TIDMARGO
RNS Number : 9734K
ARGO Group Limited
29 August 2012
Argo Group Limited
("Argo" or the "Company")
Interim Results for the six months ended 30 June 2012
Argo today announces its interim results for the six months
ended 30 June 2012.
The Company will today make available its interim report for the
six month period ended 30 June 2012 on the Company's website
www.argogrouplimited.com.
Key Highlights for the six month period ended 30 June 2012
- Revenues US$3.9 million (six months to 30 June 2011: US$6.2 million)
- Operating profit US$0.7 million (six months to 30 June 2011: US$1.0 million)
- Loss before tax US$15.3 million after a one-off goodwill
impairment charge of US$14.9 million (six months to 30 June 2011:
profit US$1.2 million)
- Net assets US$26.5 million (31 December 2011: US$43.4 million)
after dividend payment of US$1.4 million
Commenting on the results and outlook, Kyriakos Rialas, Chief
Executive of Argo said:
"Global markets have once again proved challenging and Argo has
continued to meet this challenge head-on through fund
restructuring, new fund initiatives and cost-cutting. During the
period Argo paid an increased dividend and successfully completed
various asset management initiatives at its retail parks in Romania
and Ukraine. Emerging markets remain attractive and despite the
challenges posed by the global markets for asset gathering we are
confident that through its strong balance sheet Argo is
well-positioned to weather the current economic downturn and to
benefit from the eventual global recovery."
Enquiries
Argo Group Limited
Andreas Rialas
020 7535 4000
Panmure Gordon
Dominic Morley
020 7459 3600
CHAIRMAN'S STATEMENT
The Group and its objective
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 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 was listed on the AIM market in November 2008 and has a
performance track record dating back to 2000.
Business and operational review
This report sets out the interim results of Argo Group Limited
for the half year ended 30 June 2012.
In the period under review markets once again proved challenging
with the European sovereign debt crisis continuing to dominate
events. The ongoing turmoil in the Eurozone continues to act as a
major drag on the performance of the Argo funds which ended the
period with Assets under Management ("AUM") at US$302.4 million,
7.0% lower than at the beginning of the period. The Argo funds have
yet to regain their high-water mark.
For the six month period ended 30 June 2012 the Group generated
revenues of US$3.9 million (six months to 30 June 2011: US$6.2
million) with management fees accounting for US$3.5 million (six
months to 30 June 2011: US$4.9 million) reflecting the falling AUM
throughout the period. There was no non-recurring income generated
in the period.
In line with last year, the Group has continued to keep its cost
base under review with total costs falling to US$3.2 million (six
months to 30 June 2011: US$5.2 million). Further cost savings and
efficiencies have been identified including the closure of the
Buenos Aires office, with investments in Latin America continuing
to be covered by the Group's investment teams operating out of its
London office. The Group's cost base will remain under constant
review whilst ensuring efficient deployment of Group resources and
safeguarding of the requisite infrastructure.
Since the acquisition of the Argo businesses in 2008 the AUM
attributable to the Group's separately identifiable business units
have decreased significantly due to the volatility and uncertainty
displayed by the global financial markets. As a result, operations
have been scaled back and an impairment review of goodwill was
undertaken at 30 June 2012. Following the review, the goodwill of
US$14.9 million created on the purchase of the Argo businesses has
been written off during the period.
Overall, the financial statements show an operating profit for
the period of US$0.7 million (six months to 30 June 2011: US$1.0
million) and a loss before tax of US$15.3 million (six months to 30
June 2011: profit US$1.2 million) reflecting the goodwill
impairment of US$14.9 million and the unrealised loss on current
asset investments of US$1.0 million (six months to 30 June 2011:
unrealised gain US$0.2 million).
At 30 June 2012, the Group had net assets of US$26.5 million (31
December 2011: US$43.4 million) and net current assets of US$25.8
million (31 December 2011: US$27.4 million) after paying a dividend
of 2.0 cents (1.3 pence) per share on 20 June 2012 (2011: 1.9
cents, 1.2 pence) and a goodwill impairment charge of US$14.9
million.
Net current assets include investments in The Argo Fund ("TAF")
and Argo Real Estate Opportunities Fund Limited ("AREOF") at fair
values of US$16.8 million (31 December 2011: US$15.5 million) and
US$0.7 million (31 December 2011: US$1.0 million) respectively.
During the period the Group invested a further US$2 million in
TAF.
The Group has provided AREOF with a notice of deferral in
relation to amounts due from the provision of investment management
services, under which it will not demand payment of such amounts
until the Group judges that AREOF is in a position to pay the
outstanding liability. These amounts accrued or receivable at 30
June 2012 total US$2,786,003 (EUR2,215,333). AREOF continues to
meet part of this obligation to the Argo Group as and when
liquidity allows.
The number of employees of the Group at 30 June 2012 increased
to 41 (six months to 30 June 2011: 30) predominantly due to the
acquisition of the holding companies of the two shopping parks in
Romania and the subsequent transfer of their staff to the Argo
Group.
Fund performance
Whilst the performance of the Argo funds was disappointing it
was near-inevitable given the prolonged period of volatility and
uncertainty. The main fund, TAF, was behind by 4.70%, as was the
Argo Distressed Credit Fund ("ADCF"), by 3.19%, albeit both funds
finished on a positive note in June; by comparison, the main hedge
fund indices showed a negative return of 0.36% for the same
period.
Managing the Argo funds continues to be a challenge against the
back-drop of the ongoing European debt crisis and turbulent
markets, particularly as Argo specialises in illiquid funds.
Investor confidence has been dented and, understandably, clients
are reluctant to invest in illiquid assets at a time of such
economic and political uncertainty.
Argo Funds
30 30
June June 2011
Launch 2012 2011 year Sharpe Down
Since Annualised
Fund date 6 months 6 months total inception performance ratio months AUM
-------------- ------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
% % % % CAGR US$m
%
-------------- ------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
27
The Argo of
Fund Oct-00 -4.70 1.02 0.10 123.49 7.84 0.69 141 82.1
-------------- ------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
Argo 16
Distressed of
Credit Fund Oct-08 -3.19 -0.23 1.18 20.60 5.33 0.65 45 24.4
-------------- ------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
Argo Special
Situations 5 of
Fund LP Feb-12 -4.30 N/A N/A -4.30 -10.10 -5.72 5 107.8
-------------- ------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
Argo Real
Estate 30
Opportunities of
Fund Aug-06 -7.18 36.90 178.23 -30.65 -10.31 N/A 72* 88.1*
-------------- ------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
Total 302.4
----------------------- ---------- ----------- ------------- --------------- ------------ ------- --------- ------
* NAV only officially measured twice a year, March and
September.
On 1 February 2012, Argo completed a significant fund
restructuring exercise to reconfirm its mandate with the investor
base of AGSSF Holdings Limited ("AHL") and Argo Capital Partners
Fund ("ACPF") and to attract new liquidity. The portfolio assets of
AHL and ACPF were transferred into a new fund, Argo Special
Situations Fund LP ("SSF"), in exchange for ordinary partnership
interests in SSF with the objective of acquiring follow-on
investments and maximising the value of the assets. The Fund has
been successful in attracting new subscriptions with all investors
being invited to subscribe for two-year preference shares targeting
a 13.5% annualised return. As part of this restructuring exercise
the high-water mark for earning performance fees was reset to zero.
SSF is a closed-ended fund with a realisation period of three years
subject to extension. SSF finished in negative territory at the
period end showing a negative return of 4.3%, largely the result of
currency movements.
AREOF continues to operate in a particularly challenging and
difficult environment albeit one which appears to be stabilising.
The uncertainties surrounding the Eurozone crisis have impacted
economic performance and property asset valuations, with pressures
from competing centres in several of the regions in which AREOF
operates changing the balance of negotiation in favour of the
tenant. Whilst tenants continue to seek rent concessions and
turnover only rents, the properties are consistently 98-100%
let.
Despite the challenging trading environment AREOF successfully
completed asset management initiatives at Sibiu Shopping City,
Romania and Riviera Shopping City, Odessa both of which continue to
maintain their trading dominance in the respective regions. The
recently acquired shopping parks, ERA Shopping Park, Oradea and ERA
Shopping Park, Iasi, in Romania, are both anchored by prominent
international retailers with the former completing development of
its 16,000 sqm shopping mall in early spring 2012 and the latter
hoping to agree the restructuring of a EUR77m debt facility with a
view to commencing the final phase development of its 28,000 sqm
shopping mall this year.
AREOF has successfully renegotiated and agreed terms with its
existing bankers on several of its loans which will provide
development cash flow to complete the final phase of the asset
management initiative at Sibiu Shopping City, Romania due to be
competed in 2012.
The Fund's adjusted Net Asset Value was US$88.1 million (EUR70.0
million) as at 31 March 2012, compared with US$53.4 million
(EUR37.1 million) a year earlier, the increase being attributable
to the acquisition of the two Romanian shopping parks, ERA Shopping
Park, Oradea and ERA Shopping Park in September 2011. Following the
purchase of these assets AREOF has become the largest listed owner
and operator of retail parks in the country thus making it more
marketable to international investors over the long term. Further
information may be found in the published accounts of AREOF on its
website at www.argoproperty.com.
During the period the decision was taken to terminate Argo
Global Special Situations Fund. The size of the Fund had diminished
greatly as a result of redemptions and reached the quantum where
administrative costs were too high relative to the Fund's size to
continue trading. Fund operations were terminated on 1 June 2012
with investors being given the option to continue their exposure to
a distressed credit strategy by switching their investment to
ADCF.
Dividends
During the period the Group paid a dividend of 2.0 cents (1.3
pence) per share (2011: 1.9 cents, 1.2 pence). Going forward, the
Company intends, subject to its financial performance, to pay a
final dividend each year.
Outlook
Conditions in global financial markets are once again
characterised by uncertainty amid investor anxiety about the future
of the Eurozone. Unless there is a rapid return of investor
confidence it is difficult to envisage anything other than another
turbulent year ahead. This uncertainty has made attracting new
investors to Argo's funds difficult.
Despite this backdrop the Group, with its strong balance sheet,
is well positioned to continue to weather the economic and
political challenges ahead. The business will continue to look for
opportunities and invest in infrastructure where necessary whilst
operating as cost-effectively as possible.
As a new initiative Argo is expanding its liquid product
offering through a new fund, Argo Local Markets Fund, which will be
launched over the coming months with the aim of achieving capital
growth through investments in local bonds, interest rates and
currency markets within the emerging markets sector.
The Board is confident that with its talented team the Group can
continue to meet the ongoing economic challenges and is well placed
to benefit from an eventual global recovery and in particular
recovery of the emerging markets sector.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Six months Six months
ended ended
30 June 30 June
2012 2011
Note US$'000 US$'000
Management fees 3,543 4,868
Other income 316 1,355
===================================== ===== =========== ===========
Revenue 3,859 6,223
===================================== ===== =========== ===========
Legal and professional expenses (178) (159)
Management and incentive (7) -
fees payable
Operational expenses (845) (831)
Employee costs (1,832) (3,883)
Foreign exchange loss (2) (6)
Amortisation of intangible
assets 7 (317) (341)
Depreciation 8 (14) (21)
Operating profit 664 982
===================================== ===== =========== ===========
Impairment of intangible
assets 7 (14,945) -
Interest income on cash and
cash equivalents 8 29
Unrealised (loss)/gain on
investments (1,014) 159
===================================== ===== =========== ===========
(Loss)/profit on ordinary
activities before taxation (15,287) 1,170
===================================== ===== =========== ===========
Taxation 5 (76) (131)
===================================== ===== =========== ===========
(Loss)/profit for the period
after taxation attributable
to members of the Company 6 (15,363) 1,039
Other comprehensive income
Exchange differences on translation
of foreign operations (127) 282
===================================== ===== =========== ===========
Total comprehensive (loss)/income
for the period (15,490) 1,321
===================================== ===== =========== ===========
Six months Six months
Ended Ended
30 June 30 June
2012 2011
US$ US$
Earnings per share (basic) 6 -0.23 0.01
============================== =========== ===========
Earnings per share (diluted) 6 -0.23 0.01
============================== =========== ===========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2012
30 June At 31 December
2012 2011
Note US$'000 US$'000
Assets
Non-current assets
Intangible assets 7 660 15,942
Fixtures, fittings and
equipment 8 62 70
Loans and advances receivable 37 38
=============================== ===== ========== ===============
Total non-current assets 759 16,050
=============================== ===== ========== ===============
Current assets
Investments 9 17,525 16,539
Trade and other receivables 10 3,579 3,314
Cash and cash equivalents 5,009 8,358
Loans and advances receivable 258 240
=============================== ===== ========== ===============
Total current assets 26,371 28,451
=============================== ===== ========== ===============
Total assets 27,130 44,501
=============================== ===== ========== ===============
Equity and liabilities
Equity
Issued share capital 11 674 674
Share premium 30,878 30,878
Revenue reserve (2,633) 14,123
Foreign currency translation
reserve (2,377) (2,250)
=============================== ===== ========== ===============
Total equity 26,542 43,425
=============================== ===== ========== ===============
Current liabilities
Trade and other payables 361 913
Taxation payable 5 227 163
=============================== ===== ========== ===============
Total current liabilities 588 1,076
Total equity and liabilities 27,130 44,501
=============================== ===== ========== ===============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Foreign
Issued currency
share Share Revenue translation
capital premium reserve reserve Total
2011 2011 2011 2011 2011
US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January
2011 737 32,199 13,645 (2,139) 44,442
Total comprehensive
income
Profit for the
period after taxation - - 1,039 282 1,321
Transactions with
owners recorded
directly in equity
Dividends to equity
holders (Note 11) - - (1,418) - (1,418)
Purchase of own
shares (Note 11) (39) (793) - - (832)
As at 30 June 2011 698 31,406 13,266 (1,857) 43,513
======================== ========== ========== ========== ============== ========
Foreign
Issued currency
share Share Revenue translation
capital premium reserve reserve Total
2012 2012 2012 2012 2012
US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January
2012 674 30,878 14,123 (2,250) 43,425
Total comprehensive
income
Loss for the period
after taxation - - (15,363) (127) (15,490)
Transactions with
owners recorded
directly in equity
Dividends to equity
holders (Note 11) - - (1,393) - (1,393)
As at 30 June 2012 674 30,878 (2,633) (2,377) 26,542
===================== ========== ========== ========== ============== =========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Six months Six months
ended ended
30 June 30 June
2012 2011
Note US$'000 US$'000
Net cash inflow from operating
activities 12 151 433
Cash flows (used in)/from
investing activities
Interest received on cash
and cash equivalents 8 29
Purchase of current asset
investments 9 (2,000) -
Purchase of fixtures,
fittings and equipment 8 (8) (10)
Net cash (used in)/from
investing activities (2,000) 19
================================ ===== =========== ===========
Cash flows used in financing
activities
Repurchase of own shares 11 - (832)
Dividends paid 11 (1,393) (1,418)
Net cash used in financing
activities (1,393) (2,250)
================================ ===== =========== ===========
Net decrease in cash and
cash equivalents (3,242) (1,798)
Cash and cash equivalents
at 1 January 2012 and
1 January 2011 8,358 11,907
Foreign exchange (loss)/gain
on cash and cash equivalents (107) 141
Cash and cash equivalents
as at 30 June 2012 and
30 June 2011 5,009 10,250
================================ ===== =========== ===========
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2012
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 2012 comprise the Company and its subsidiaries (together
referred to as the "Group").
The consolidated financial statements of the Group as at and for
the year ended 31 December 2011 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 41
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.
Argo Property Management Srl Romania
(formerly North Asset Management
Srl)
North Asset Management Sarl Luxembourg
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 year ended 31 December 2011.
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 year ended 31 December 2011.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 28 August 2012.
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 Six
Capital Argo Capital months
Argo Management Capital Management ended
Group (Cyprus) Management Property 30
Ltd Ltd Ltd Ltd Other June
2012 2012 2012 2012 2012 2012
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenues from
external customers - 2,245 - 1,614 - 3,859
Intersegment
revenues 2,200 - 1,093 - 184 3,477
Reportable
segment profit/(loss) 968 (1,443) (510) 581 18 (386)
Intersegment
profit/(loss) 2,200 (3,297) 909 - 184 (4)
Profit/(loss)
excluding inter-
segment transactions (1,232) 1,854 (1,419) 581 (166) (382)
Reportable
segment assets 48,999 830 2,352 4,442 430 57,053
Reportable
segment liabilities 67 396 255 153 26 897
======================== ======== ============ ============= ============= ======== ========
Revenues, profit or loss, assets and Six months
liabilities may be reconciled as follows:
ended
30 June
2012
US$'000
Revenues
Total revenues for reportable segments 7,336
Elimination of intersegment revenues (3,477)
============================================== ===========
Group revenues 3,859
============================================== ===========
Profit or loss
Total loss for reportable segments (386)
Elimination of intersegment losses 4
Other unallocated amounts (14,905)
============================================== ===========
Loss on ordinary activities before taxation (15,287)
============================================== ===========
Assets
Total assets for reportable segments 57,053
Elimination of intersegment receivables (325)
Elimination of Company's cost of investments (29,598)
============================================== ===========
Group assets 27,130
============================================== ===========
Liabilities
Total liabilities for reportable segments 897
Elimination of intersegment payables (309)
============================================== ===========
Group liabilities 588
============================================== ===========
Argo Argo Six
Capital Argo Capital months
Argo Management Capital Management ended
Group (Cyprus) Management Property 30
Ltd Ltd Ltd Ltd Other June
2011 2011 2011 2011 2011 2011
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenues from
external customers - 3,465 1,131 1,627 - 6,223
Intersegment
revenues 4,000 - 1,575 - 266 5,841
Reportable
segment profit/(loss) 3,977 (2,684) (454) 144 62 1,045
Intersegment
profit/(loss) 4,000 (5,578) 1,308 - 266 (4)
Profit/(loss)
excluding inter-
segment transactions (23) 2,894 (1,762) 144 (204) 1,049
Reportable
segment assets 49,141 2,524 4,378 3,679 732 60,454
Reportable
segment liabilities 47 742 923 499 87 2,298
======================== ======== ============ ============= ============= ======== ========
Revenues, profit or loss, assets and liabilities Six months
may be reconciled as follows:
ended
30 June
2011
US$'000
Revenues
Total revenues for reportable segments 12,064
Elimination of intersegment revenues (5,841)
================================================== ===========
Group revenues 6,223
================================================== ===========
Profit or loss
Total profit for reportable segments 1,045
Elimination of intersegment losses 4
Other unallocated amounts 121
================================================== ===========
Profit on ordinary activities before taxation 1,170
================================================== ===========
Assets
Total assets for reportable segments 60,454
Elimination of intersegment receivables (441)
Elimination of Company's cost of investments (14,653)
================================================== ===========
Group assets 45,360
================================================== ===========
Liabilities
Total liabilities for reportable segments 2,298
Elimination of intersegment payables (451)
================================================== ===========
Group liabilities 1,847
================================================== ===========
4. SHARE-BASED INCENTIVE PLANS
On 14 March 2011 the Group granted options over 5,900,000 shares
to directors and employees under The Argo Group Limited Employee
Stock Option Plan. All options are exercisable in four equal
tranches over a period of four years at an exercise price of 24p
per share.
The fair value of the options granted was measured at the grant
date using a Black-Scholes model that takes into account the effect
of certain financial assumptions, including the option exercise
price, current share price and volatility, dividend yield and the
risk-free interest rate. The fair value of the options granted is
spread over the vesting period of the scheme and the value is
adjusted to reflect the actual number of shares that are expected
to vest.
The principal assumptions for valuing the options are:
Exercise price (pence) 24.0
Weighted average share
price at grant date
(pence) 12.0
Weighted average option
life (years) 10.0
Expected volatility
(% p.a.) 2.11
Dividend yield (% p.a.) 10.0
Risk-free interest rate
(% p.a.) 5.0
The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The total charge
to employee costs in respect of this incentive plan is nil.
The number and weighted average exercise price of the share
options during the period is as follows:
Weighted No. of share
average exercise options
price
Outstanding at beginning of
period 24.0p 5,465,000
Granted during the period - -
Forfeited during the period 24.0p (50,000)
============================== ================== =============
Outstanding at end of period 24.0p 5,415,000
============================== ================== =============
Exercisable at end of period 24.0p 1,353,750
============================== ================== =============
The options outstanding at 30 June 2012 have an exercise price
of 24p and a weighted average contractual life of 10 years. They
expire after 10 years. Outstanding share options are contingent
upon the option holder remaining an employee of the Group.
The weighted average fair value of the options outstanding at
the period end was nil.
5. TAXATION
Taxation rates applicable to the parent company and the Cypriot,
UK, Singaporean, Luxembourg, Swiss, Cayman and Romanian
subsidiaries range from 0% to 25% (2011: 0% to 27%).
Income Statement Six months Six months
ended ended
30 June 30 June
2012 2011
US$'000 US$'000
Taxation charge for the period
on Group companies 76 131
================================ =========== ===========
The charge for the period can be reconciled to the profit per
the Condensed Consolidated Statement of Comprehensive Income as
follows:
Six months Six months
ended ended
30 June 30 June
2012 2011
US$'000 US$'000
(Loss)/profit before tax (15,287) 1,170
================================== =========== ===========
Applicable Isle of Man tax - -
rate for Argo Group Limited
of 0%
Timing differences (5)
Non-deductible expenses 8
Non-taxable income (1)
Other adjustments (2) -
Tax effect of different tax
rates of subsidiaries operating
in other jurisdictions 76 131
================================== =========== ===========
Tax charge 76 131
================================== =========== ===========
Balance Sheet
30 June 31 December
2012 2011
US$'000 US$'000
Corporation tax payable 227 163
========================= ======== ============
6. 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 months Six months
ended ended
30 June 30 June
2012 2011
US$'000 US$'000
Net (loss)/profit for the
period after taxation attributable
to members (15,363) 1,039
===================================== ============= =============
No. of No. of
shares shares
Weighted average number of
ordinary shares for basic
earnings per share 67,428,494 72,253,494
Effect of dilution (Note 4) 5,415,000 5,900,000
===================================== ============= =============
Weighted average number of
ordinary shares for diluted
earnings per share 72,843,494 78,153,494
===================================== ============= =============
Six months Six months
ended ended
30 June 30 June
2012 2011
US$ US$
Earnings per share (basic) -0.23 0.01
Earnings per share (diluted) -0.23 0.01
============================== =========== ===========
7. INTANGIBLE ASSETS
Fund management
contracts
US$'000
Cost
At 1 January 2011 18,554
Foreign exchange movement 86
========================================== ================
At 31 December 2011 18,640
Foreign exchange movement 42
========================================== ================
At 30 June 2012 18,682
========================================== ================
Amortisation and impairment
At 1 January 2011 1,939
Amortisation of Argo business intangible
assets 683
Foreign exchange movement 76
========================================== ================
At 31 December 2011 2,698
Impairment charge 14,945
Amortisation of Argo business intangible
assets 317
Foreign exchange movement 62
========================================== ================
At 30 June 2012 18,022
========================================== ================
Net book value
At 31 December 2011 15,942
========================================== ================
At 30 June 2012 660
========================================== ================
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.
Since the acquisition of the Argo businesses in 2008 the assets
under management attributable to the Group's separately
identifiable business units have decreased significantly due to the
volatility and uncertainty displayed by the global financial
markets. As a result, operations have been scaled back and an
impairment review of goodwill was undertaken at 30 June 2012.
Following the review, the goodwill of US$14.9 million created on
the purchase of the Argo businesses has been written off during the
period. At the balance sheet date the carrying value of goodwill is
US$nil (31 December 2011: US$14.9 million).
At the balance sheet date the carrying value of the Argo Real
Estate Opportunities Fund Limited management contract is US$0.7
million (31 December 2011: US$1.0 million), net of amortisation.
The intangible asset is being amortised over 5 years and 44 days,
being the remaining period of the contract from the date of
acquisition. The Group has successfully renegotiated the extension
of this management contract by five years from the current
termination date of 31 July 2013 to 31 July 2018.
8. FIXTURES, FITTINGS AND EQUIPMENT
Fixtures,
fittings
& equipment
US$'000
Cost
At 1 January 2011 295
Additions 64
Foreign exchange movement (2)
================================ =============
At 31 December 2011 357
Additions 8
Disposal (13)
Foreign exchange movement -
================================ =============
At 30 June 2012 352
================================ =============
Accumulated Depreciation
At 1 January 2011 254
Depreciation charge for period 35
Foreign exchange movement (2)
================================ =============
At 31 December 2011 287
Depreciation charge for period 14
Disposal (12)
Foreign exchange movement 1
================================ =============
At 30 June 2012 290
================================ =============
Net book value
At 31 December 2011 70
================================ =============
At 30 June 2012 62
================================ =============
9. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June
2012 2012
Holding Investment in management Total cost Fair value
shares
US$'000 US$'000
10 The Argo Fund Ltd 0 0
Argo Capital Investors
10 Fund SPC 0 0
Argo Capital Partners
10 Fund Ltd 0 0
Argo Distressed Credit
100 Fund Ltd 0 0
100 AGSSF Holdings Ltd 0 0
Argo Special Situations
1 Fund LP 0 0
======== ========================= ============= =============
0 0
======== ========================= ============= =============
Holding Investment in ordinary Total cost Fair value
shares
US$'000 US$'000
75,165 The Argo Fund Ltd 16,343 16,799
Argo Real Estate
Opportunities Fund
10,899,021 Ltd 988 726
=========== ======================= ============= =============
17,331 17,525
=========== ======================= ============= =============
31 December 31 December
2011 2011
Holding Investment in management Total cost Fair value
shares
US$'000 US$'000
10 The Argo Fund Ltd 0 0
Argo Capital Investors
10 Fund SPC 0 0
Argo Capital Partners
10 Fund Ltd 0 0
Argo Distressed Credit
100 Fund Ltd 0 0
100 AGSSF Holdings Ltd 0 0
======== ========================= ============== ==============
0 0
======== ========================= ============== ==============
Holding Investment in ordinary Total cost Fair value
shares
US$'000 US$'000
66,435 The Argo Fund Ltd 14,343 15,579
Argo Real Estate
Opportunities Fund
10,899,021 Ltd 988 960
=========== ======================= ============= =============
15,331 16,539
=========== ======================= ============= =============
10. TRADE AND OTHER RECEIVABLES
During the year ended 31 December 2011 the Group provided Argo
Real Estate Opportunities Fund Limited ("AREOF") (to whom it
provides investment management services) with a notice of deferral
in relation to the amounts due from the provision of investment
management services, under which it will not demand payment of such
amounts until the Group judges that AREOF is in a position to pay
the outstanding liability. These amounts accrued or receivable at
30 June 2012 total US$2,786,003 (EUR2,215,333) (31 December 2011:
US$2,480,165, EUR1,915,333). AREOF continues to meet part of this
obligation to the Argo Group as and when liquidity allows.
In the audited financial statements of AREOF at 30 September
2011 and the interim report of AREOF at 31 March 2012, a material
uncertainty surrounding the refinancing of bank debts was referred
to in relation to the basis of preparation of the financial
statements. In the view of the directors of AREOF, discussions with
the banks are continuing satisfactorily and they have therefore
concluded that it is appropriate to prepare those financial
statements on a going concern basis.
11. SHARE CAPITAL
The Company's authorised share capital is unlimited with a
nominal value of US$0.01.
30 June 30 June 31 December 31 December
2012 2012 2011 2011
No. US$'000 No. US$'000
Issued and fully
paid
Ordinary shares
of US$0.01 each 67,428,494 674 67,428,494 674
================== ============= ========== ============= ============
67,428,494 674 67,428,494 674
================== ============= ========== ============= ============
The directors recommended a final dividend of 2.0 cents (1.3
pence) per share for the year ended 31 December 2011 (31 December
2010: 1.9 cents, 1.2 pence). The final dividend for the year ended
31 December 2011 of US$1,392,885 (GBP876,570) (31 December 2010:
US$1,418,257, GBP 873,042) was paid on 20 June 2012 to ordinary
shareholders who were on the Register of Members on 25 May 2012.
Going forward, the Company intends, subject to its financial
performance, to pay a final dividend each year.
During the six month period ended 30 June 2011 the directors
authorised the repurchase of 3,910,000 shares at an average
purchase price of 13.2p. No shares were repurchased during the
current period.
12. RECONCILIATION OF NET CASH INFLOW FROM OPERATING ACTIVITIES TO
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Six months Six months
ended ended
30 June 30 June
2011 2011
US$'000 US$'000
(Loss)/profit on ordinary
activities before taxation (15,287) 1,170
Interest income (8) (29)
Impairment charge 14,945 -
Amortisation of intangible
assets 317 341
Depreciation 14 21
Unrealised (loss)/gain on
investments 1,014 (159)
Net foreign exchange loss 2 6
(Decrease)/increase in payables (552) 469
Increase in receivables (282) (1,379)
Income taxes paid (12) (7)
================================= ============= =============
Net cash inflow from operating
activities 151 433
================================= ============= =============
13. RELATED PARTY TRANSACTIONS
All Group revenues derive from funds or entities in which two of
the Company's directors, Andreas Rialas and Kyriakos Rialas, have
an influence through directorships and the provision of investment
advisory services.
At the balance sheet date the Company holds investments in The
Argo Fund Limited and Argo Real Estate Opportunities Fund Limited
("AREOF"). These investments are reflected in the accounts at a
fair value of US$16,798,536 (31 December 2011: US$15,578,970
million) and US$726,450 (31 December 2011: US$959,694
million)respectively.
During the period the Group provided AREOF (to whom it provides
investment management services) with a notice of deferral in
relation to the amounts due from the provision of investment
management services, under which it will not demand payment of such
amounts until the Group judges that AREOF is in a position to pay
the outstanding liability. These amounts accrued or receivable at
30 June 2012 total US$2,786,003 (EUR2,215,333) (31 December 2011:
US$2,480,165, EUR1,915,333). AREOF continues to meet part of this
obligation to the Argo Group as and when liquidity allows.
In the audited financial statements of AREOF at 30 September
2011 and the interim report of AREOF at 31 March 2012, a material
uncertainty surrounding the refinancing of bank debts was referred
to in relation to the basis of preparation of the financial
statements. In the view of the directors of AREOF, discussions with
the banks are continuing satisfactorily and they have therefore
concluded that it is appropriate to prepare those financial
statements on a going concern basis.
Michael Kloter, the non-executive chairman, is also partner in a
legal firm which supplies services to the Group. This firm charged
US$1,530 (six months ended 30 June 2011: US$11,426) for services
rendered to the Group in the period.
David Fisher, a non-executive director of the Company, is also a
non-executive director of AREOF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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