TIDMARGO
RNS Number : 4478W
ARGO Group Limited
01 August 2018
Argo Group Limited
("Argo" or the "Company")
Interim Results for the six months ended 30 June 2018
Argo today announces its interim results for the six months
ended 30 June 2018.
The Company will today make available its interim report for the
six months period ended 30 June 2018 on the Company's website
www.argogrouplimited.com.
Key highlights for the six months period ended 30 June 2018
This report sets out the results of Argo Group Limited (the
"Company") and its subsidiaries (collectively "the Group" or
"Argo") covering the six months ended 30 June 2018.
- Revenues US$2.2 million (six months to 30 June 2017: US$2.3 million restated)
- Operating loss US$0.6 million (six months to 30 June 2017: US$0.7 million restated)
- Loss before tax US$0.7 million (six months to 30 June 2017: profit US$1.1 million restated)
- Net assets US$23.8 million (31 December 2017: US$24.7 million)
Commenting on the results and outlook, Kyriakos Rialas, Chief
Executive Officer of Argo said:
"Emerging Market fixed income started the year with strong gains
which were quickly reversed after April following increases in US
treasury yields and particularly fears of an escalating trade war
with China. The large outflows of funds affected the Argo Fund as
well but to a much lesser extent than market benchmarks due to the
overall short positioning of the fund. Although The Argo Fund
outperformed the market all performance fees accrued in the first
three months of the year have been wiped out in May and June 2018.
We are currently seeing some stabilisation and new inflows into the
EM space and we hope for positive returns in the second half of the
year leading to performance fees for the investment manager. The
distressed assets of the other funds are slow to recover but a
combination of litigation pressure and continuous negotiations
hopefully will lead to liquidity events for the Argo Distressed
Credit Fund and the Argo Special Situations Find LP."
Enquiries
Argo Group Limited
Andreas Rialas
020 7016 7660
Panmure Gordon
Dominic Morley
020 7886 2500
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
CHAIRMAN'S STATEMENT
The Group and its investment objective
Argo's 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
For the six months ended 30 June 2018 the Group generated
revenues of US$2.2 million (six months to 30 June 2017: US$2.3
million restated) with management fees accounting for US$2.1
million (six months to 30 June 2017: US$2.1 million). Under IFRS
15, which became effective from 1 January 2018, performance fees
for the Argo Funds can only be recognised at the crystallisation
date, when performance fees become due and payable, which is
currently 31 December. Thus, performance fees can be recognised at
year end but not at the interim date. Revenue for the comparative
period has been restated to be in line with the new standard. The
impact of the restatement is set out under Note 15.
Total operating costs for the period, ignoring bad debt
provisions, are US$2.1 million compared to US$1.9 million for the
six months to 30 June 2017. The Group has provided against
management fees of US$0.6 million (EUR0.5 million) (six months to
30 June 2017: US$0.8 million (EUR0.8 million)) due from AREOF. In
the Directors' view these amounts are fully recoverable however
they have concluded that it would not be appropriate to continue to
recognise income without provision from these investment management
services as the timing of such receipts may be outside the control
of the Company and AREOF.
Overall, the financial statements show an operating loss for the
period of US$0.6 million (six months to 30 June 2017: loss US$0.7
million restated) and a loss before tax of US$0.7 million (six
months to 30 June 2017: profit US$1.1 million restated) reflecting
the net loss on investments of US$0.2 million (six months to 30
June 2017: net gain US$1.7 million).
At the period end, the Group had net assets of US$23.9 million
(31 December 2017: US$24.7 million) and net current assets of
US$23.4 million (31 December 2017: US$24.2 million) including cash
reserves of US$4.3 million (31 December 2017: US$5.0 million).
Net assets include investments in TAF, AREOF, Argo Special
Situations Fund LP and ADCF (together referred to as "the Argo
funds") at fair values of US$10.4 million (31 December 2017:
US$10.6 million), US$0.1 million (31 December 2017: US$0.1
million), US$0.03 million (31 December 2017: US$0.03 million) and
US$8.1 million (31 December 2017: US$4.2 million) respectively.
At the period end the Argo funds (excluding AREOF) owed the
Group total management and performance fees of US$0.4 million (31
December 2017: US$6.2 million).
The Argo funds (excluding AREOF) ended the period with Assets
under Management ("AUM") at US$148.6 million. The Group invested a
further $4m in ADCF in February 2018. The current level of AUM
remains below that required to ensure sustainable profits on a
recurring management fee basis in the absence of performance fees.
This has necessitated an ongoing review of the Group's cost basis.
Nevertheless, the Group has ensured that the operational framework
remains intact and that it retains the capacity to manage
additional fund inflows as and when they arise.
The average number of permanent employees of the Group for the
six months to 30 June 2018 was 20 (30 June 2017: 23).
The Group has provided AREOF with a notice of deferral in
relation to amounts due from the provision of investment management
services, under which it will not demand payment of such amounts
until the Group judges that AREOF is in a position to pay the
outstanding liability. These amounts accrued or receivable at 30
June 2018 total US$ Nil (31 December 2017: US$ Nil) after a bad
debt provision of US$8.5 million (EUR7.3 million) (31 December
2017: US$8.2 million, EUR6.8 million). AREOF continues to meet part
of this obligation to the Argo Group as and when liquidity allows.
In November 2013 AREOF offered Argo Group Limited additional
security for the continued support in the form of debentures and
guarantees by underlying intermediate companies. The AREOF
management contract expires on the later of its termination or the
sale of all assets in the Portfolio. The life of the fund is due to
expire on 30 June 2034.
Fund performance
The Argo Funds
30 June 30 June 2017
Launch 2018 2017 year Sharpe Down
Since Annualised
Fund date 6 months 6 months total inception performance ratio months AUM
% % % % CAGR % US$m
------- --------- --------- ------- ---------- ------------ ------ -------- ------
64 of
The Argo Fund Oct-00 -1.95 4.67 10.70 229.90 7.76 0.49 213 66.0
------- --------- --------- ------- ---------- ------------ ------ -------- ------
Argo Distressed 55 of
Credit Fund Oct-08 -0.10 51.00 65.60 228.96 15.05 0.63 117 56.3
------- --------- --------- ------- ---------- ------------ ------ -------- ------
Argo Special
Situations 59 of
Fund LP Feb-12 -1.91 -12.03 115.45 -76.68 -5.44 -0.09 83 26.3
------- --------- --------- ------- ---------- ------------ ------ -------- ------
Total 148.6
--------- --------- ------- ---------- ------------ ------ -------- ------
* NAV only officially measured once a year in September.
AREOF's adjusted NAV at 30 September 2017* was US$0.7 million
(EUR0.6 million), compared with minus US$36.4 million (minus
EUR31.9 million) a year earlier. The Adjusted NAV per share at 30
September 2017 was US$0.001 (EUR0.001) (2016: minus US$0.06 (minus
EUR0.05)). The improvement in NAV follows the AREOF Group
restructuring that completed in March 2017.
The main shareholders in AREOF are:
Entity No of Shares %
------------------------- ------------- ----
Argo Distressed Credit
Fund 175,694,400
Argo Special Situations
Fund LP 300,396,609
Argo Group Limited 30,056,500
Total 506,147,509 83%
------------------------- ------------- ----
Developments in the US continued to dominate the headlines and
investor sentiment, as the world's biggest economy entered its
ninth year of expansion and expenditure by consumers, businesses
and government all gained momentum Against this backdrop the
Federal Reserve lifted its 2018 GDP guidance as it raised its
target range for the federal funds rate in June by 25 basis points,
the second rate increase this year. Faster growth has helped drive
the US unemployment rate to an 18-year low and lift earnings. One
of the larger investor concerns is therefore that the economy could
bump up against capacity restraints and overheat, and with
inflation levels rising, one of the Federal Reserve's tasks is to
raise interest rates just enough to keep prices from increasing
faster, but not so much as to smother growth and tip the economy
into a recession. Political developments in the EU and elections in
key emerging markets such as Turkey and Mexico also sparked
apprehension at times in the first half of 2018, though these
concerns appeared to be mostly shrugged off by markets before
period-end. More worrying though was the emergence of trade
tensions between the US and China which taken together with the
ongoing renegotiation of the North America Free Trade Agreement has
given rise to fears of a global tariff war and the impact that
would have on world trade volumes and hence emerging market
economies, particularly those which enjoy export-led growth.
Nevertheless, the IMF recently updated its World Economic Outlook
and against global expansion of 3.9% this year and next, it
projects growth rates of 4.9% for 2018 and 5.1% for 2019 for
emerging and developing countries.
Against this background, it is not surprising that after posting
reasonable gains in the previous two years, emerging markets
faltered in the first half of 2018; for example, the JP Morgan
EMBI+ emerging market bond index fell by around 6% in that period
compared with rises of 9.6% and 8.3% respectively in 2016 and 2017.
TAF is the Group's flagship fund and has an 18 year track record.
TAF's focus is on liquid bond securities, both sovereign and
corporate, but the long/short strategy pursued by TAF allows it to
adjust more quickly to a dynamic macroeconomic environment. Whilst
the first quarter started positively, the overall decline of 1.95 %
in the period under review is disappointing: however, the Board
believes it compares favourably with its peers and long-only funds
dedicated to emerging market foreign exchange and bonds. The
performance of ADCF, which concentrates on less liquid distressed
positions, was largely unchanged as it awaits a realisation from
its biggest position which comprises a petrochemicals asset in
Asia. The ASSF declined by 1.9% principally due to the cost of debt
funding.
As mentioned previously, the Group's marketing efforts have been
bolstered and for the time being are concentrated on TAF. Whilst
the recent risk sell-off may deter some investors, others may
identify a more attractive entry level and the Board believes
emerging markets continue to offer attractive investment
opportunities.
Dividends
The Group did not pay a dividend during the current or prior
period. The Directors intend to restart dividend payments as soon
as the Group's performance provides a consistent track record of
profitability.
Outlook
The Board remains optimistic about the Group's prospects based
on the transactions in the pipeline and the Group's initiatives to
increase AUM. A significant increase in AUM is still required to
ensure sustainable profits on a recurring management fee basis and
the Group is well placed with capacity to absorb such an increase
in AUM with negligible impact on operational costs.
Boosting AUM will be Argo's top priority in the next six months.
The Group's marketing efforts will continue to focus on TAF which
has a 18-year track record as well as identifying acquisitions that
are earnings enhancing.
Over the longer term, the Board believes there is significant
opportunity for growth in assets and profits and remains committed
to ensuring the Group's investment management capabilities and
resources are appropriate to meet its key objective of achieving a
consistent positive investment performance in the emerging markets
sector.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
Restated
Note US$'000 US$'000
Management fees 2,115 2,138
Other income 125 122
============================================= ===== =========== ===========
Revenue 2,240 2,260
============================================= ===== =========== ===========
Legal and professional expenses (177) (126)
Management and incentive fees payable (35) (33)
Operational expenses (559) (532)
Employee costs (1,347) (1,228)
9,
Bad debt provision 10 (692) (1,032)
Foreign exchange gain/(loss) 1 (7)
Depreciation 7 (6) (15)
Operating loss (575) (713)
============================================= ===== =========== ===========
Interest income 99 88
Realised and unrealised gains/(losses)
on investments 8 (238) 1,728
============================================= ===== =========== ===========
(Loss)/profit on ordinary activities
before taxation (714) 1,103
============================================= ===== =========== ===========
Taxation 5 (11) (130)
============================================= ===== =========== ===========
(Loss)/profit for the period after
taxation attributable to members of
the Company 6 (725) 973
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations (98) 202
============================================= ===== =========== ===========
Total comprehensive income for the
period (823) 1,175
============================================= ===== =========== ===========
Six months Six months
Ended Ended
30 June 30 June
2018 2017
Restated
US$ US$
Earnings per share (basic) 6 (0.02) 0.02
============================================= ===== =========== ===========
Earnings per share (diluted) 6 (0.01) 0.02
============================================= ===== =========== ===========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
30 June 31 December
2018 2017
Note US$'000 US$'000
Assets
Non-current assets
Land, fixtures, fittings and
equipment 7 219 227
Financial assets at fair value
through profit or loss 8 150 151
Loans and advances receivable 10 123 125
================================ ===== ========== ============
Total non-current assets 492 503
================================ ===== ========== ============
Current assets
Financial assets at fair value
through profit or loss 8 18,563 14,800
Trade and other receivables 9 647 6,442
Loans and advances receivable 10 6 -
Cash and cash equivalents 4,315 5,023
Total current assets 23,531 26,273
================================ ===== ========== ============
Total assets 24,023 26,776
================================ ===== ========== ============
Equity and liabilities
Equity
Issued share capital 11 470 470
Share premium 28,022 28,022
Revenue reserve (1,852) (1,127)
Foreign currency translation
reserve (2,803) (2,705)
================================ ===== ========== ============
Total equity 23,837 24,660
================================ ===== ========== ============
Current liabilities
Trade and other payables 154 2,097
Taxation payable 5 32 19
================================ ===== ========== ============
Total current liabilities 186 2,116
Total equity and liabilities 24,023 26,776
================================ ===== ========== ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE SIX MONTHSED 30 JUNE 2018
Foreign
Issued currency
share Share Revenue translation
capital premium reserve reserve Total
2017 2017 2017 2017 2017
US$'000 US$'000 US$'000 US$'000 US$'000
Restated Restated Restated
As at 1 January 2017 481 28,211 (5,668) (2,955) 20,069
Total comprehensive
income
Profit for the period
after taxation - - 973 - 973
Other comprehensive
income - - - 202 202
Transaction with owners
recorded directly in
equity
Purchase of own shares (11) (189) - - (200)
As at 30 June 2017 470 28,022 (4,695) (2,753) 21,044
========================= ========== ========== ================ =============== =========
Foreign
Issued currency
share Share Revenue translation
capital premium reserve reserve Total
2018 2018 2018 2018 2018
US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2018 470 28,022 (1,127) (2,705) 24,660
Total comprehensive
income
Profit for the period
after taxation - - (725) - (725)
Other comprehensive
income - - - (98) (98)
As at 30 June 2018 470 28,022 (1,852) (2,803) 23,837
======================= ========== ========== ========== ================ ========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
Note US$'000 US$'000
Net cash inflow/(outflow) from
operating activities 12 3,365 (366)
========================================= ===== =========== ===========
Cash flows used in investing activities
Interest received on cash and
cash equivalents 11 14
Purchase of fixtures, fittings
and equipment 7 (1) (2)
Purchase of current asset investments 8 (4,000) -
Net cash generated (used in)/from
investing activities (3,990) 12
========================================= ===== =========== ===========
Cash flows from financing activities
Repurchase of own shares - (200)
Net cash used in financing activities - (200)
========================================= ===== =========== ===========
Net decrease in cash and cash
equivalents (625) (554)
Cash and cash equivalents at 1
January 2018 and
1 January 2017 5,031 6,126
Foreign exchange loss on cash
and cash equivalents (91) (170)
Cash and cash equivalents as at
30 June 2018 and 30 June 2017 4,315 5,742
========================================= ===== =========== ===========
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2018
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 Group as at and for the six months ended 30 June
2018 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 2017 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.
Wholly owned subsidiaries Country of incorporation
Argo Capital Management (Cyprus) Limited Cyprus
Argo Capital Management Limited United Kingdom
Argo Capital Management Property Limited Cayman Islands
Argo Property Management Srl Romania
2. ACCOUNTING POLICIES
(a) 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 2017.
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 2017.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 31 July 2018.
b) Financial instruments and fair value hierarchy
The following represents the fair value hierarchy of financial
instruments measured at fair value in the Condensed Consolidated
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
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 Capital Argo Capital
Management Argo Capital Management Six months
Argo Group (Cyprus) Management Property ended
Ltd Ltd Ltd Ltd 30 June
2018 2018 2018 2018 2018
US$'000 US$'000 US$'000 US$'000 US$'000
Total revenues
for reportable
segments customers - 377 1,510 730 2,617
Intersegment
revenues - 377 - - 377
Total profit/(loss)
for reportable
segments (419) 141 (115) (321) (714)
Intersegment
profit/(loss) - 377 (377) - -
Total assets
for reportable
segments assets 20,127 1,440 1,467 2,222 25,256
Total liabilities
for reportable
segments 6 32 392 989 1,419
===================== ============= ============= =============== =============== ===========
Revenues, profit or loss, assets and liabilities Six months
may be reconciled as follows:
Ended
30 June
2018
US$'000
Revenues
Total revenues for reportable segments 2,617
Elimination of intersegment revenues (377)
================================================== ===========
Group revenues 2,240
================================================== ===========
Profit or loss
Total loss for reportable segments (714)
Elimination of intersegment loss -
Other unallocated amounts -
================================================== ===========
Profit on ordinary activities before taxation (714)
================================================== ===========
Assets
Total assets for reportable segments 25,256
Elimination of intersegment receivables (1,233)
Group assets 24,023
================================================== ===========
Liabilities
Total liabilities for reportable segments 1,419
Elimination of intersegment payables (1,233)
================================================== ===========
Group liabilities 186
================================================== ===========
Argo Capital Argo Capital
Management Argo Capital Management Six months
Argo Group (Cyprus) Management Property ended
Ltd Ltd Ltd Ltd 30 June
2017 2017 2017 2017 2017
US$'000 US$'000 US$'000 US$'000 US$'000
Total revenues
for reportable
segments - 337 1,347 913 2,597
Intersegment
revenues - 337 - - 337
Total profit/(loss)
for reportable
segments 1,592 126 (135) (480) 1,103
Intersegment
profit/(loss) - 337 (337) - -
Total assets
for reportable
segments 17,071 1,123 1,638 2,448 22,280
Total liabilities
for reportable
segments 9 136 103 989 1,237
===================== ============= ============= =============== =============== ===========
Revenues, profit or loss, assets and liabilities may Six months
be reconciled as follows:
ended
30 June 2017
Restated
US$'000
Revenues
Total revenues for reportable segments 2,597
Elimination of intersegment revenues (337)
====================================================== =============
Group revenues 2,260
====================================================== =============
Profit or loss
Total profit for reportable segments 1,103
Elimination of intersegment loss -
Other unallocated amounts -
====================================================== =============
Profit on ordinary activities before taxation 1,103
====================================================== =============
Assets
Total assets for reportable segments 22,280
Elimination of intersegment receivables (960)
Group assets 21.320
====================================================== =============
Liabilities
Total liabilities for reportable segments 1,237
Elimination of intersegment payables (960)
====================================================== =============
Group liabilities 277
====================================================== =============
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 at 24p per share
within 10 years of the grant date.
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) 17.0
Weighted average option life
(years) 10.0
Expected volatility (% p.a.) 15.0
Dividend yield (% p.a.) 10.0
Risk-free interest rate (%
p.a.) 0.907
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 GBPnil (30
June 2017: GBPnil)
The number and weighted average exercise price of the share
options during the period is as follows:
Weighted average No. of share
exercise price options
Outstanding at beginning of period 24.0p 4,340,000
Granted during the period - -
Forfeited during the period - -
==================================== ================= =============
Outstanding at end of period 24.0p 4,340,000
==================================== ================= =============
Exercisable at end of period 24.0p 4,340,000
==================================== ================= =============
The options outstanding at 30 June 2018 have an exercise price
of 24p and a weighted average contractual life of 3 years.
Outstanding share options are contingent upon the option holder
remaining an employee of the Group.
No share options were issued during the period.
5. TAXATION
Taxation rates applicable to the parent company and the Cypriot,
UK, Luxembourg, Cayman and Romanian subsidiaries range from 0% to
19% (2017: 0% to 19.25%).
Consolidated statement of profit or
loss Six months Six months
ended Ended
30 June 30 June
2018 2017
Restated
US$'000 US$'000
Taxation charge for the period on Group
companies 11 130
========================================= =========== ===========
The charge for the period can be reconciled to the profit/(loss)
shown on the Condensed Consolidated Statement of profit or loss as
follows:
Six months Six months
ended Ended
30 June 30 June
2018 2017
Restated
US$'000 US$'000
(Loss)/profit before tax (714) 1,103
================================================ ============== ===========
Applicable Isle of Man tax rate for - -
Argo Group Limited of 0%
Timing differences - -
Non-deductible expenses - 5
Other adjustments 22 (5)
Tax effect of different tax rates of
subsidiaries operating in other jurisdictions (11) 130
================================================ ============== ===========
Tax charge 11 130
================================================ ============== ===========
Consolidated statement of financial
position
30 June 31 December
2018 2017
US$'000 US$'000
Corporation tax payable 32 19
===================================== ======== ============
6. EARNINGS PER SHARE
Earnings per share is calculated by dividing the net
profit/(loss) for the period by the weighted average number of
shares outstanding during the period.
Six months Six months
ended ended
30 June 30 June
2018 2017
Restated
US$'000 US$'000
Net (loss)/profit for the period after
taxation attributable to members (725) 973
======================================== ============= =============
No. of No. of
shares shares
Weighted average number of ordinary
shares for basic earnings per share 47,032,878 47,582,353
Effect of dilution (Note 4) 4,340,000 4,540,000
======================================== ============= =============
Weighted average number of ordinary
shares for diluted earnings per share 51,372,878 52,122,353
======================================== ============= =============
Six months Six months
ended ended
30 June 30 June
2018 2017
Restated
US$ US$
Earnings per share (basic) (0.02) 0.02
Earnings per share (diluted) (0.01) 0.02
============================== =========== ===========
7. LAND, FIXTURES, FITTINGS AND EQUIPMENT
Land, fixtures,
fittings
& equipment
US$'000
Cost
At 1 January 2017 250
Additions 197
Disposals -
Foreign exchange movement 15
================================ =======================
At 31 December 2017 462
Additions 1
Foreign exchange movement (7)
================================ =======================
At 30 June 2018 456
================================ =======================
Accumulated Depreciation
At 1 January 2017 200
Depreciation charge for period 26
Disposals -
Foreign exchange movement 9
================================ =======================
At 31 December 2017 235
Depreciation charge for period 6
Foreign exchange movement (4)
================================ =======================
At 30 June 2018 237
================================ =======================
Net book value
At 31 December 2017 227
================================ =======================
At 30 June 2018 219
================================ =======================
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 2018 30 June 2018
Holding Investment in management Total cost Fair value
shares
US$'000 US$'000
10 The Argo Fund Ltd - -
100 Argo Distressed Credit - -
Fund Ltd
1 Argo Special Situations - -
Fund LP
- -
======== ========================= =============== ===============
Holding Investment in ordinary Total cost Fair value
shares
US$'000 US$'000
31,636 The Argo Fund Ltd* 7,159 10,437
Argo Real Estate Opportunities
30,056,500 Fund Ltd 988 119
Argo Special Situations
115 Fund LP 115 31
Argo Distressed Credit
2,470 Fund Limited* 6,000 8,126
=========== =============================== ============= =============
14,262 18,713
=========== =============================== ============= =============
31 December 31 December
2017 2017
Holding Investment in management Total cost Fair value
shares
US$'000 US$'000
10 The Argo Fund Ltd - -
100 Argo Distressed Credit - -
Fund Ltd
1 Argo Special Situations - -
Fund LP
- -
======== ========================= ============== ==============
Holding Investment in ordinary Total cost Fair value
shares
US$'000 US$'000
31,636 The Argo Fund Ltd* 7,159 10,644
Argo Real Estate Opportunities
10,899,021 Fund Ltd 988 119
Argo Special Situations
115 Fund LP 115 32
Argo Distressed Credit
1,262 Fund Ltd* 2,000 4,156
=========== =============================== ============= =============
10,262 14,951
=========== =============================== ============= =============
*Classified as current in the consolidated statement of
Financial Position
Note that some of the Argo funds listed above may have
investments in each other.
9. TRADE AND OTHER RECEIVABLES
At 30 June At 31 December
2018 2017
US$ '000 US$ '000
Trade receivables - Gross 8,970 14,489
Less: provision for impairment
of trade receivables (8,535) (8,264)
-------------------------------- ------------- -----------------
Trade receivables - Net 435 6,225
Other receivables 121 110
Prepayments and accrued income 91 107
================================ ============= =================
647 6,442
================================ ============= =================
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
reporting date except as disclosed below.
A provision for impairment has been raised for all balances owed
by the AREOF Group under trade and other receivables. These
balances include all management fees and other loans and advances
made by the investment manager to the AREOF Group. These amounted
to US$11.1 million (EUR9.5 million) (31 December 2017: US$8.5
million, EUR8.1 million).
The movement in the Group's provision for impairment of trade
and loan receivables is as follow:
At 30 June At 31 December
2018 2017
US$ '000 US$ '000
Opening balance 10,992 8,626
Bad debt recovered - (577)
Charged during the period 692 1,687
Foreign exchange movement (306) 1,256
=========================== ============= =================
Closing balance 11,378 10,992
=========================== ============= =================
10. LOANS AND ADVANCES RECEIVABLE
At 30 June At 31 December
2018 2017
US$'000 US$'000
Other loans and advances receivable 6 -
- current
Deposits on leased premises -
non-current (see below) 123 125
9
Other loans and advances receivable - -
- non-current (see below)
===================================== ============ ===========================
129 125
===================================== ============ ===========================
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 30 June At 31 December
2018 2017
t 31 December
2016
US$'000 US$'000
Non-current:
Lease expiring in second year
after the reporting date 15 15
Lease expiring in fifth year after
reporting date 108 110
123 125
==================================== =========== ===============
11. SHARE CAPITAL
The Company's authorised share capital is unlimited with a
nominal value of US$0.01.
30 June 30 June 31 December 31 December
2018 2018 2017 2017
No. US$'000 No. US$'000
Issued and fully paid
Ordinary shares of
US$0.01 each 47,032,878 470 47,032,878 470
======================= ============= ========== ============= ============
47,032,878 470 47,032,878 470
======================= ============= ========== ============= ============
The Directors did not recommend the payment of a final dividend
for the year ended 31 December 2017 and do not recommend an interim
dividend in respect of the current period.
12. RECONCILIATION OF NET CASH INFLOW/(OUTFLOW) FROM OPERATING
ACTIVITIES TO PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE
TAXATION
Six months Six months
ended ended
30 June 2018 30 June
2017
Restated
US$'000 US$'000
(Loss)/profit on ordinary activities
before taxation (714) 1,103
Interest income (99) (88)
Depreciation 6 15
Realised and unrealised loss/(gain) 238 (1,729)
Net foreign exchange (gain)/loss (1) 7
Decrease in payables (1,943) (1,538)
Decrease in receivables, loans and
advances 5,878 1,864
Net cash inflow/(outflow) from operating
activities 3,365 (366)
========================================== ================ =============
13. FAIR VALUE HIERARCY
The table below analyses financial instruments measured at fair
value at the end of the reporting period by the level of the fair
value hierarchy (note 2b).
At 30 June 2018
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets
at fair value through
profit or loss - 18,563 150 18,713
======================== ========== ========= ========= =========
At 31 December 2017
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets
at fair value through
profit or loss - 14,800 151 14,951
======================== ========== ========= ========= =========
The following table shows a reconciliation from the opening
balances to the closing balances for fair value measurements in
Level 3 of the fair value hierarchy:
Unlisted Listed open
closed ended ended investment
investment fund
fund Emerging Markets
Real Estate Total
US$ '000 US$ '000 US$ '000
Balance as at 1 January
2018 119 32 151
Total loss recognized
in profit or loss - (1) (1)
Balance as at 30 June
2018 119 31 150
========================= ================= ==================== =========
14. RELATED PARTY TRANSACTIONS
Most Group revenues derive from funds or entities in which one
of the Company's directors, Kyriakos Rialas, has an influence
through directorships and the provision of investment advisory
services.
At the reporting date the Company holds investments in The Argo
Fund Limited, Argo Real Estate Opportunities Fund Limited
("AREOF"), Argo Special Situations Fund LP and Argo Distressed
Credit Fund Limited. These investments are reflected in the
accounts at fair value of US$10.4 million, US$0.1 million, US$0.03
million and US$8.1 million respectively.
The Group has provided AREOF with a notice of deferral in
relation to the amounts due from the provision of investment
management services, under which it will not demand payment of such
amounts until the Group judges that AREOF is in a position to pay
the outstanding liability. These amounts accrued or receivable at
30 June 2018 total US$ Nil (31 December 2017: US$ Nil) after a bad
debt provision of US$8.5 million (EUR7.3 million) (31 December
2017: US$8.2 million, EUR6.8 million). In November 2013 AREOF
offered Argo Group Limited additional security for the continued
support in the form of debentures and guarantees by underlying
intermediate companies. Argo Group Limited retains this additional
security.
At the period end the Argo Group is also owed loans repayable on
demand of US$2.2 million (EUR1.8 million) (31 December 2017: US$2.0
million, EUR1.7 million) by AREOF accruing interest at 10%. The
Company is also owed a further amount of US$0.4 million (EUR0.4
million) (31 December 2017: US$0.7 million, EUR0.6 million) by
other AREOF Group entities. A full provision has been made in the
consolidated financial statements against these balances at the
current and prior period end.
David Fisher, a non-executive director of the Company, is also a
non-executive director of AREOF.
15. RESTATEMENT OF COMPARATIVE
IFRS 15: Revenue from contracts from customers became effective
from 1 January 2018. The main impact of the new standard is that
performance fees for the Argo Funds can only be recognised at the
crystallisation date, when performance fees become due and payable,
which is currently 31 December. Thus, performance fees can be
recognised at year end but not at the interim date. Revenue for the
comparative period has been restated to be in line with the new
standard. The impact on profit after tax is set out below:
30 June 2017
US$'000
Profit after tax previously reported 4,766
Performance fees derecognised under IFRS 15 (4,045)
Tax adjustment as a result of revenue adjustment 252
Restated profit after tax 973
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LIFEDTVILIIT
(END) Dow Jones Newswires
August 01, 2018 03:56 ET (07:56 GMT)
Argo (LSE:ARGO)
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