of 9 | 12.4 |
| Credit Fund | | | | | | | | | |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| Argo Real | Aug-06 | -60.52 | 0.32 | -2.13 | -49.58 | -20.88 | N/A | 12 of | 62.9* |
| Estate | | | | | | | | 36 | |
| Opportunities | | | | | | | | | |
| Fund | | | | | | | | | |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| Argo Capital | Aug-06 | -2.7 | 2.3 | -37.51 | 28 | 9 | N/A | N/A | 70.05 |
| Partners Fund | | | | | | | | | |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
| Total | | | | | | | | | 477.5 |
+-----------------+--------+--------------+--------------+--------+-----------+-------------+--------+--------+--------+
* NAV only officially measured twice a year, March and September.
The Argo Real Estate Opportunities Fund Limited ("AREOF"), which is more
susceptible to deterioration in the real economy, was affected by rising
retailer bankruptcies, increasing demand for rent concessions and a growing
reluctance of tenants to make payments of their contractual obligations.
Nevertheless, the Fund's two retail centre projects in Sibiu and Suceava in
Romania continued to trade with 98% and 95% tenant occupancy levels,
respectively. The third project, the Riviera Shopping City in Odessa, Ukraine,
is due to reach completion in the 3rd quarter of 2009.
Despite the Fund's fall in AUM during the six month period ended 30 June 2009 by
59% to USD62.9 million, the Company still received management fee income from
the initial capital of EUR100 million. AREOF reported an adjusted NAV of EUR48.3
million (as at 31 March 2008: EUR125.6 million).
Meanwhile, the Argo Capital Partners Fund reported a negative return of -2.7 %
for the six months ended 30 June 2009 (as at 30 June 2008: 2.3%). Nevertheless,
the Fund is still performing well and its underlying assets remain robust. The
Fund is closed to new subscriptions.
Outlook
There has been significant turnaround in market sentiment during the last six
months as the impact of massive and unprecedented government intervention has
begun to be felt. Liquidity has returned in some quarters, enabling great
trading volumes in the main markets but the sustainability of the global
economic recovery will remain the subject of speculation for some time.
Although there are fewer opportunities now to acquire assets at prices well
below fundamental value, there remains plenty of potential to profit from
trading and monetising less liquid assets. The Group's multi-strategy approach
to investing in emerging markets means that it is well placed to take advantage
of these opportunities.
The Group is well capitalised for the current scale of operations and the Board
remains committed on delivering attractive returns while rebuilding assets under
management.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+---------------------------------------------+------+-----------+----------+-----------+
| | | Six | | 14 |
| | | months | | February |
+---------------------------------------------+------+-----------+----------+-----------+
| | | Ended | | to |
+---------------------------------------------+------+-----------+----------+-----------+
| | | 30 June | | 30 June |
+---------------------------------------------+------+-----------+----------+-----------+
| | | 2009 | | 2008 |
+---------------------------------------------+------+-----------+----------+-----------+
| |Note | US$'000 | | US$'000 |
+---------------------------------------------+------+-----------+----------+-----------+
| | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Management fees | | 5,485 | | 944 |
+---------------------------------------------+------+-----------+----------+-----------+
| Incentive fees | | 177 | | 553 |
+---------------------------------------------+------+-----------+----------+-----------+
| Other income | | 173 | | - |
+---------------------------------------------+------+-----------+----------+-----------+
| Revenue | | 5,835 | | 1,497 |
+---------------------------------------------+------+-----------+----------+-----------+
| | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Legal and professional expenses | | (294) | | (8) |
+---------------------------------------------+------+-----------+----------+-----------+
| Management and incentive fees payable | | (181) | | (191) |
+---------------------------------------------+------+-----------+----------+-----------+
| Operational expenses | | (1,004) | | (578) |
+---------------------------------------------+------+-----------+----------+-----------+
| Employee costs | | (2,660) | | (125) |
+---------------------------------------------+------+-----------+----------+-----------+
| Foreign exchange gain/(loss) | | 157 | | (142) |
+---------------------------------------------+------+-----------+----------+-----------+
| Amortisation of intangible assets | 6 | (333) | | - |
+---------------------------------------------+------+-----------+----------+-----------+
| Depreciation | 7 | (54) | | (6) |
+---------------------------------------------+------+-----------+----------+-----------+
| Excess of acquirer's interest in net value | | - | | 1,556 |
| of identifiable net assets | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Operating profit | | 1,466 | | 2,003 |
+---------------------------------------------+------+-----------+----------+-----------+
| | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Interest income on cash and cash | | 99 | | 17 |
| equivalents | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Unrealised gain on investments | | 481 | | 72 |
+---------------------------------------------+------+-----------+----------+-----------+
| Profit on ordinary activities before | | 2,046 | | 2,092 |
| taxation | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Taxation | 4 | (184) | | - |
+---------------------------------------------+------+-----------+----------+-----------+
| Profit for the period after taxation | 5 | 1,862 | | 2,092 |
| attributable to members of the Company | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Other comprehensive income | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Exchange differences on translation of | | 895 | | 155 |
| foreign operations | | | | |
+---------------------------------------------+------+-----------+----------+-----------+
| Total comprehensive income for the period | | 2,757 | | 2,247 |
+---------------------------------------------+------+-----------+----------+-----------+
+---------------------------------------------+------+-----------+----------+-----------+
| Earnings per share (basic) | 5 | US$0.02 | | US$0.03 |
+---------------------------------------------+------+-----------+----------+-----------+
| Earnings per share (diluted) | 5 | US$0.02 | | US$0.03 |
+---------------------------------------------+------+-----------+----------+-----------+
The Directors consider that all results derive from continuing activities.
The company was incorporated on 14 February 2008 and acquired the Argo
businesses on 13 June 2008
when it began to trade as a new group.
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2009
+---------------------------------------------+------+-----------+--+-----------+
| | | | | Restated |
| | | | | (Note 13) |
+---------------------------------------------+------+-----------+--+-----------+
| | | At | | At |
| | | 30 June | | 31 |
| | | | | December |
+---------------------------------------------+------+-----------+--+-----------+
| | | 2009 | | 2008 |
+---------------------------------------------+------+-----------+--+-----------+
| |Note | US$'000 | | US$'000 |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Assets | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Non-current assets | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Intangible assets | 6 | 17,855 | | 18,110 |
+---------------------------------------------+------+-----------+--+-----------+
| Fixtures, fittings and equipment | 7 | 206 | | 237 |
+---------------------------------------------+------+-----------+--+-----------+
| Loans and advances receivable | | 264 | | 235 |
+---------------------------------------------+------+-----------+--+-----------+
| | | 18,325 | | 18,582 |
+---------------------------------------------+------+-----------+--+-----------+
| Current assets | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Investments | 8 | 13,457 | | 1,976 |
+---------------------------------------------+------+-----------+--+-----------+
| Trade and other receivables | | 2,366 | | 2,214 |
+---------------------------------------------+------+-----------+--+-----------+
| Cash and cash equivalents | | 10,767 | | 20,058 |
+---------------------------------------------+------+-----------+--+-----------+
| Loans and advances receivable | | 6 | | 44 |
+---------------------------------------------+------+-----------+--+-----------+
| | | 26,596 | | 24,292 |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Total assets | | 44,921 | | 42,874 |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Equity and liabilities | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Equity | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Issued share capital | 9 | 769 | | 769 |
+---------------------------------------------+------+-----------+--+-----------+
| Share premium | | 32,772 | | 32,772 |
+---------------------------------------------+------+-----------+--+-----------+
| Revenue reserve | | 11,702 | | 9,840 |
+---------------------------------------------+------+-----------+--+-----------+
| Foreign currency translation reserve | | (1,560) | | (2,455) |
+---------------------------------------------+------+-----------+--+-----------+
| | | 43,683 | | 40,926 |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Current liabilities | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Trade and other payables | | 944 | | 717 |
+---------------------------------------------+------+-----------+--+-----------+
| Taxation payable | 4 | 294 | | 1,231 |
+---------------------------------------------+------+-----------+--+-----------+
| Total current liabilities | | 1,238 | | 1,948 |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
| Total equity and liabilities | | 44,921 | | 42,874 |
+---------------------------------------------+------+-----------+--+-----------+
| | | | | |
+---------------------------------------------+------+-----------+--+-----------+
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+--------------------------+----------+----------+----------+-------------+----------+
| | Issued | Share | Revenue | Foreign | Total |
| | share | premium | reserve | currency | |
| | capital | | | translation | |
| | | | | reserve | |
+--------------------------+----------+----------+----------+-------------+----------+
| | 2008 | 2008 | 2008 | 2008 | 2008 |
+--------------------------+----------+----------+----------+-------------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| As at 14 February 2008 | - | - | - | - | - |
| (date of incorporation) | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Total comprehensive | | | | | |
| income | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Profit for the period | - | - | 2,092 | - | 2,092 |
| after taxation | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Exchange differences on | - | - | - | 155 | 155 |
| translation | | | | | |
| of foreign operations | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Contributions by and | | | | | |
| distributions to owners | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Issue of 76,931,620 | 769 | 32,772 | - | - | 33,541 |
| shares | | | | | |
| (US$0.01 par) | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| As at 30 June 2008 | 769 | 32,772 | 2,092 | 155 | 35,788 |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | Issued | Share | Revenue | Foreign | Total |
| | share | premium | reserve | currency | |
| | capital | | | translation | |
| | | | | reserve | |
+--------------------------+----------+----------+----------+-------------+----------+
| | 2009 | 2009 | 2009 | 2009 | 2009 |
+--------------------------+----------+----------+----------+-------------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| As at 1 January 2009 | 769 | 32,772 | 9,840 | (2,455) | 40,926 |
| (Restated | | | | | |
| Note 13) | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Total comprehensive | | | | | |
| income | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Profit for the period | - | - | 1,862 | - | 1,862 |
| after taxation | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| Exchange differences on | - | - | - | 895 | 895 |
| translation | | | | | |
| of foreign operations | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
| As at 30 June 2009 | 769 | 32,772 | 11,702 | (1,560) | 43,683 |
+--------------------------+----------+----------+----------+-------------+----------+
| | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+----------------------------------------+--------+-------------+--+-------------+
| | | Six months | | 14 February |
| | | ended | | |
| | | | | to |
+----------------------------------------+--------+-------------+--+-------------+
| | | 30 June | | 30 June |
+----------------------------------------+--------+-------------+--+-------------+
| | | 2009 | | 2008 |
+----------------------------------------+--------+-------------+--+-------------+
| | Note | US$'000 | | US$'000 |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Net cash inflow from operating | 10 | 659 | | 644 |
| activities | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Cash flows from investing activities | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Interest received on cash and cash | | 99 | | 17 |
| equivalents | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Acquisition of the Argo businesses | | - | | 10,057 |
+----------------------------------------+--------+-------------+--+-------------+
| Purchase of current asset investments | | (11,000) | | - |
+----------------------------------------+--------+-------------+--+-------------+
| Purchase of fixtures, fittings and | 7 | (23) | | (12) |
| equipment | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Net cash (outflow)/inflow from | | (10,924) | | 10,062 |
| investing activities | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Net (decrease)/increase in cash and | | (10,265) | | 10,706 |
| cash equivalents | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Cash and cash equivalents at 1 January | | 20,058 | | - |
| 2009 and | | | | |
| 14 February 2008 (date of | | | | |
| incorporation) | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Foreign exchange gain on cash and cash | | 974 | | 268 |
| equivalents | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| | | | | |
+----------------------------------------+--------+-------------+--+-------------+
| Cash and cash equivalents as at 30 | | 10,767 | | 10,974 |
| June 2009 and 30 June 2008 | | | | |
+----------------------------------------+--------+-------------+--+-------------+
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2009
1. CORPORATE INFORMATION
The Company is domiciled in the Isle of Man under the Companies Act 2006.
Its registered office is at 33-37 Athol Street, Douglas, Isle of Man, IM1 1LB.
The condensed consolidated interim financial statements of the Company as at and
for the six months ended 30 June 2009 comprise the Company and its subsidiaries
(together referred to as the "Group").
The consolidated financial statements of the Group as at and for the period
ended 31 December 2008 are available upon request from the Company's registered
office or at www.argogrouplimited.com.
The principal activity of the Company is that of a holding company and the
principal activity of the wider Group is that of an investment management
business. The functional and presentational currency of the Group undertakings
is US dollars. The Group has 39 employees.
Wholly owned subsidiaries
Country of incorporation
+---------------------------------------------------+-------------------+
| Argo Capital Management (Cyprus) Limited | Cyprus |
+---------------------------------------------------+-------------------+
| Argo Capital Management Limited | United Kingdom |
+---------------------------------------------------+-------------------+
| Argo Capital Management Property Limited | Cayman Islands |
+---------------------------------------------------+-------------------+
| Argo Capital Management (Asia) Pte. Ltd. | Singapore |
+---------------------------------------------------+-------------------+
| North Asset Management Srl | Romania |
+---------------------------------------------------+-------------------+
| North Asset Management Sarl | Luxembourg |
+---------------------------------------------------+-------------------+
| Argo Investor Services Limited | Cayman Islands |
+---------------------------------------------------+-------------------+
| Argo Investor Services AG | Switzerland |
+---------------------------------------------------+-------------------+
2. BASIS OF PREPARATION
These condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting. They do not include all the
information required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group as at and
for the period ended 31 December 2008.
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the period ended 31 December
2008
These condensed consolidated interim financial statements were approved by
the Board of Directors on 27 August 2009.
3. SEGMENTAL ANALYSIS
The Group operates as a single asset management business.
The operating results of the companies set out in note 1 above are regularly
reviewed by the directors of the Group for the purposes of making decisions
about resources to be allocated to each company and to assess performance. The
following summary analyses revenues, profit or loss, assets and liabilities:
+-------------------------+---------+------------+------------+---------+----------+
| | | Argo | | | Six |
| | Argo | Capital | Argo | | months |
| | Group | Management | Capital | | ended |
| | Ltd | (Cyprus) | Management | Other | 30 June |
| | | Limited | Limited | | |
+-------------------------+---------+------------+------------+---------+----------+
| | 2009 | 2009 | 2009 | 2009 | 2009 |
+-------------------------+---------+------------+------------+---------+----------+
| | US$000 | US$000 | US$000 | US$000 | US$000 |
+-------------------------+---------+------------+------------+---------+----------+
| | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Revenues from external | - | 4,358 | - | 1,477 | 5,835 |
| customers | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Intersegment revenues | 11,479 | - | 1,728 | 221 | 13,428 |
+-------------------------+---------+------------+------------+---------+----------+
| | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Reportable segment | 11,971 | (9,426) | (502) | (1) | 2,042 |
| profit/(loss) | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Intersegment | 11,479 | (13,424) | 1,728 | 221 | 4 |
| profit/(loss) | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Profit/(loss) excluding | 492 | 3,998 | (2,230) | (222) | 2,038 |
| inter- segment | | | | | |
| transactions | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Reportable segment | 46,550 | 2,721 | 6,702 | 7,872 | 63,845 |
| assets | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
| Reportable segment | 35 | 623 | 394 | 519 | 1,571 |
| liabilities | | | | | |
+-------------------------+---------+------------+------------+---------+----------+
+------------------------------------------------------------+------------+
| Revenues, profit or loss, assets and liabilities may be | |
| reconciled as follows: | |
| | |
+------------------------------------------------------------+------------+
| | Six months |
+------------------------------------------------------------+------------+
| | ended |
+------------------------------------------------------------+------------+
| | 30 June |
| | 2009 |
+------------------------------------------------------------+------------+
| | US$000 |
+------------------------------------------------------------+------------+
| Revenues | |
+------------------------------------------------------------+------------+
| Total revenues for reportable segments | 19,263 |
+------------------------------------------------------------+------------+
| Elimination of intersegment revenues | (13,428) |
+------------------------------------------------------------+------------+
| Group revenues | 5,835 |
+------------------------------------------------------------+------------+
| | |
+------------------------------------------------------------+------------+
| Profit or loss | |
+------------------------------------------------------------+------------+
| Total profit for reportable segments | 2,042 |
+------------------------------------------------------------+------------+
| Elimination of intersegment profits | (4) |
+------------------------------------------------------------+------------+
| Other unallocated amounts | 8 |
+------------------------------------------------------------+------------+
| Profit on ordinary activities before taxation | 2,046 |
+------------------------------------------------------------+------------+
| | |
+------------------------------------------------------------+------------+
| Assets | |
+------------------------------------------------------------+------------+
| Total assets for reportable segments | 63,845 |
+------------------------------------------------------------+------------+
| Elimination of intersegment receivables | (327) |
+------------------------------------------------------------+------------+
| Elimination of Companys cost of investments | (18,597) |
+------------------------------------------------------------+------------+
| Group assets | 44,921 |
+------------------------------------------------------------+------------+
| | |
+------------------------------------------------------------+------------+
| Liabilities | |
+------------------------------------------------------------+------------+
| Total liabilities for reportable segments | 1,571 |
+------------------------------------------------------------+------------+
| Elimination of intersegment payables | (333) |
+------------------------------------------------------------+------------+
| Group liabilities | 1,238 |
+------------------------------------------------------------+------------+
3. SEGMENTAL ANALYSIS (continued)
+---------------+---------+------------+------------+------------+---------+-----------+
| | | Argo | | Argo | | 14 |
| | Argo | Capital | Argo | Capital | | February |
| | Group | Management | Capital | Management | | to |
| | Ltd | (Cyprus) | Management | Property | Other | 30 June |
| | | Limited | Limited | Limited | | |
+---------------+---------+------------+------------+------------+---------+-----------+
| | 2008 | 2008 | 2008 | 2008 | 2008 | 2008 |
+---------------+---------+------------+------------+------------+---------+-----------+
| | US$000 | US$000 | US$000 | US$000 | US$000 | US$000 |
+---------------+---------+------------+------------+------------+---------+-----------+
| Revenues from | - | 1,349 | - | 148 | - | 1,497 |
| external | | | | | | |
| customers | | | | | | |
+---------------+---------+------------+------------+------------+---------+-----------+
| Intersegment | - | - | 481 | - | 29 | 510 |
| revenues | | | | | | |
+---------------+---------+------------+------------+------------+---------+-----------+
| Reportable | (22) | 505 | 2 | 73 | (39) | 519 |
| segment | | | | | | |
| profit/(loss) | | | | | | |
+---------------+---------+------------+------------+------------+---------+-----------+
| Intersegment | - | (656) | 481 | - | 29 | (146) |
| profit/(loss) | | | | | | |
+---------------+---------+------------+------------+------------+---------+-----------+
| Reportable | 33,542 | 10,386 | 7,909 | 6,075 | 4,487 | 62,399 |
| segment | | | | | | |
| assets | | | | | | |
+---------------+---------+------------+------------+------------+---------+-----------+
| Reportable | 22 | 3,568 | 3,555 | 872 | 14 | 8,031 |
| segment | | | | | | |
| liabilities | | | | | | |
+---------------+---------+------------+------------+------------+---------+-----------+
Revenues, profit or loss, assets and liabilities may be reconciled
as follows:
+----------------------------------------------------------+--------------+
| | 14 |
| | February |
| | to |
| | 30 June |
+----------------------------------------------------------+--------------+
| | 2008 |
+----------------------------------------------------------+--------------+
| | US$000 |
+----------------------------------------------------------+--------------+
| Revenues | |
+----------------------------------------------------------+--------------+
| Total revenues for reportable segments | 2,007 |
+----------------------------------------------------------+--------------+
| Elimination of intersegment revenues | (510) |
+----------------------------------------------------------+--------------+
| Group revenues | 1,497 |
+----------------------------------------------------------+--------------+
| | |
+----------------------------------------------------------+--------------+
| Profit or loss | |
+----------------------------------------------------------+--------------+
| Total profit for reportable segments | 519 |
+----------------------------------------------------------+--------------+
| Elimination of intersegment loss | 146 |
+----------------------------------------------------------+--------------+
| Other unallocated amounts | 1,427 |
+----------------------------------------------------------+--------------+
| Profit on ordinary activities before taxation | 2,092 |
+----------------------------------------------------------+--------------+
| | |
+----------------------------------------------------------+--------------+
| Assets | |
+----------------------------------------------------------+--------------+
| Total assets for reportable segments | 62,399 |
+----------------------------------------------------------+--------------+
| Elimination of intersegment receivables | (900) |
+----------------------------------------------------------+--------------+
| Elimination of Companys cost of investments | (18,597) |
+----------------------------------------------------------+--------------+
| Group assets | 42,902 |
+----------------------------------------------------------+--------------+
| | |
+----------------------------------------------------------+--------------+
| Liabilities | |
+----------------------------------------------------------+--------------+
| Total liabilities for reportable segments | 8,031 |
+----------------------------------------------------------+--------------+
| Elimination of intersegment payables | (917) |
+----------------------------------------------------------+--------------+
| Group liabilities | 7,114 |
+----------------------------------------------------------+--------------+
4. TAXATION
Taxation rates applicable to the parent company and the Cypriot, UK,
Singaporean, Luxembourg, Swiss and Romanian subsidiaries range from 0% to 28%.
+----------------------------------------------+-----------+--+------------+
| Income Statement | Six | | 14 |
| | months | | February |
+----------------------------------------------+-----------+--+------------+
| | ended | | to |
+----------------------------------------------+-----------+--+------------+
| | 30 June | | 30 June |
+----------------------------------------------+-----------+--+------------+
| | 2009 | | 2008 |
+----------------------------------------------+-----------+--+------------+
| | US$'000 | | US$'000 |
+----------------------------------------------+-----------+--+------------+
| | | | |
+----------------------------------------------+-----------+--+------------+
| Taxation charge for the period on Group | 184 | | - |
| companies | | | |
+----------------------------------------------+-----------+--+------------+
The charge for the period can be reconciled to the profit per the Condensed
Consolidated Income Statement as follows:
+----------------------------------------------+-----------+--+------------+
| | Six | | 14 |
| | months | | February |
+----------------------------------------------+-----------+--+------------+
| | ended | | to |
+----------------------------------------------+-----------+--+------------+
| | 30 June | | 30 June |
+----------------------------------------------+-----------+--+------------+
| | 2009 | | 2008 |
+----------------------------------------------+-----------+--+------------+
| | US$'000 | | US$'000 |
+----------------------------------------------+-----------+--+------------+
| | | | |
+----------------------------------------------+-----------+--+------------+
| Profit before tax | 2,046 | | 2,092 |
+----------------------------------------------+-----------+--+------------+
| | | | |
+----------------------------------------------+-----------+--+------------+
| Applicable Isle of Man tax rate for Argo | - | | - |
| Group Limited of 0% | | | |
+----------------------------------------------+-----------+--+------------+
| Timing difference | - | | (204) |
+----------------------------------------------+-----------+--+------------+
| Other adjustments | (9) | | - |
+----------------------------------------------+-----------+--+------------+
| Tax effect of different tax rates of | 193 | | 204 |
| subsidiaries operating in other | | | |
| jurisdictions | | | |
+----------------------------------------------+-----------+--+------------+
| Tax charge | 184 | | - |
+----------------------------------------------+-----------+--+------------+
+----------------------------------------------+-----------+--+------------+
| Balance Sheet | At | | At |
+----------------------------------------------+-----------+--+------------+
| | 30 June | | 31 |
| | | | December |
+----------------------------------------------+-----------+--+------------+
| | 2009 | | 2008 |
+----------------------------------------------+-----------+--+------------+
| | US$'000 | | US$'000 |
+----------------------------------------------+-----------+--+------------+
| | | | |
+----------------------------------------------+-----------+--+------------+
| Corporation tax payable | 294 | | 1,231 |
+----------------------------------------------+-----------+--+------------+
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing the net profit for the period
by the weighted average number of shares
outstanding during the period.
+----------------------------------------------+------------+--+------------+
| | Six | | 14 |
| | months | | February |
+----------------------------------------------+------------+--+------------+
| | ended | | to |
+----------------------------------------------+------------+--+------------+
| | 30 June | | 30 June |
+----------------------------------------------+------------+--+------------+
| | 2009 | | 2008 |
+----------------------------------------------+------------+--+------------+
| | US$'000 | | US$'000 |
+----------------------------------------------+------------+--+------------+
| | | | |
+----------------------------------------------+------------+--+------------+
| Net profit for the period after taxation | 1,862 | | 2,092 |
| attributable to members | | | |
+----------------------------------------------+------------+--+------------+
| | | | |
+----------------------------------------------+------------+--+------------+
| | No. of | | No. of |
| | shares | | shares |
+----------------------------------------------+------------+--+------------+
| | | | |
+----------------------------------------------+------------+--+------------+
| Weighted average of ordinary shares for | 76,931,620 | | 76,931,620 |
| basic earnings per share | | | |
+----------------------------------------------+------------+--+------------+
| Effect of dilution | - | | - |
+----------------------------------------------+------------+--+------------+
| Weighted average number of ordinary shares | 76,931,620 | | 76,931,620 |
| for diluted earnings per share | | | |
+----------------------------------------------+------------+--+------------+
+----------------------------------------------+-----------+--+------------+
| | Six | | 14 |
| | months | | February |
+----------------------------------------------+-----------+--+------------+
| | ended | | to |
+----------------------------------------------+-----------+--+------------+
| | 30 June | | 30 June |
+----------------------------------------------+-----------+--+------------+
| | 2009 | | 2008 |
+----------------------------------------------+-----------+--+------------+
| | US$ | | US$ |
+----------------------------------------------+-----------+--+------------+
| | | | |
+----------------------------------------------+-----------+--+------------+
| Earnings per share (basic) | 0.02 | | 0.03 |
+----------------------------------------------+-----------+--+------------+
| Earnings per share (diluted) | 0.02 | | 0.03 |
+----------------------------------------------+-----------+--+------------+
6. INTANGIBLE ASSETS
+----------------------------------------------------------+-------------+
| | Fund |
| | management |
| | contracts |
+----------------------------------------------------------+-------------+
| | US$'000 |
+----------------------------------------------------------+-------------+
| Cost | |
+----------------------------------------------------------+-------------+
| Acquisition of Argo businesses | 18,834 |
+----------------------------------------------------------+-------------+
| Foreign exchange movement | (344) |
+----------------------------------------------------------+-------------+
| At 31 December 2008 | 18,490 |
+----------------------------------------------------------+-------------+
| Foreign exchange movement | 78 |
+----------------------------------------------------------+-------------+
| At 30 June 2009 | 18,568 |
+----------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------+-------------+
| Amortisation and impairment | |
+----------------------------------------------------------+-------------+
| Amortisation of Argo business intangible assets | 380 |
+----------------------------------------------------------+-------------+
| At 31 December 2008 | 380 |
+----------------------------------------------------------+-------------+
| Amortisation of Argo business intangible assets | 333 |
+----------------------------------------------------------+-------------+
| At 30 June 2009 | 713 |
+----------------------------------------------------------+-------------+
| | |
+----------------------------------------------------------+-------------+
| Net book value | |
+----------------------------------------------------------+-------------+
| At 31 December 2008 | 18,110 |
+----------------------------------------------------------+-------------+
| At 30 June 2009 | 17,855 |
+----------------------------------------------------------+-------------+
The Group tests intangible assets annually for impairment, or more frequently if
there are indications that the intangible assets may be impaired. The
recoverable amounts of the intangible assets that have been reviewed for
impairment are separately identifiable business units within the Group. The
value in use approach has been used as the businesses were not considered
saleable in their current form due to certain factors, the main being reliance
on certain key individuals.
6. INTANGIBLE ASSETS (continued)
At the balance sheet date the carrying value of goodwill was US$14.9m being
allocated to Argo Capital Management (Cyprus) Limited and Argo Capital
Management Limited as US$7.2m and US$7.7m respectively.
The key assumptions on which the directors have based their five year discounted
cash flow analysis are a pre-tax discount rate of 15%, an inflation rate of 5%
and a growth in assets under management (which determine management and
performance fee income) of 15% to 20%, with 4.5% to 6% of this estimated to be
from annual profits. The assumption of growth in assets under management has
been based on the historic performance of the funds. The calculations use cash
flow projections based on actual operating results. The result of this review
has been compared to the carrying value of goodwill and accordingly the
directors have concluded that there is no impairment to goodwill. As an added
sensitivity, if the estimated discount rate applied to the discounted cash flows
had been 25% higher or the growth rate of assets under management had been 25%
lower there would still have been no impairment of goodwill as the net present
value of future cash flows would still have been higher than the carrying value
of goodwill.
At the balance sheet date the carrying value of the Argo Real Estate
Opportunities Fund Limited management contract is US$2.9m, net of amortisation.
The intangible asset has been amortised over 5 years and 44 days, being the
remaining period of the contract.
7. FIXTURES, FITTINGS AND EQUIPMENT
+---------------------------------------------------------+-------------+
| | Fixtures, |
| | fittings |
| | & equipment |
+---------------------------------------------------------+-------------+
| | US$ '000 |
+---------------------------------------------------------+-------------+
| Cost | |
+---------------------------------------------------------+-------------+
| Acquisitions through business combinations | 363 |
+---------------------------------------------------------+-------------+
| Additions | 25 |
+---------------------------------------------------------+-------------+
| Disposals | (4) |
+---------------------------------------------------------+-------------+
| Foreign exchange movement | (69) |
+---------------------------------------------------------+-------------+
| At 31 December 2008 | 315 |
+---------------------------------------------------------+-------------+
| Additions | 23 |
+---------------------------------------------------------+-------------+
| At 30 June 2009 | 338 |
+---------------------------------------------------------+-------------+
| | |
+---------------------------------------------------------+-------------+
| Accumulated Depreciation | |
+---------------------------------------------------------+-------------+
| Depreciation charge for period | 78 |
+---------------------------------------------------------+-------------+
| At 31 December 2008 | 78 |
+---------------------------------------------------------+-------------+
| Depreciation charge for period | 54 |
+---------------------------------------------------------+-------------+
| At 30 June 2009 | 132 |
+---------------------------------------------------------+-------------+
| | |
+---------------------------------------------------------+-------------+
| Net book value | |
+---------------------------------------------------------+-------------+
| At 31 December 2008 | 237 |
+---------------------------------------------------------+-------------+
| At 30 June 2009 | 206 |
+---------------------------------------------------------+-------------+
8. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
+---------+-------------------------------+--------------+--+--------------+
| | | At | | At |
+---------+-------------------------------+--------------+--+--------------+
| | | 30 June | | 30 June |
+---------+-------------------------------+--------------+--+--------------+
| | | 2009 | | 2009 |
+---------+-------------------------------+--------------+--+--------------+
|Holding | Investment in management | Total cost | | Fair value |
| | shares | | | |
+---------+-------------------------------+--------------+--+--------------+
| | | US$ '000 | | US$ '000 |
+---------+-------------------------------+--------------+--+--------------+
| | | | | |
+---------+-------------------------------+--------------+--+--------------+
| 10 | The Argo Fund Ltd | 0 | | 0 |
+---------+-------------------------------+--------------+--+--------------+
| 10 | Argo Capital Investors Fund | 0 | | 0 |
| | SPC | | | |
+---------+-------------------------------+--------------+--+--------------+
| 10 | Argo Capital Partners Fund | 0 | | 0 |
+---------+-------------------------------+--------------+--+--------------+
| 100 | Argo Distressed Credit Fund | 0 | | 0 |
| | Ltd | | | |
+---------+-------------------------------+--------------+--+--------------+
| 100 | AGSSF Holdings Ltd | 0 | | 0 |
+---------+-------------------------------+--------------+--+--------------+
| | | 0 | | 0 |
+---------+-------------------------------+--------------+--+--------------+
+---------+-------------------------------+--------------+--+--------------+
|Holding | Investment in ordinary shares | Total cost | | Fair value |
+---------+-------------------------------+--------------+--+--------------+
| | | US$ '000 | | US$ '000 |
+---------+-------------------------------+--------------+--+--------------+
| | | | | |
+---------+-------------------------------+--------------+--+--------------+
| 66,435 | The Argo Fund Ltd | 14,343 | | 13,457 |
+---------+-------------------------------+--------------+--+--------------+
| | | 14,343 | | 13,457 |
+---------+-------------------------------+--------------+--+--------------+
+---------+-------------------------------+--------------+--+--------------+
| | | At | | At |
+---------+-------------------------------+--------------+--+--------------+
| | | 31 December | | 31 December |
+---------+-------------------------------+--------------+--+--------------+
| | | 2008 | | 2008 |
+---------+-------------------------------+--------------+--+--------------+
|Holding | Investment in management | Total cost | | Fair value |
| | shares | | | |
+---------+-------------------------------+--------------+--+--------------+
| | | US$ '000 | | US$ '000 |
+---------+-------------------------------+--------------+--+--------------+
| | | | | |
+---------+-------------------------------+--------------+--+--------------+
| 10 | The Argo Fund Ltd | 0 | | 0 |
+---------+-------------------------------+--------------+--+--------------+
| 10 | Argo Capital Investors Fund | 0 | | 0 |
| | SPC | | | |
+---------+-------------------------------+--------------+--+--------------+
| 10 | Argo Capital Partners Fund | 0 | | 0 |
| | Ltd | | | |
+---------+-------------------------------+--------------+--+--------------+
| 100 | Argo Distressed Credit Fund | 0 | | 0 |
| | Ltd | | | |
+---------+-------------------------------+--------------+--+--------------+
| | | 0 | | 0 |
+---------+-------------------------------+--------------+--+--------------+
+---------+-------------------------------+--------------+--+--------------+
|Holding | Investment in ordinary shares | Total cost | | Fair value |
+---------+-------------------------------+--------------+--+--------------+
| | | US$ '000 | | US$ '000 |
+---------+-------------------------------+--------------+--+--------------+
| | | | | |
+---------+-------------------------------+--------------+--+--------------+
| 10,270 | The Argo Fund Ltd | 3,343 | | 1,976 |
+---------+-------------------------------+--------------+--+--------------+
| | | 3,343 | | 1,976 |
+---------+-------------------------------+--------------+--+--------------+
9. SHARE CAPITAL
The Company's authorised share capital is unlimited with a nominal value of
US$ 0.01.
+---------------------------------------------+--------------+--+--------------+
| | 2009 | | 2009 |
+---------------------------------------------+--------------+--+--------------+
| | No. | | US$'000 |
+---------------------------------------------+--------------+--+--------------+
| Issued and fully paid | | | |
+---------------------------------------------+--------------+--+--------------+
| Ordinary shares of US$ 0.01 each | 76,931,620 | | 769 |
+---------------------------------------------+--------------+--+--------------+
| At 1 January 2009 and 30 June 2009 | 76,931,620 | | 769 |
+---------------------------------------------+--------------+--+--------------+
10. RECONCILIATION OF NET CASH INFLOW FROM OPERATING ACTIVITIES TO
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
+------------------------------------------+-------------+--+--------------+
| | Six months | | 14 February |
| | ended | | |
| | 30 June | | to |
| | 2009 | | 30 June |
| | | | 2008 |
+------------------------------------------+-------------+--+--------------+
| | | | US$ '000 |
+------------------------------------------+-------------+--+--------------+
| | | | |
+------------------------------------------+-------------+--+--------------+
| Profit on ordinary activities before | 2,046 | | 2,092 |
| taxation | | | |
+------------------------------------------+-------------+--+--------------+
| | | | |
+------------------------------------------+-------------+--+--------------+
| Interest income | (99) | | (17) |
+------------------------------------------+-------------+--+--------------+
| Amortisation of intangible assets | 333 | | - |
+------------------------------------------+-------------+--+--------------+
| Depreciation | 54 | | 6 78 |
+------------------------------------------+-------------+--+--------------+
| Unrealised gains on investments | (481) | | (72) 1,368 |
+------------------------------------------+-------------+--+--------------+
| Negative goodwill | - | | (1,556) |
+------------------------------------------+-------------+--+--------------+
| Net foreign exchange (gain)/loss | (157) | | 142 691 |
+------------------------------------------+-------------+--+--------------+
| Increase/(decrease) in payables | 227 | | (5,090) |
+------------------------------------------+-------------+--+--------------+
| (Increase)/decrease in receivables | (143) | | 5,139 5,538 |
+------------------------------------------+-------------+--+--------------+
| Income taxes paid | (1,121) | | - |
+------------------------------------------+-------------+--+--------------+
| Net cash inflow from operating | 659 | | 644 |
| activities | | | |
+------------------------------------------+-------------+--+--------------+
11. RELATED PARTY TRANSACTIONS
74% of revenue derives from funds in which two of the Company's directors,
Andreas Rialas and Kyriakos Rialas, have an influence through the provision of
investment advisory services.
Michael Kloter, the non-executive chairman, is also partner in a legal firm
which supplies services to the Group. This firm charged US$9,382 (six months
ended 30 June 2008: nil) for services rendered to the Group in the period.
12. POSSIBLE CLAIM RELATING TO LAWSUIT AGAINST FORMER GROUP COMPANY
Argo Group Limited ("Argo") has been named as an additional defendant in a
lawsuit filed against Absolute Capital Management Holdings Limited (now known as
ACMH Limited ("ACMH")) and others. The suit has been filed in the District of
Colorado, USA, by an investor in several of ACMH's investment funds. This
litigation arose after the demerger of Argo from ACMH. The plaintiff, The
Cascade Fund LLLP ("Cascade"), has made a number of claims against ACMH. In the
event that Cascade's litigation proves successful, Cascade is seeking to include
Argo assets and shares as part of the ACMH asset pool available to it by way of
compensation.
Argo considers that the courts of Colorado do not have valid jurisdiction and it
intends to file a motion to dismiss in the near future. The directors believe
that the claim against Argo is wholly without merit and Argo intends vigorously
to defend its position.
13. PRIOR PERIOD ADJUSTMENT
Comparative figures have been restated due to a reclassification in the 31
December 2008 financial statements, resulting in a transfer from Foreign
Currency Translation Reserve to Revenue Reserve of US$3,080,270. This occurred
due to a reclassification between pre and post acquisition reserves on the
acquisition of the Argo businesses.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Argo (LSE:ARGO)
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