TIDMARGO
RNS Number : 8432C
ARGO Group Limited
14 March 2011
Argo Group Limited
("Argo" or the "Company")
Annual Report and Accounts for the Year ended 31 December
2010
Argo today announces its final results for the year ended 31
December 2010.
The Company will today make available its report and accounts
for the year ended 31 December 2010 on the Company's website
www.argogrouplimited.com.
Key highlights for the twelve months ended 31 December 2010
- Steady performance across most of the Argo funds
- Revenues US$10.9 million (2009: US$11.7 million)
- Operating profit US$1.2 million (2009: US$0.9 million)
- Profit before tax US$2.5 million (2009: US$2.4 million)
- Maintained balance sheet strength - net assets US$44.5 million
(2009: US$44.5 million) after dividend payment and share buybacks
totalling US$1.7 million (2009: Nil)
- Final dividend paid - 1.0p per share (2009: Nil) in respect of
year ended 31 December 2009
- Final dividend declared on 11 March 2011 - 1.2p per share
(2009:1.0p) in respect of year ended 31 December 2010
Commenting on the results and outlook, Kyriakos Rialas, Chief
Executive of Argo said:
"Argo has made very good progress in a particularly challenging
and difficult environment. During the year we paid a dividend and
carried out the successful buyback of shares whilst still
maintaining our strong balance sheet and liquidity. Our
profitability remains consistent and we have continued confidence
about the future of the business and the outlook for new asset
gathering."
Enquiries
Argo Group Limited
Andreas Rialas
020 7535 4000
Panmure Gordon
Dominic Morley
020 7459 3600
CHAIRMAN'S STATEMENT
Business and operational review
Argo is pleased to report another profitable set of results for
the year ended 31 December 2010.
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 six 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 and this year celebrates its tenth anniversary.
Emerging markets continued to see large investment inflows last
year, with a high proportion destined for long-only mutual funds.
We believe that higher volatility - as witnessed in recent weeks -
may weaken the attractiveness of such funds and that emerging
market inflows should in time benefit the more actively managed
hedge fund strategies. Our marketing team identified a number of
potential leads during the period under review, and it is hoped
that the funds will be able to raise more new money during the
course of 2011.
For the year ended 31 December 2010 the Group generated revenues
of US$10.9 million (2009: US$11.7 million) with management fees
accounting for US$10.0 million (2009: US$10.9 million); the largest
funds have yet to regain their high-water mark. Cost reductions
mitigated the impact of slightly lower revenues with total costs
falling to US$9.7 million (2009: US$10.8 million) as a direct
result of the cost saving initiatives the Group implemented
earlier. Overall, operating profit for the year was US$1.2 million
(2009: US$0.9 million) and earnings per share were US$0.03 (2009:
US$0.04).
Argo has maintained its strong balance sheet with over US$27.5
million (2009: US$26.6 million) in net current assets. The Group
has held its net asset position of US$44.5 million (2009: US$44.5
million) despite paying a dividend of US$1.1 million (2009: Nil)
and buying back shares at a total cost of US$605,000 (2009:
Nil).The Company's investment in The Argo Fund ("TAF") continues to
generate a return on assets well in excess of the prevailing rates
available from bank deposits.
The Group employed 26 people (2009: 26) at the end of the year.
In order to retain and properly incentivise its qualified
personnel, the Company paid its employees variable compensation in
the form of a cash bonus and intends to continue such practice in
the aggregate amount of 30%-50% of profit before tax. It is also
planned to issue stock options to further incentivise personnel and
to align their interests with those of the shareholders of the
Company.
Fund performance
Performance across the range of Argo funds was mixed for the
year ended 31 December 2010, but the three main funds TAF, Argo
Global Special Situations Fund SP ("AGSSF"), a segregated portfolio
of the Argo Capital Investors Fund SPC, and Argo Distressed Credit
Fund ("ADCF") all showed positive annual returns in the 8-10%
range.
The generally optimistic tone experienced in the first quarter
of the year gave way to concern over the fiscal imbalances and
credit metrics of peripheral European economies, most notably
Greece and Ireland. Amidst mounting speculation concerning
sovereign defaults, restructurings and the status of the Euro as a
reserve currency, markets became very volatile and difficult to
trade. Our hedge funds navigated the volatility by maintaining some
short positions and then benefited from a better tone in the latter
part of 2010.
The Argo Funds
2010 2009
Launch Year Year Since Annualised Sharpe Down
Fund date total total inception performance ratio months AUM
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
% % % CAGR % US$m
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
16 of
The Argo Fund Oct-00 8.55 12.18 134.26 9.50 0.80 123 109.3
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
Argo Global
Special
Situations 17 of
Fund Aug-04 8.21 12.85 48.34 6.95 0.65 77 92.2
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
11 of
AGSSF Holdings Feb-09 -1.50 7.72 6.10 3.40 0.45 23 80.4
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
Argo
Distressed 8 of
Credit Fund Oct-08 10.32 11.06 23.12 9.58 1.39 27 22.8
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
Argo Real
Estate
Opportunities
Fund Aug-06 2.65 -78.47 -72.37 -29.38 N/A N/A 35.9*
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
Argo Capital
Partners Fund Aug-06 -3.97 -2.83 20.80 4.50 N/A N/A 62.6
-------------- ------- ----- ------ --------- ----------- ------ ------ -----
Total 403.2
----------------------- ----- ------ --------- ----------- ------ ------ -----
* NAV only officially measured twice a year, March and
September.
TAF and AGSSF recorded a pleasing annual return of 8.55% and
8.21% respectively and ADCF continued to build a solid track record
of returns achieving 10.32% in the year to 31 December 2010 after
the 11.06% recorded in 2009.
AGSSF Holdings Limited ("AHL") comprises assets that are
currently more difficult to liquidate. In the year ended 31
December 2010 it delivered a return of -1.50%, an improvement on
the -5.49% in the six months to 30 June 2010 but down from 7.72% in
the year to 31 December 2009. This performance was in part driven
by exchange rate fluctuations and despite difficult market
conditions we believe that we are nearer to creating liquidity
events for investors in the Fund.
The Argo Real Estate Opportunities Fund Limited ("AREOF")
continues to operate in a particularly challenging and difficult
environment in which regional and global property markets have
remained weak. However, 2010 has seen a general stabilisation in
the economic downturn, albeit at a low level, as the numbers of
retailer bankruptcies and requests for rental concessions have
materially decreased since the same period in 2009. Whilst AREOF
has reported a further write down of investment property values in
the financial year to 30 September 2010 it has successfully
renegotiated and agreed terms with its bankers and continues to
maintain tenant occupancy at around 97%-98%. Phase 3 of the 83,000
sqm Riviera Shopping City, Odessa, Ukraine was completed in summer
2010. The Fund's adjusted Net Asset Value was US$35.9 million
(EUR27.1 million) as at 30 September 2010, compared with US$37.8
million (EUR26.4 million) a year earlier.
Argo Capital Partners Fund ("ACPF"), a private equity fund
closed to new subscriptions, is now invested in four projects. ACPF
reported a negative return of 3.97% for the year (2009: -2.83%).
This Fund has suffered mainly from the lack of liquidity and demand
for private equity assets in emerging markets. Whilst the intention
was to sell some portfolio investments in 2010 it is disappointing
that difficult operating conditions hindered this process. However,
in February 2010 we did exit with profit (two times money to the
fund) from one of the smaller investments, a generic pharmaceutical
company in Peru, through a sale to Teva Pharmaceutical and it is
hoped that further disposals will occur in the current year.
Assets under management ("AUM")
During the year AUM decreased from US$439.5 million to US$403.2
million. Despite positive fund performance the Group experienced an
8.3% (US$36.3 million) decline in AUM largely due to continuing,
albeit declining, net redemptions throughout the year and
Euro/Dollar foreign exchange volatility. Since the year end
redemptions have arisen solely in AGSSF, this being the only fund
that has retained its original gate conditions.
Dividends and share purchase programme
Underlining the Board's confidence in the future prospects of
the Group, the directors recommend a final dividend of 1.2p per
share (2009: 1.0p). The final dividend will be paid on 22 June 2011
to shareholders who are on the Register of Members on 27 May 2011.
The final dividend for the year ended 31 December 2009 of
US$1,125,888 was paid on 23 June 2010 to ordinary shareholders who
were on the Register of Members on 28 May 2010. Going forward, the
Company intends, subject to its financial performance, to pay a
final dividend each year.
During the year the directors authorised the repurchase of
3,268,126 shares at a total cost of US$605,000. The directors
intend to continue with their share purchase programme on a rolling
basis up to a maximum total value of US$2 million over a period of
12 months commencing from 1 April each year.
The directors firmly believe that a return of excess cash to
shareholders through dividends and buy-backs will send a positive
message to investors in the Company.
Outlook
The Board is satisfied with the Group's current cost base and
its alignment with the lower AUM. Costs are appropriate and are
reviewed periodically so as to optimise the efficient deployment of
Company resources.
More emphasis is being placed on direct communication with
existing and new fund investors with the purchase of two databases
to assist in growing the funds with additional subscriptions.
Management has recently observed greater mobility and a new air
of optimism in the market conditions that will affect positively
the workout of some of the less liquid and private equity
transactions in the funds. A significant number of man hours is
being spent on such transactions and there is continuous
communication with investors about the funds' performance.
The Group's priorities continue to be the achievement of
consistent investment performance and increasing AUM both of which
the Group has the capacity to achieve without a corresponding
increase in costs. Emerging markets remain attractive and despite
the continuing challenges posed by the global markets for asset
gathering the Board is confident about the future of the business
and believes that special situations strategies will outperform in
the coming year.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2010
Year ended Year ended
31 December 31 December
2010 2009
Note US$'000 US$'000
Management fees 10,034 10,900
Incentive fees 434 437
Other income 480 352
========================================= ====== ============ ============
2(e),
Revenue 3 10,948 11,689
========================================= ====== ============ ============
Legal and professional expenses (614) (866)
Management and incentive fees payable 2(f) (444) (263)
Operational expenses (1,931) (1,870)
Employee costs 4 (5,864) (7,222)
Foreign exchange (loss)/gain (134) 269
Amortisation of intangible assets 9 (651) (692)
Depreciation 10 (99) (119)
========================================= ====== ============ ============
Operating profit 6 1,211 926
========================================= ====== ============ ============
Interest income on cash and cash
equivalents 57 134
Unrealised gain on investments 1,226 1,361
========================================= ====== ============ ============
Profit on ordinary activities before
taxation 3 2,494 2,421
========================================= ====== ============ ============
Taxation 7 (267) 387
========================================= ====== ============ ============
Profit for the year after taxation
attributable to members of the Company 8 2,227 2,808
Other comprehensive income
Exchange differences on translation
of foreign operations (469) 785
========================================= ====== ============ ============
Total comprehensive income for the
year 1,758 3,593
========================================= ====== ============ ============
Year ended Year ended
31 December 31 December
2010 2009
US$ US$
Earnings per share (basic) 8 0.03 0.04
============================== ============ ============
Earnings per share (diluted) 8 0.03 0.04
============================== ============ ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010
At 31 December At 31 December
2010 2009
Note US$'000 US$'000
Assets
Non-current assets
Intangible assets 9 16,719 17,557
Fixtures, fittings and equipment 10 41 136
Loans and advances receivable 14 253 226
================================== ===== =============== ===============
17,013 17,919
================================== ===== =============== ===============
Current assets
Investments 11 15,563 14,337
Trade and other receivables 12 1,312 1,972
Cash and cash equivalents 13 11,907 13,069
Loans and advances receivable 14 5 36
================================== ===== =============== ===============
28,787 29,414
================================== ===== =============== ===============
Total assets 3 45,800 47,333
================================== ===== =============== ===============
Equity and liabilities
Equity
Issued share capital 15 737 769
Share premium 32,199 32,772
Revenue reserve 13,749 12,648
Foreign currency translation
reserve 2(d) (2,139) (1,670)
================================== ===== =============== ===============
Total equity 44,546 44,519
================================== ===== =============== ===============
Current liabilities
Trade and other payables 16 1,054 2,692
Taxation payable 7 200 122
================================== ===== =============== ===============
Total current liabilities 3 1,254 2,814
================================== ===== =============== ===============
Total equity and liabilities 45,800 47,333
================================== ===== =============== ===============
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
YEAR ENDED 31 DECEMBER 2010
Foreign
Issued currency
share Share Revenue translation
capital premium reserve reserve Total
2009 2009 2009 2009 2009
US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January
2009 769 32,772 9,840 (2,455) 40,926
Total comprehensive
income
Profit for the
period after
taxation - - 2,808 785 3,593
==================== ========= ========= ========= ============= ========
As at 31 December
2009 769 32,772 12,648 (1,670) 44,519
==================== ========= ========= ========= ============= ========
Foreign
Issued currency
share Share Revenue translation
capital premium reserve reserve Total
2010 2010 2010 2010 2010
US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January
2010 769 32,772 12,648 (1,670) 44,519
Total comprehensive
income
Profit for the
period after
taxation - - 2,227 (469) 1,758
Transactions with
owners recorded
directly in equity
Dividends to equity
holders (Note 15) - - (1,126) - (1,126)
Purchase of own
shares (Note 15) (32) (573) - - (605)
==================== ========= ========= ========= ============= ========
As at 31 December
2010 737 32,199 13,749 (2,139) 44,546
==================== ========= ========= ========= ============= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2010
Year ended Year ended
31 December 31 December
2010 2009
Note US$'000 US$'000
Net cash inflow from operating
activities 18 932 3,003
Cash flows from investing activities
Interest received on cash and
cash equivalents 57 134
Purchase of current asset investments 11 - (11,000)
Purchase of fixtures, fittings
and equipment 10 (8) (23)
Net cash used in investing
activities 49 (10,889)
======================================= ===== ============ ============
Cash flows from financing activities
Repurchase of own shares (605) -
Dividends paid (1,126) -
======================================= ===== ============ ============
Net cash used in financing
activities (1,731) -
======================================= ===== ============ ============
Net decrease in cash and cash
equivalents (750) (7,886)
Cash and cash equivalents at
1 January 2010 and 1 January
2009 13,069 20,058
Foreign exchange (loss)/gain
on cash and cash equivalents (412) 897
Cash and cash equivalents as
at 31 December 2010 and 31
December 2009 11,907 13,069
======================================= ===== ============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2010
1. CORPORATE INFORMATION
The Company was incorporated on 14 February 2008 in the Isle of
Man under the Companies Act 2006 and started to trade on 13 June
2008. Its registered office is at 33-37 Athol Street, Douglas, Isle
of Man, IM1 1LB and the principal place of business is at 10
Vasilissis Frederikis Street, 1066 Nicosia, Cyprus. 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 26 (2009: 26)
employees.
Wholly owned subsidiaries Country of incorporation
Argo Capital Management (Cyprus) Cyprus
Limited
Argo Capital Management Limited United Kingdom
Argo Capital Management Property Cayman Islands
Limited
Argo Capital Management (Asia) Singapore
Pte. Ltd.
North Asset Management Srl Romania
North Asset Management Sarl Luxembourg
Argo Investor Services AG Switzerland
2. ACCOUNTING POLICIES
(a) Accounting convention
These consolidated financial statements have been prepared on a
historical cost basis, except for the revaluation of certain
financial instruments, and in accordance with International
Financial Reporting Standards.
These accounts have been prepared on the basis that the Company
is a going concern.
(b) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries. Subsidiaries are
consolidated from the date upon which control is transferred to the
Company and cease to be consolidated from the date upon which
control is transferred from the Company.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Company. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
(c) Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed and equity instruments
issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date.
Goodwill
Goodwill arising on the consolidation represents the excess of
the cost of the acquisition over the Company's interest in the fair
value of the identifiable assets and liabilities of a subsidiary at
the date of acquisition. Any excess of the Company's interest in
the fair value of the identifiable assets and liabilities over the
cost of the acquisition (negative goodwill) is immediately
recognised in the Consolidated Statement of Comprehensive Income.
Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment
losses. Goodwill which is recognised as an asset is reviewed at
least annually for impairment. Any impairment is recognised
immediately in the Consolidated Statement of Comprehensive
Income.
Intangible assets
The Group's principal intangible asset is a fund management
contract recorded at directors' valuation at the date of
acquisition. The directors' valuation is based on the underlying
share price of the vendor and its assets under management at the
time of acquisition. This intangible asset has a finite life and is
amortised on a straight line basis over the period of the contract.
Impairment tests are undertaken annually to determine any
diminution in the recoverable amount below carrying value. The
Group does not capitalise internally generated goodwill or
intangible assets.
Impairment of intangible assets
At each balance sheet date the Group reviews the carrying
amounts of its intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss,
if any.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
(d) Foreign currency translation
The consolidated financial statements are expressed in US
dollars. Transactions denominated in currencies other than US
dollars have been translated at the rate of exchange prevailing at
the date of the transaction. Assets and liabilities in other
currencies are translated to US dollars at the rates of exchange
prevailing at the balance sheet date. The resulting profits or
losses are reflected in the Consolidated Statement of Comprehensive
Income.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the year. Exchange differences arising, if any, are
classified as equity and transferred to the Group's foreign
currency translation reserve. Such translation differences are
recognised in the Consolidated Statement of Comprehensive Income as
income or as expenses in the year of the operation's disposal.
(e) Revenue
Revenue is recognised to the extent that it is probable that
economic benefit will flow to the Group and the revenue can be
reliably measured.
Management and incentive fees receivable
The Group recognises revenue for providing management services
to mutual funds. Revenue accrues on a monthly basis on completion
of management services and is based on the assets under management
of each mutual fund.
Incentive fees generally arise monthly or annually, however for
the Argo funds incentive fees may arise monthly, annually or on
realisation of an investment. In addition, for the Argo Real Estate
Opportunities Fund Ltd (managed by Argo Capital Management Property
Ltd) incentive fees may be triggered at any time on realisation of
a property asset.
Management and incentive fees receivable (continued)
The management and incentive fees receivable from the Argo Real
Estate Opportunities Fund Ltd are defined in the management
contract between that company and Argo Capital Management Property
Ltd. The management contract has a fixed term expiring on 26 July
2013.
(f) Management and incentive fees payable
The Group pays management and incentive fees based on a
proportion of fees receivable from mutual funds. Fees payable are
accrued on a monthly basis consistent with revenue streams
earned.
(g) Depreciation
Plant and equipment is initially recorded at cost and
depreciated on a straight-line basis over the expected useful lives
of the assets as follows:
Leasehold 33 1/3% per annum
Fixtures and fittings 10% to 33 1/3% per annum
Office equipment 10% to 33 1/3% per annum
Computer equipment and software 20% to 33 1/3% per annum
(h) Investments held at fair value through profit or loss
All investments are classified as held at fair value through
profit or loss. Investments are initially recognised at fair value.
Transaction costs are expensed as incurred.
After initial recognition, investments are measured at fair
value, with unrealised gains and losses on investments and
impairment of investments recognised in the Consolidated Statement
of Comprehensive Income. Investments held at fair value in managed
mutual funds are valued at fair value of the net assets as provided
by the administrators of those funds. Investments in the management
shares of The Argo Fund Ltd, Argo Capital Investors Fund SPC, Argo
Capital Partners Fund Ltd, Argo Distressed Credit Fund Limited and
AGSSF Holdings Limited are stated at fair value, being the
recoverable amount.
(i) Trade date accounting
All 'regular way' purchases and sales of financial assets are
recognised on the 'trade date', i.e. the date that the entity
commits to purchase or sell the asset. Regular way purchases or
sales are purchases or sales of financial assets that require
delivery of the asset within the time frame generally established
by regulation or convention in the market place.
(j) Financial instruments
Financial assets and liabilities are recognised on the
Consolidated Statement of Financial Position when the Company
becomes party to the contractual provisions of the instrument.
Non-derivative financial instruments include trade and other
receivables, cash and cash equivalents, loans and borrowings and
trade and other payables. The initial and subsequent measurement of
non-derivative financial instruments is dealt with below.
Trade and other receivables
Trade and other receivables do not carry any interest and are
stated at their original invoice amount as reduced by appropriate
allowances for estimated irrecoverable amounts. An estimate for
doubtful debts is made when collection is no longer probable. Bad
debts are written off when identified.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand
deposits and short-term, highly liquid investments which are
readily convertible to known amounts of cash, subject to
insignificant risk of changes in value, and have a maturity of less
than six months from the date of acquisition.
For the purposes of the cash flow statement, cash and cash
equivalents consist of cash in hand and bank deposits.
Trade payables
Trade payables are not interest bearing and are stated at their
nominal value.
(k) Loans and borrowings
All loans and borrowings payable are initially recognised at
cost, calculated as the fair value of the consideration received
less issue costs where applicable. After initial recognition, all
interest-bearing loans and borrowings are subsequently measured at
amortised cost. Amortised cost is calculated by using the effective
interest method, taking into account any issue costs, and discounts
and premiums on settlement.
All loans and borrowings receivable are initially recognised at
cost and subsequently measured at amortised cost.
(l) Current taxation
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amounts are those
enacted or substantially enacted by the balance sheet date.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Consolidated Statement of Comprehensive Income because it excludes
items of income or expense that are taxable or deductible in other
periods or because it excludes items that are never taxable or
deductible.
(m) Deferred taxation
Deferred income tax is provided for using the liability method
on temporary timing differences at the balance sheet date between
the tax basis of assets and liabilities and their carrying amounts
for financial reporting purposes. Deferred tax liabilities are
recognised in full for all temporary differences. Deferred tax
assets are recognised for all deductible temporary differences,
carried forward unused tax credits and unused tax losses to the
extent that it is probable that taxable profit will be available
against which the deductible temporary differences and
carry-forward of unused tax credits and unused losses can be
utilised.
The carrying amount of deferred income tax assets is revalued at
each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each
balance sheet date and are recognised to the extent that is
probable that future taxable profits will allow the deferred tax
asset to be recovered. Deferred income tax assets and liabilities
are measured at the tax rates that are expected to apply in the
year when the asset is realised or the liability settled, based on
tax rates that have been enacted or substantively enacted at the
balance sheet date.
(n) Accounting estimates, assumptions and judgements
The preparation of the consolidated financial statements
necessitates the use of estimates, assumptions and judgements.
These estimates, assumptions and judgements affect the reported
amounts of assets, liabilities and contingent liabilities at the
balance sheet date as well as affecting the reported income and
expenses for the year. Although the estimates are based on
management's knowledge and best judgment of information and
financial data, the actual outcome may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that and prior periods, or in the period of the revision and
future periods if the revision affects both current and future
periods.
In the process of applying the Group's accounting policies,
which are described above, management has made the following
judgements that have the most significant effect on the amounts
recognised in the consolidated financial statements:
- Management and incentive fees
- Intangibles (see note 9)
It has been assumed that, when available, the audited financial
statements of the funds under the Group's management will confirm
the net asset values used in the calculation of management and
performance fees receivable.
(o) Operating leases
Costs in respect of operating leases are charged on a straight
line basis over the lease term. Benefits, such as rent free
periods, received and receivable as incentives to take on operating
leases are spread on a straight line basis over the lease term, or,
if shorter than the full lease term, over the period to the review
date on which the rent is first expected to be adjusted to the
prevailing market rent.
(p) Financial Instruments and Fair Value Hierarchy
The following represents the fair value hierarchy of financial
instruments measured at fair value in the Statement of Financial
Position. The hierarchy groups financial assets and liabilities
into three levels based on the significance of inputs used in
measuring the fair value 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).
The level within which the financial asset or liability is
classified is determined based on the lowest level of significant
input to the fair value measurement.
(q) Changes in accounting policies
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the year, and have not
been applied in preparing these consolidated financial
statements:
New/Revised International Accounting Effective date
Standards/International Financial Reporting Standards (accounting
(IAS/IFRS) periods commencing
after)
IAS 24 Related Party Disclosures - Revised 1 January 2011
definition of related parties
IFRS 7 Financial Instruments: Disclosures - 1 January 2011
Addition of explicit statement that
qualitative disclosures to be made in the context
of quantitative
disclosures
IFRS 7 Financial Instruments: Disclosures - 1 July 2011
Amendments relating to enhancing
disclosures about transfers of financial assets
IAS 1 Presentation of Financial Statements 1 January 2011
- Amendments clarifying that the
analysis of other comprehensive income may
be presented either in the
Statement of Changes in Equity or in the notes
to the accounts
IAS 32 Financial Instruments: Presentation 1 February
- Amendments relating to 2010
classification of rights issues
IFRS 9 Financial Instruments - part of IASB's 1 January 2013
wider project to replace IAS 39
Financial Instruments: Recognition and Measurement.
The standard
retains but simplifies the mixed measurement
model and establishes two
primary measurement categories for financial
assets and liabilities:
amortised costs and fair value. The guidance
on IAS 39 on impairment
of financial assets and hedge accounting continues
to apply
IAS 12 Deferred Tax: Recovery of Underlying 1 January 2012
Assets - Amendments introduce
presumption that carrying amount of the underlying
assets will normally
be through sale
IFRS 3 Business Combinations - Improvements 1 July 2010
clarifying contingent
consideration arising in a business combination;
limitation on accounting
policy choice to measure non-controlling interests
upon initial
recognition and expansion on the requirement
to allocate the market-
based measure of replacement awards between
the consideration
transferred and post-combination remuneration
applies to
all replacement awards
IAS 27 Consolidated and Separate Financial 1 July 2010
Statements - Amendments clarify
that the consequential amendments to IAS 21
The Effects of Changes
in Foreign Exchange Rates, IAS 28 and IAS 31
resulting from IAS 27
(2008) should be applied prospectively, with
the exception of
amendments resulting from renumbering
The directors do not expect the adoption of these standards and
interpretations to have a material impact on the Group's financial
statements in the period of initial application, except for IFRS 9
Financial Instruments, which becomes mandatory for the Group's 2013
consolidated financial statements and could change the
classification and measurement of financial assets. The Group does
not plan to adopt this standard early and the extent of the impact
has not been determined.
Any standard adopted during the year has presentational impact
only; it is therefore not necessary to adjust comparative
information.
(r) Dividends payable
Interim and final dividends are recognised when declared.
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 Argo
Capital Argo Capital
Argo Management Capital Management Year
Group (Cyprus) Management Property ended 31
Ltd Limited Limited Limited Other December
2010 2010 2010 2010 2010 2010
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenues from
external
customers - 7,845 38 3,063 2 10,948
Intersegment
revenues 3,084 - 3,057 - 547 6,688
Reportable
segment
profit/(loss) 3,692 1,699 (1,283) (1,737) 127 2,498
Intersegment
profit/(loss) 3,084 (4,500) 3,057 (2,257) 547 (69)
Reportable
segment
assets 47,455 5,112 4,622 2,881 603 60,673
Reportable
segment
liabilities 88 514 851 80 43 1,576
=============== ======== =========== =========== =========== ======== =========
Revenues, profit or loss, assets and liabilities may
be reconciled as follows: Year ended
31 December
2010
US$'000
Revenues
Total revenues for reportable segments 17,636
Elimination of intersegment revenues (6,688)
====================================================== ============
Group revenues 10,948
====================================================== ============
Profit or loss
Total profit for reportable segments 2,498
Elimination of total intersegment losses 69
Other unallocated amounts (73)
====================================================== ============
Profit on ordinary activities before taxation 2,494
====================================================== ============
Assets
Total assets for reportable segments 60,673
Elimination of intersegment receivables (325)
Elimination of Company's cost of investments (14,548)
====================================================== ============
Group assets 45,800
====================================================== ============
Liabilities
Total liabilities for reportable segments 1,576
Elimination of intersegment payables (322)
====================================================== ============
Group liabilities 1,254
====================================================== ============
Argo Argo
Capital Argo Capital Argo
Argo Management Capital Management Investor Year
Group (Cyprus) Management Property Services ended 31
Ltd Limited Limited Limited Ltd Other December
2009 2009 2009 2009 2009 2009 2009
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenues from
external
customers - 8,587 - 3,085 - 17 11,689
Intersegment
revenues 11,705 - 3,409 - - 574 15,688
Reportable
segment
profit/(loss) 10,863 (8,272) (2,068) 304 (2,349) (105) (1,627)
Intersegment
profit/(loss) 11,705 (15,424) 3,409 - (226) 574 38
Reportable
segment
assets 45,463 4,070 6,801 5,300 76 475 62,185
Reportable
segment
liabilities 56 911 1,602 405 26 117 3,117
=============== ======== =========== =========== =========== ========= ======== =========
Revenues, profit or loss, assets and liabilities may
be reconciled as follows: Year ended
31 December
2009
US$'000
Revenues
Total revenues for reportable segments 27,377
Elimination of intersegment revenues (15,688)
====================================================== ============
Group revenues 11,689
====================================================== ============
Profit or loss
Total loss for reportable segments (1,627)
Elimination of total intersegment profits (38)
Other unallocated amounts 4,086
====================================================== ============
Profit on ordinary activities before taxation 2,421
====================================================== ============
Assets
Total assets for reportable segments 62,185
Elimination of intersegment receivables (304)
Elimination of Company's cost of investments (14,548)
====================================================== ============
Group assets 47,333
====================================================== ============
Liabilities
Total liabilities for reportable segments 3,117
Elimination of intersegment payables (303)
====================================================== ============
Group liabilities 2,814
====================================================== ============
4. EMPLOYEE COSTS
Year ended Year ended
31 December 31 December
2010 2009
US$'000 US$'000
Wages and salaries 5,399 6,571
Social security costs 421 550
Pension costs - 41
Other 44 60
======================= ============== ==============
5,864 7,222
======================= ============== ==============
5. KEY MANAGEMENT PERSONNEL REMUNERATION
Included in employee costs are payments to:
Year ended Year ended
31 December 31 December
2010 2009
US$'000 US$'000
Directors and key management personnel 3,561 3,680
======================================== ============== ==============
The remuneration of the Directors of the Company for the year
was as follows:
Year
ended Year ended
31 31
December December
Cash
Salaries Fees Benefits bonus 2010 2009
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Executive
Directors
Kyriakos
Rialas 226 - - 304 530 558
Andreas Rialas 223 - 2 475 700 738
Non-Executive
Directors
Michael Kloter - 74 - - 74 70
David Fisher - 39 - - 39 39
Ken Watterson - 39 - - 39 39
=============== =========== ========== =========== ========== =========== ===========
6. OPERATING PROFIT
Operating profit is stated after charging:
Year ended Year ended
31 December 31 December
2010 2009
US$'000 US$'000
Auditors' remuneration 111 117
Depreciation 99 119
Amortisation 651 692
Directors' fees 2,592 2,543
Operating lease payments 530 624
=========================== ============== ==============
7. TAXATION
Taxation rates applicable to the parent company and the Cypriot,
UK, Singaporean, Luxembourg, Swiss and Romanian subsidiaries range
from 0% to 28% (2009: 0% to 28%).
Income Statement
Year ended Year ended
31 December 31 December
2010 2009
US$'000 US$'000
Taxation charge/(credit) for the year
on Group companies 273 (387)
Over provision in respect of prior
years (6) -
======================================= ============== ==============
Tax on profit on ordinary activities 267 (387)
======================================= ============== ==============
The tax charge/(credit) for the year can be reconciled to the
profit per the Consolidated Statement of Comprehensive Income as
follows:
Year ended Year ended
31 December 31 December
2010 2009
US$'000 US$'000
Profit before tax 2,494 2,421
===================================== ============== ==============
Applicable Isle of Man tax rate for
Argo Group Limited of 0% - -
Timing differences 16 (7)
Non-deductible expenses 16 11
Non-taxable income (14) (12)
Other adjustments (4) (131)
Tax effect of different tax rates
of subsidiaries operating in other
jurisdictions 253 (248)
===================================== ============== ==============
Tax charge 267 (387)
===================================== ============== ==============
Balance Sheet
At 31 December At 31 December
2010 2009
US$'000 US$'000
Corporation tax payable 200 122
========================= =============== ===============
8. EARNINGS PER SHARE
Earnings per share is calculated by dividing the net profit for
the period by the weighted average number of shares outstanding
during the period.
Year ended Year ended
31 December 31 December
2010 2009
US$'000 US$'000
Net profit for the year after taxation
attributable to members 2,227 2,808
======================================== ================ ================
No. of shares No. of shares
Weighted average of ordinary shares
for basic earnings per share 75,150,213 76,931,620
Effect of dilution - -
======================================== ================ ================
Weighted average number of ordinary
shares for diluted earnings per share 75,150,213 76,931,620
======================================== ================ ================
Year ended Year ended
31 December 31 December
2010 2009
US$ US$
Earnings per share (basic) 0.03 0.04
Earnings per share (diluted) 0.03 0.04
============================== ============== ==============
9. INTANGIBLE ASSETS
Fund management
contracts
US$'000
Cost
At 1 January 2009 18,490
Foreign exchange movement 247
================================================= ================
At 31 December 2009 18,737
Foreign exchange movement (79)
================================================= ================
At 31 December 2010 18,658
================================================= ================
Amortisation and impairment
At 1 January 2009 380
Amortisation of Argo business intangible assets 692
Foreign exchange movement 108
================================================= ================
At 31 December 2009 1,180
Amortisation of Argo business intangible assets 651
Foreign exchange movement 108
================================================= ================
At 31 December 2010 1,939
================================================= ================
Net book value
At 31 December 2009 17,557
================================================= ================
At 31 December 2010 16,719
================================================= ================
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.
At the balance sheet date the carrying value of goodwill was
US$14.9m (2009: US$14.9m).
The key assumptions on which the directors have based their five
year discounted cash flow analysis are a pre-tax discount rate of
15% (2009: 15%), an inflation rate of 5% (2009: 5%) and a growth in
assets under management (which determine management and performance
fee income) of 10% to 12.5% (2009: 15% to 20%), with 3.0% to 3.75%
(2009: 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 (2009: 25% higher) or the growth rate of assets under
management had been 25% lower (2009: 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$1.8m
(2009: US$2.6m), net of amortisation. The intangible asset has been
amortised over 5 years and 44 days, being the remaining period of
the contract from the date of acquisition.
10. FIXTURES, FITTINGS AND EQUIPMENT
Fixtures,
fittings
& equipment
US$ '000
Cost
At 1 January 2009 315
Additions 23
Disposals (25)
Foreign exchange movement (14)
================================ =============
At 31 December 2009 299
Additions 8
Disposals -
Foreign exchange movement (12)
================================ =============
At 31 December 2010 295
================================ =============
Accumulated Depreciation
At 1 January 2009 78
Depreciation charge for period 119
Disposals (3)
Foreign exchange movement (31)
================================ =============
At 31 December 2009 163
Depreciation charge for period 99
Disposals -
Foreign exchange movement (8)
================================ =============
At 31 December 2010 254
================================ =============
Net book value
At 31 December 2009 136
================================ =============
At 31 December 2010 41
================================ =============
11. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
At 31 December At 31 December
2010 2010
Holding Investment in management Total cost Fair value
shares
US$ '000 US$ '000
10 The Argo Fund Ltd - -
10 Argo Capital Investors - -
Fund SPC
10 Argo Capital Partners - -
Fund
100 Argo Distressed Credit - -
Fund Ltd
100 AGSSF Holdings Ltd - -
========= ========================== ================= =================
- -
==================================== ================= =================
Investment in ordinary
Holding shares Total cost Fair value
US$ '000 US$ '000
66,435 The Argo Fund Ltd 14,343 15,563
======== ======================= ============= =============
14,343 15,563
======== ======================= ============= =============
At 31 December At 31 December
2009 2009
Holding Investment in management Total cost Fair value
shares
US$ '000 US$ '000
10 The Argo Fund Ltd - -
10 Argo Capital Investors - -
Fund SPC
10 Argo Capital Partners - -
Fund Ltd
100 Argo Distressed Credit - -
Fund Ltd
100 AGSSF Holdings Ltd - -
========= ========================== ================= =================
- -
==================================== ================= =================
Investment in ordinary
Holding shares Total cost Fair value
US$ '000 US$ '000
66,435 The Argo Fund Ltd 14,343 14,337
======== ======================= ============= =============
14,343 14,337
======== ======================= ============= =============
12. TRADE AND OTHER RECEIVABLES
At 31 December At 31 December
2010 2009
US$ '000 US$ '000
Trade receivables 1,060 1,166
Other receivables 41 677
Prepayments and accrued income 211 129
================================ ================= =================
1,312 1,972
================================ ================= =================
The directors consider that the carrying amount of trade and
other receivables approximates their fair value. All trade
receivable balances are recoverable within one year from the
balance sheet date.
13. CASH AND CASH EQUIVALENTS
Included in cash and cash equivalents is a balance of US$100,000
(2009: US$103,000) which represents a bank guarantee in respect of
credit cards issued to Argo Capital Management Property Limited.
Due to the nature of this balance it is not freely available.
14. LOANS AND ADVANCES RECEIVABLE
At 31 December At 31 December
2010 2009
US$'000 US$'000
Deposits on leased premises -
current 5 36
Deposits on leased premises -
non-current 253 226
=============================== =============== ===============
258 262
=============================== =============== ===============
The deposits on leased premises are retained by the lessor until
vacation of the premises at the end of the lease term as
follows:
At 31 December At 31 December
2010 2009
US$'000 US$'000
Current:
Lease expiring within one year 5 36
================================ =============== ===============
At 31 December At 31 December
2010 2009
US$'000 US$'000
Non-current:
Lease expiring in second year
after balance sheet date 33 -
Lease expiring in third year
after balance sheet date 220 226
=============================== =============== ===============
253 226
=============================== =============== ===============
15. SHARE CAPITAL
The Company's authorised share capital is unlimited ordinary
shares with a nominal value of US$0.01.
31 December 31 December 31 December 31 December
2010 2010 2009 2009
No. US$'000 No. US$'000
Issued and fully
paid
Ordinary shares of
US$0.01 each 73,663,494 737 76,931,620 769
==================== ============= ============ ============= ============
73,663,494 737 76,931,620 769
==================== ============= ============ ============= ============
The directors recommend a final dividend of 1.2p per share
(2009: 1.0p) for the year ended 31 December 2010. The final
dividend for the year ended 31 December 2009 of US$1,125,888 was
paid on 23 June 2010 to ordinary shareholders who were on the
Register of Members on 28 May 2010. Going forward, the Company
intends, subject to its financial performance, to pay a final
dividend each year.
In addition, the directors authorised the repurchase of 750,000
shares on 6 April 2010, 1,518,126 shares on 2 June 2010 and
1,000,000 shares on 30 September at respective purchase prices of
US$0.20, US$0.18 and US$0.20 per share.
16. TRADE AND OTHER PAYABLES
At 31 December At 31 December
2010 2009
US$ '000 US$ '000
Trade and other payables 49 44
Other creditors and accruals 1,005 2,648
============================== =============== ===============
1,054 2,692
============================== =============== ===============
Trade and other payables are normally settled on 30-day
terms.
17. OBLIGATIONS UNDER OPERATING LEASES
Operating lease payments represent rentals payable by the Group
for certain of its business premises. The leases have no escalation
clauses or renewal or purchase options and no restrictions imposed
on them.
As at the balance sheet date, the Group had outstanding future
minimum lease payments under non-cancellable operating leases,
which fall due as follows.
At 31 December At 31 December
2010 2009
US$ '000 US$ '000
Operating lease liabilities:
Within one year 440 527
In the second to fifth years
inclusive 305 607
============================== =============== ===============
Present value of minimum
lease payments 745 1,134
============================== =============== ===============
18. RECONCILIATION OF NET CASH INFLOW FROM OPERATING ACTIVITIES
TO
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Year ended Year ended
31 December 31 December
2010 2009
US$ '000 US$ '000
Profit on ordinary activities
before taxation 2,494 2,421
Interest income (57) (134)
Amortisation of intangible
assets 651 692
Depreciation 99 119
(Decrease)/increase in payables (1,638) 1,975
Decrease in receivables 97 259
Increase in fair value of current
asset investments (1,226) (1,361)
Loss on disposal of fixtures,
fittings & equipment - 23
Net foreign exchange loss/(gain) 134 (269)
Income taxes repaid/(paid) 378 (722)
=================================== ============== ==============
Net cash inflow from operating
activities 932 3,003
=================================== ============== ==============
19. RELATED PARTY TRANSACTIONS
71% 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$7,180 (2009: US$45,986) for services rendered to the Group in
the year.
20. FINANCIAL INSTRUMENTS
(a) Use of financial instruments
The wider Group has maintained sufficient cash reserves not to
use alternative financial instruments to finance the Group's
operations. The Group has various financial assets and liabilities
such as trade and other receivables, loans and advances, cash,
short-term deposits, and trade and other payables which arise
directly from its operations.
The Group's non-subsidiary investments in funds were entered
into with the purpose of providing seed capital for these
funds.
(b) Market risk
Market risk is the risk that a decline in the value of assets
adversely impacts on the profitability of the Group, either as a
result of an asset not meeting its expected value or through the
decline of assets under management generating lower fees. The
principal exposures of the Group are in respect of its seed
investments in its own funds. Lower management fee and incentive
fee revenues could result from a reduction in asset values.
(c) Capital risk management
The primary objective of the Group's capital management is to
ensure that the Company has sufficient cash and cash equivalents on
hand to finance its ongoing operations. This is achieved by
ensuring that trade receivables are collected on a timely basis and
that excess liquidity is invested in an optimum manner. This is
achieved by placing fixed short-term deposits or using interest
bearing bank accounts.
At the year-end cash balances were held at Royal Bank of
Scotland, Laiki Bank, Bank of Cyprus, United Overseas Bank,
Bancpost and UBS AG.
(d) Credit/counterparty risk
The Group will be exposed to counterparty risk on parties with
whom it trades and will bear the risk of settlement default. Credit
risk is concentrated in the funds under management as detailed in
note 11. Trade receivables are normally settled on 30-day
terms.
The Group's principal financial assets are bank and cash
balances, trade and other receivables and investments held at fair
value through profit or loss. These represent the Company's maximum
exposure to credit risk in relation to financial assets and are
represented by the carrying amount of each financial asset in the
balance sheet.
(e) Liquidity risk
Liquidity risk is the risk that the Group may be unable to meet
its payment obligations. This would be the risk of insufficient
cash resources and liquid assets, including bank facilities, being
available to meet liabilities as they fall due.
The main liquidity risks of the Group are associated with the
need to satisfy payments to creditors. Trade receivables and trade
payables are on 30-day terms.
(f) Foreign exchange risk
Foreign exchange risk is the risk that the Group will sustain
losses through adverse movements in currency exchange rates.
The Group is subject to short-term foreign exchange movements
between the calculation date of fees in currencies other than US
dollars and the date of settlement. The Group holds cash balances
in US dollars, Sterling, Singapore dollars, Swiss Francs, Romanian
Lei and Euros.
If there was a 5% increase or decrease in the exchange rate
between the US dollar and the other operating currencies used by
the Group at 31 December 2010 the exposure would be a profit or
loss to the Consolidated Statement of Comprehensive Income of
approximately US$74,000 (2009: US$266,000).
(g) Interest rate risk
The interest rate profile of the Group at 31 December 2010 is as
follows:
Instruments
Total as Variable Fixed on which no
per balance interest rate interest rate interest is
sheet instruments* instruments receivable
US$ '000 US$ '000 US$ '000 US$ '000
Financial
Assets
Financial
assets at
fair value
through
profit or
loss 15,563 - - 15,563
Loans and
receivables 1,570 - - 1,570
Cash and cash
equivalents 11,907 600 8,282 3,025
=============== ============= ============== ============== ==============
29,040 600 8,282 20,158
=============== ============= ============== ============== ==============
Financial
liabilities
Financial
liabilities
at fair value
through
profit or
loss 1,054 - - 1,054
=============== ============= ============== ============== ==============
* Changes in the interest rate may cause movements.
The average interest rate at the year end was 0.5%. Any movement
in interest rates would have an immaterial effect on the
profit/loss for the period.
The interest rate profile of the Group at 31 December 2009 is as
follows:
Instruments
Total as Variable Fixed on which no
per balance interest rate interest rate interest is
sheet instruments* instruments receivable
US$ '000 US$ '000 US$ '000 US$ '000
Financial
Assets
Financial
assets at
fair value
through
profit or
loss 14,337 - - 14,337
Loans and
receivables 2,234 - - 2,234
Cash and cash
equivalents 13,069 2,300 7,343 3,426
=============== ============= ============== ============== ==============
29,640 2,300 7,343 19,997
=============== ============= ============== ============== ==============
Financial
liabilities
Financial
liabilities
at fair value
through
profit or
loss 2,692 - - 2,692
=============== ============= ============== ============== ==============
* Changes in the interest rate may cause movements.
The average interest rate at the year end was 0.3%. Any movement
in interest rates would have an immaterial effect on the
profit/loss for the period.
(h) Fair value
The carrying values of the financial assets and liabilities
approximate the fair value of the financial assets and liabilities
and can be summarised as follows:
At 31 December At 31 December
2010 2009
US$ '000 US$ '000
Financial Assets
Financial assets at fair value
through profit or loss 15,563 14,337
Loans and receivables 1,570 2,234
Cash and cash equivalents 11,907 13,069
================================= ================= =================
29,040 29,640
================================ ================= =================
Financial Liabilities
Trade and other payables 1,054 2,692
================================= ================= =================
Financial assets and liabilities, other than investments, are
either repayable on demand or have short repayment dates. The fair
value of investments is stated at the redemption prices quoted by
fund managers and is based on the fair value of the underlying net
assets of the funds because, although the funds are listed, there
is no active market. Redemption gates are currently imposed by the
funds thereby limiting the Group's ability to realise the value of
its investments in a timely manner.
Fair value hierarchy
The table below analyses financial instruments measured at fair
value at the end of the reporting period by the level of the fair
value hierarchy (see note 2).
At 31 December 2010
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets
at fair value through
profit or loss - 15,563 - 15,563
At 31 December 2009
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets
at fair value through
profit or loss - 14,337 - 14,337
21. 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 named ACMH Limited ("ACMH")) and others. The
suit has been filed in the United States District Court for the
District of Colorado, 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
claim against ACMH proves successful, Cascade is seeking to include
Argo assets as part of the ACMH asset pool available to it by way
of compensation.
Argo considers that the courts of Colorado do not have
jurisdiction over it and that the claim against Argo is wholly
without merit. In April 2010 the Colorado court dismissed Cascade's
action against ACMH for failure to state a claim, following which
Cascade filed a second amended complaint. Argo subsequently filed a
motion to dismiss Cascade's second amended complaint, which motion
is pending before the court. Argo intends to continue to vigorously
defend its position.
22. EVENTS AFTER THE BALANCE SHEET DATE
The directors consider that there has been no event since the
year end that has a significant effect on the Group's position.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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