RNS Number : 6955U
ARGO Group Limited
31 July 2020
 

Argo Group Limited

("Argo" or the "Company")

 

Interim Results for the six months ended 30 June 2020

 

Argo today announces its interim results for the six months ended 30 June 2020.

The Company will today make available its interim report for the six months period ended 30 June 2020 on the Company's website www.argogrouplimited.com.

 

 

Key highlights for the six months period ended 30 June 2020

 

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 2020.

 

-     Revenues US$1.4 million (six months to 30 June 2019: US$2.4 million)

-     Operating loss US$0.4 million (six months to 30 June 2019: US$0.03 million)

-     Profit before tax US$0.2 million (six months to 30 June 2019: US$1.5 million)

-     Net assets US$21.4 million (31 December 2019 restated: US$21.3 million)

 

Commenting on the results and outlook, Kyriakos Rialas, Chief Executive Officer of Argo said:

 

 

''The outbreak of the Covid-19 pandemic has been totally unexpected but Argo Group took early measures to protect the health of its employees and their families.  The office was closed early on with employees working from home and key operations such as trading and settlements functioned smoothly with remote secure computers. The market volatility that resulted provided trading opportunities and although March was a down month The Argo Fund recovered strongly from April to June resulting in a YTD return of 4.55%.  In January 2020 Argo Group finalised the refinancing of the Odessa Riviera shopping mall in Ukraine with EBRD at improved terms.  This involved the company contributing US$11.2 million to the outstanding loan balance.

 

Finally in July 2020 we have launched the Argo US Feeder Fund in an effort to attract US onshore investors as the Group's main target is to increase assets under management.''

 

 

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.

 

 

 

 

 

 

 

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 multi strategy investments in emerging markets.

 

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 2020 the Group generated revenues of US$1.4 million (six months to 30 June 2019: US$2.4 million) with management fees accounting for US$1.2 million (six months to 30 June 2019: US$2.0 million). Management fees for the comparative period included USD$0.6 million earned from Argo Real Estate Opportunities Fund Limited (''AREOF'').  The management contract with AREOF was terminated on 1 January 2020, so there was no fees earned from AREOF in the current period.   The Group does not accrue for performance fees until they are crystalized at the year end.

 

Total operating costs for the period, ignoring bad debt provisions, are US$1.6 million compared to US$2.5 million for the six months to 30 June 2019. The Group has provided against management fees of US$0.2 million due from the Designated share class in The Argo Fund ("TAF") (six months to 30 June 2019: US$0.3 million (€0.2 million) due from AREOF). In the Directors' view these amounts are fully recoverable however they have concluded that it would only be appropriate to recognise income without provision from these investment management services once a liquidity event occurs in this share class.

 

Overall, the financial statements show an operating loss for the period of US$0.4 million (six months to 30 June 2019: US$0.03 million) and a profit before tax of US$0.2 million (six months to 30 June 2019: US$1.5 million) reflecting the net profit on investments of US$0.2 million (six months to 30 June 2019: US$1.4 million) and interest income of US$0.4 million (six months to 30 June 2019: US$0.1 million).

 

At the period end, the Group had net assets of US$21.4 million (31 December 2019 restated: US$21.3 million) and net current assets of US$9.0 million (31 December 2019 restated: US$20.7 million) including cash reserves of US$1.6 million (31 December 2019: US$0.9 million).

 

Net assets include investments in TAF, ASSF LP and ADCF (together referred to as "the Argo Funds") at fair values of US$7.8 million (31 December 2019: US$18.6 million),), US$ nil (31 December 2019: US$0.1 million) and US$0.02 million (31 December 2019: US$0.8 million) respectively. On 30 June 2020, The ASSF LP was struck off. Its assets and remaining investors were moved to ADCF.

 

Business and operational review

 

At the period end the Argo Funds owed the Group total fees of US$0.3 million (31 December 2019: US$0.9 million). At 30 June 2020, a provision for US$0.2 million was made against this amount as the timing of the receipt of the fees from the designated share class in TAF is uncertain. Moreover, the Group owes US$0.3 million to ADCF in overpayment of performance fees at the period end. This overpayment will be set off against future management fees that the fund will owe to the Group.

 

The Argo Funds ended the period with Assets under Management ("AUM") at US$130.4 million. 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 2020 was 20 (30 June 2019: 21).

 

Fund performance

The Argo Funds

Fund

Launch

date

30 June

2020

6 months

30 June

2019

6 months

2019

year

total

Since inception

Annualised  performance

Sharpe

ratio

 

Down

months

AUM

 

 

%

%

%

%

CAGR %

 

 

US$m

The Argo Fund

Oct-00

4.55

4.25

2.18

239.11

7.14

0.51

76 of 237

   105.0

Argo Distressed Credit Fund

Oct-08

 

 

 

 

 

 

 

 

   25.4

Total

 

 

 

 

 

 

 

 

130.4

 

 

 

 

The events of the first six months of 2020 caught most by surprise. At the beginning of the period markets were largely focused on the US electoral cycle and whether growth momentum would be maintained, particularly in the US and China, but very quickly attention turned to the impact of the previously little-known COVID-19 virus. Initially thought to be a localised problem in parts of Asia, the virus (and fear of it) spread to the rest of the world leading to a meltdown in global equity and credit markets from early March. Arguably, the response from governments, particularly the G7, was much faster compared with the 2008 Global Financial Crisis and they announced sizeable packages of monetary easing and fiscal support and stimuli alongside public health initiative measures such as lockdowns and travel restrictions. As confidence about a rapid economic recovery took hold, equity markets partially rebounded and delivered strong returns from April onwards. Emerging markets have not escaped the effects of COVID-19 despite the perceived advantage of a younger demographic; some like Brazil have recorded a high number of infections and deaths whilst others have seen their economies adversely affected by the sudden halt in global growth and trade and direct hits on sectors including oil and tourism. Countries such as Argentina and Lebanon had already signalled a need to restructure their external debts, but the strains of falling demand and additional health costs have led to wider calls for debt relief, particularly for poorer countries. Although government creditors (including China) have begun to implement this for those countries that have requested it, there remains a large question mark over the necessity and operability of involvement by private creditors such as bond investors.

 

The Class A NAV of TAF increased by 4.55% in the first half of 2020, compared to a rise of 4.25% in the same period of the previous year, but against a very different -and more volatile- global economic and financial backdrop; for example, the benchmark JP Morgan EMBI+ bond index fell by 0.4% in the first six months. The fund was conservatively positioned, with low net exposure, heading into the first quarter sell-off and whilst TAF suffered a drawdown in March, it was not of the scale witnessed in some other funds. The losses were clawed back and more by a judicious choice of long bond positions that benefited from positive developments in sovereign restructurings and the oil market. At the end of 2019, the decision was taken to restructure the fund, creating a master/feeder structure. Class A shares issued by TAF continue to be invested in a diversified debt and macro positions which seek to capture alpha through long and short investment in liquid EM corporate and sovereign bonds and FX. In addition, there are new classes of Designated Investments which offer investors exposure to distressed and special situations where the timeline to investment realisation will be three years or more. A US feeder fund was also recently established in order to widen the potential pool of investors in that jurisdiction.

 

Dividends and share purchase programme

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 19-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 MONTHS ENDED 30 JUNE 2020

 

 

 

Six months

 

Six months

 

 

 

ended

 

ended

 

 

 

30 June

 

30 June

 

 

 

2020

 

2019

 

 

 

Note

US$'000

 

US$'000

 

 

 

 

 

 

 

Management fees

 

1,227

 

2,013

 

Performance fees

 

-

 

300

 

Other income

 

144

 

122

 

Revenue

 

1,371

 

2,435

 

 

 

 

 

 

 

Legal and professional expenses

 

(267)

 

(303)

 

Management and incentive fees payable

 

-

 

(34)

 

Operational expenses

 

(335)

 

(520)

 

Employee costs

 

(1,202)

 

(1,291)

 

Bad debt provision

9, 10

(203)

 

(295)

 

Foreign exchange profit/(loss)

 

313

 

(20)

 

Depreciation

7

(97)

 

(5)

 

Operating loss

 

(420)

 

(33)

 

 

 

 

 

 

 

Interest income

 

409

 

90

 

Realised and unrealised gain on investments

8

205

 

1,438

 

Profit on ordinary activities before taxation

 

194

 

1,495

 

 

 

 

 

 

 

Taxation

5

-

 

(19)

 

Profit for the period after taxation attributable to members of the Company

6

194

 

1,476

 

Other comprehensive income

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

Exchange differences on translation of foreign operations

 

(15)

 

(44)

 

Total comprehensive income for the period

 

179

 

1,432

 

 

 

 

 

 

 

 

 

Six months

 

Six months

 

 

 

Ended

 

Ended

 

 

 

30 June

 

30 June

 

 

 

2020

 

2019

 

 

 

US$

 

US$

 

Earnings per share (basic)

6

0.004

 

0.03

 

Earnings per share (diluted)

6

0.005

 

0.03

 

                 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

 

 

30 June

 

31 December

 

 

 

2020

 

2019

Restated

 

 

Note

US$'000

 

US$'000

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Land, fixtures, fittings and equipment

7

541

 

661

 

Financial assets at fair value through profit or loss

8

-

 

56

 

Loans and advances receivable

10

12,042

 

120

 

Total non-current assets

 

12,583

 

837

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Financial assets at fair value through profit or loss

8

7,839

 

19,357

 

Trade and other receivables

9

452

 

951

 

Cash and cash equivalents

 

1,601

 

863

 

Total current assets

 

9,892

 

21,171

 

 

 

 

 

 

 

Total assets

 

22,475

 

22,008

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Issued share capital

11

390

 

390

 

Share premium

 

25,353

 

25,353

 

Revenue reserve

 

(1,352)

 

(1,546)

 

Foreign currency translation reserve

 

(2,947)

 

(2,932)

 

Total equity

 

21,444

 

21,265

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

870

 

443

 

Tax payable

 

-

 

20

 

Total current liabilities

 

870

 

463

 

 

Non-current liabilities

 

 

 

 

 

 

Trade and other payables

15

161

 

280

 

Total non-current liabilities

 

161

 

280

 

 

 

 

 

 

 

Total equity and liabilities

 

22,475

 

22,008

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020

 

 

Issued share capital

 

 

Share premium

 

 

Revenue reserve

 Foreign currency translation reserve

 

 

 

Total

 

2019

2019

2019

2019

2019

 

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

As at 1 January 2019

470

28,022

(2,363)

(2,860)

23,269

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

Profit for the period after taxation

-

-

1,476

               -

1,476

Other comprehensive income

-

-

-

(44)

(44)

Transaction with owners

recorded directly in equity

 

 

 

 

 

Purchase of own shares

(80)

 

(2,669)

-

-

(2,749)

 

 

 

 

 

 

As at 30 June 2019

390

25,353

(887)

(2,904)

21,952

 

 

 

 

 

Issued share capital

 

 

Share premium

 

 

Revenue reserve

 Foreign currency translation reserve

 

 

 

Total

 

2020

2020

2020

2020

2020

 

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

As at 1 January 2020 restated (note 16)

390

25,353

(1,546)

(2,932)

21,265

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

Profit for the period after taxation

-

-

194

               -

194

Other comprehensive income

-

-

-

(15)

(15)

As at 30 June 2020

390

25,353

(1,352)

(2,947)

21,444

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

 

 

 

 

Six months ended

 

Six months ended

 

 

30 June

 

30 June

 

 

2020

 

2019

 

Note

US$'000

 

US$'000

 

 

 

 

 

Net cash inflow/(outflow) from operating activities

12

195

 

(32)

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

Interest received on cash and cash equivalents

 

3

 

8

Purchase of fixtures, fittings and equipment

7

(1)

 

(1)

Proceeds from sale of financial assets at fair value through profit or loss

8

11,779

 

-

Loan investments

 

(11,200)

 

-

 

 

 

 

 

 

 

 

 

 

Net cash generated from investing activities

 

581

 

7

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Payment of lease liabilities

 

(44)

 

-

Repurchase of own shares

 

-

 

(2,749)

 

 

 

 

 

Net cash used in financing activities

 

(44)

 

(2,749)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

732

 

(2,774)

 

 

 

 

 

Cash and cash equivalents at 1 January 2020 and

    1 January 2019

 

863

 

4,005

 

 

 

 

 

Foreign exchange loss on cash and cash equivalents

 

6

 

(63)

 

 

 

 

 

Cash and cash equivalents as at 30 June 2020 and 30 June 2019

 

1,601

 

1,168

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

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 2020 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 2019 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 Limited

United Kingdom

Argo Capital Management Cyprus Limited

Cyprus

Argo Capital Management Property Limited (dissolved in June 2020)

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 2019.

 

         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 2019.

 

         These condensed consolidated interim financial statements were approved by the Board of Directors on 30 July 2020.       

                 

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 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 Group Ltd

Argo Capital Management (Cyprus) Ltd

 

Argo Capital Management Ltd

 

Argo Capital Management Property Ltd

Six months ended

 30 June      

 

2020

2020

2020

2020

2020

 

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

Total revenues for reportable segments customers

-

120

1,227

144

1,491

Intersegment revenues

-

120

-

-

120

 

 

 

 

 

 

Total profit/(loss) for reportable segments

818

-

(423)

(201)

194

Intersegment profit/(loss)

-

120

(120)

-

-

 

 

 

 

 

 

Total assets for reportable segments assets

20,370

341

1,460

303

22,474

Total liabilities for reportable segments

6

90

857

78

1,031

 

Revenues, profit or loss, assets and liabilities may be reconciled as follows:

 

Six months

 

Ended

 

30 June 2020

 

US$'000

Revenues

 

Total revenues for reportable segments

1,491

Elimination of intersegment revenues

(120)

Group revenues

1,227

 

 

Profit or loss

 

Profit for reportable segments

194

Elimination of intersegment loss

-

Other unallocated amounts

-

Profit on ordinary activities before taxation

194

 

 

Assets

 

Total assets for reportable segments

25,358

Elimination of intersegment receivables

(2,884)

Group assets

22,474

 

 

Liabilities

 

Total liabilities for reportable segments

3,915

Elimination of intersegment payables

(2,884)

Group liabilities

1,031

 

 

 

 

Argo Group Ltd

Argo Capital Management (Cyprus) Ltd

 

Argo Capital Management Ltd

 

Argo Capital Management Property Ltd

Six months ended

 30 June      

 

2019

2019

2019

2019

2019

 

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

Total revenues for reportable segments customers

-

437

1,748

687

2,872

Intersegment revenues

-

437

-

-

437

 

 

 

 

 

 

Total profit/(loss) for reportable segments

1,114

135

157

70

1,476

Intersegment profit/(loss)

-

437

(437)

-

-

 

 

 

 

 

 

Total assets for reportable segments assets

20,034

346

1,100

690

22,170

Total liabilities for reportable segments

6

10

92

110

218

 

Revenues, profit or loss, assets and liabilities may be reconciled as follows:

 

Six months

 

Ended

 

30 June 2019

 

US$'000

Revenues

 

Total revenues for reportable segments

2,872

Elimination of intersegment revenues

(437)

Group revenues

2,435

 

 

Profit or loss

 

Total profit for reportable segments

1,495

Elimination of intersegment loss

-

Other unallocated amounts

-

Profit on ordinary activities before taxation

1,495

 

 

Assets

 

Total assets for reportable segments

22,546

Elimination of intersegment receivables

(376)

Group assets

22,170

 

 

Liabilities

 

Total liabilities for reportable segments

594

Elimination of intersegment payables

(376)

Group liabilities

218

 

 

 

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 £nil (30 June 2019: £nil)

           

The number and weighted average exercise price of the share options during the period is as follows:

 

 

Weighted average exercise price

No. of share options

Outstanding at beginning of period

24.0p

4,115,000

Granted during the period

-

   -

Forfeited during the period

-

-

Outstanding at end of period

24.0p

4,115,000

Exercisable at end of period

24.0p

4,115,000

 

The options outstanding at 30 June 2020 have an exercise price of 24p and a weighted average contractual life of 1 year.  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% (2019: 0% to 19%).

        

Consolidated statement of profit or loss

Six months

 

Six months

 

ended

 

Ended

 

30 June

 

30 June

 

2020

 

2019

 

US$'000

 

US$'000

 

 

 

 

Taxation charge for the period on Group companies

-

 

19

 

The charge for the period can be reconciled to the profit shown on the Condensed Consolidated Statement of profit or loss as follows:

 

Six months

 

Six months

 

Ended

 

Ended

 

30 June

 

30 June

 

2020

 

2019

 

US$'000

 

US$'000

 

 

 

 

Profit before tax

194

 

1,495

 

 

 

 

Applicable Isle of Man tax rate for Argo Group Limited of 0%

-

 

-

Timing differences

-

 

-

Non-deductible expenses

-

 

-

Other adjustments

-

 

(31)

Tax effect of different tax rates of subsidiaries operating in other jurisdictions

-

 

50

Tax charge

          -

 

19

 

Consolidated statement of financial position

 

 

 

 

30 June

 

31 December

 

2020

 

2019

 

US$'000

 

US$'000

 

 

 

 

Corporation tax payable

-

 

(4)

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

 

 

2020

 

2019

 

 

US$'000

 

US$'000

 

 

 

 

 

 

Net profit for the period after taxation attributable to members

194

 

1,476

 

 

 

 

 

 

 

No. of shares

 

No. of shares

 

 

 

 

 

 

Weighted average number of ordinary shares for basic earnings per share

38,959,986

 

42,996,432

 

Effect of dilution (Note 4)

4,115,000

 

4,340,000

 

Weighted average number of ordinary shares for diluted earnings per share

43,074,986

 

47,336,432

 

 

 

Six months

 

Six months

 

Ended

 

ended

 

30 June

 

30 June

 

2020

 

2019

 

US$

 

US$

 

 

 

 

Earnings per share (basic)

0.004

 

0.03

Earnings per share (diluted)

0.005

 

0.03

 

 

7.      LAND, FIXTURES, FITTINGS AND EQUIPMENT

 

 

Right

of use

assets

Fixtures, fittings and equipment

 

 

 

Land

 

 

Total

 

USD'000000

US$'000

US$'000

US$'000

Cost

 

 

 

 

At 1 January 2019

-

266

184

450

IFRS 16 recognition at 1 January 2019

717

-

-

717

Additions

91

5

-

96

Disposals

-

(31)

-

(31)

Foreign exchange movement

-

20

(5)

15

At 31 December 2019

808

260

179

1,247

Additions

-

1

-

1

Foreign exchange movement

(49)

(9)

2

(56)

At 30 June 2020

759

252

181

1,192

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

At 1 January 2019

 

-

 

238

 

-

                  238

IFRS 16 recognition at 1 January 2019

191

-

-

191

Depreciation charge for period

153

9

-

162

Disposals

-

(31)

-

(31)

Foreign exchange movement

-

26

-

26

At 31 December 2019

344

242

-

586

Depreciation charge for period

91

6

-

97

Foreign exchange movement

(18)

(14)

-

(32)

At 30 June 2020

417

234

-

651

 

 

 

 

 

Net book value

 

 

 

 

At 31 December 2019

464

18

179

661

At 30 June 2020

342

18

181

541

 

 

 

8.       FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

 

 

 

 

 

 

30 June 2020

 

30 June 2020

Holding

Investment in management shares

Total cost

 

Fair value

 

 

US$'000

 

US$'000

 

 

 

 

 

10

The Argo Fund Ltd

-

 

-

100

Argo Distressed Credit Fund Ltd

-

 

-

-

Argo Special Situations Fund LP

-

 

-

 

 

-

 

-

 

Holding

Investment in ordinary shares

Total cost

 

Fair value

 

 

US$'000

 

US$'000

 

 

 

 

 

23,061

The Argo Fund Ltd*

6,226

 

7,821

-

Argo Special Situations Fund LP

-

 

-

9

Argo Distressed Credit Fund Limited*

56

 

18

 

 

6,282

 

7,839

 

 

 

31 December

 

31 December

 

 

2019

 

2019

Holding

Investment in management shares

Total cost

 

Fair value

 

 

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 shares

Total cost

 

Fair value

 

 

US$'000

 

US$'000

 

 

 

 

 

57,301

The Argo Fund Ltd*

15,472

 

18,587

115

Argo Special Situations Fund LP

115

 

56

221

Argo Distressed Credit Fund Ltd*

786

 

770

 

 

16,373

 

19,413

*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 2020

 

At 31 December 2019

 

US$ '000

 

US$ '000

 

 

 

 

Trade receivables - Gross

10,141

 

10,489

Less: provision for impairment of trade receivables

(9,995)

 

(9,733)

Trade receivables - Net

146

 

756

Other receivables

209

 

105

Prepayments and accrued income

97

90

 

452

 

951

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.

         The movement in the Group's provision for impairment of trade and loan receivables is as follow:

 

 

At 30 June 2020

 

At 31 December 2019

 

US$ '000

 

US$ '000

 

 

 

 

Opening balance

12,405

 

11,803

Bad debt recovered

-

 

(335)

Charged during the period

203

 

1,270

Foreign exchange movement

 

 

75

(333)

Closing balance

12,683

 

12,405

     

10. LOANS AND ADVANCES RECEIVABLE

 

 

 At 30 June 2020

 

At 31 December

2019

 

 

US$'000

 

US$'000

 

 

 

 

 

 

Deposits on leased premises - current

12

 

-

 

Deposits on leased premises - non-current (see below)

101

 

120

 

Other loans and advances receivable - non-current (note 14)

 

11,929

 

-

 

 

12,042

 

120

 

           

 

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

2020

 

At 31 December

2019

 

 

US$'000

 

US$'000

Non-current:

 

 

 

Lease expiring in second year after the reporting date

12

 

-

Lease expiring in second year after the reporting date

101

 

12

Lease expiring in third year after the reporting date

-

 

108

 

113

 

120

 

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

 

2020

2020

2019

2019

 

No.

US$'000

No.

US$'000

Issued and fully paid

 

 

 

 

Ordinary shares of US$0.01 each

38,959,986

390

38,959,986

390

 

38,959,986

390

38,959,986

390

The Directors did not recommend the payment of a final dividend for the year ended 31 December 2019 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 ended

30 June 2020

 

Six months ended

30 June 2019

 

US$'000

 

US$'000

 

 

 

 

Profit on ordinary activities before taxation

194

 

1,495

 

 

 

 

Interest income

(409)

 

(90)

Depreciation on fixtures, fittings and equipment

6

 

5

Depreciation on right of use asset

91

 

-

Realised and unrealised gain

(205)

 

(1,438)

Net foreign exchange (profit)/loss

(313)

 

20

Increase in payables

97

 

34

Decrease/(increase) in receivables, loans and advances

754

 

(48)

Corporation tax paid

(20)

 

 

(10)

Net cash inflow/(outflow) from operating activities

195

 

(32)

 

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 2020

 

Level 1

Level 2

Level 3

Total

 

US$ '000

US$ '000

US$ '000

US$ '000

Financial assets at fair value through profit or loss

 

 

-

7,839

-

7,839

 

                                                                                    At 31 December 2019

 

Level 1

Level 2

Level 3

Total

 

US$ '000

US$ '000

US$ '000

US$ '000

Financial assets at fair value through profit or loss

 

 

-

 

19,357

 

56

 

19,413

 

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 closed ended investment fund

 

Listed open ended investment fund

Emerging Markets

 

 

Real Estate

 

 

Total

 

US$ '000

 

US$ '000

US$ '000

 

 

 

 

 

Balance as at 1 January 2020

-

 

56

56

Total profit recognized in profit or loss

-

 

-

-

Transfer to ADCF

-

 

(56)

 

Balance as at 30 June 2020

-

 

-

-

 

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 and Argo Distressed Credit Fund Limited. These investments are reflected in the accounts at fair value of US$7.8 million, and US$0.02 million respectively.

 

The management contract with AREOF was terminated on 1 January 2020. As at the period end, AREOF owed US$12.2 million (€10.9 million) (31 December 2019: US$12.1 million (€10.9 million)). These balances are carried at US$ nil (31 December 2019: US$ nil) in the financial statements.

 

          David Fisher, a non-executive director of the Company, is also a non-executive director of AREOF.

 

          During the period, the Group also made a loan for $11.2 million to Argo Real Estate Limited Partnership, an entity that is 100% owned by Andreas Rialas. The loan carries an interest rate of 9% with a final maturity of July 2027.

 

 

15.  TRADE AND OTHER PAYABLES

 

At 30 June

 

At 31 December

 

2020

 

2019

 

US$ '000

 

US$ '000

 

 

 

 

Trade creditors

434

 

17

Other creditors and accruals

436

              

426

Total current trade and other payables

870

 

443

 

      Trade creditors are normally settled on 30-day terms.

 

 

At 30 June

 

At 31 December

 

2020

 

2019

 

US$ '000

 

US$ '000

 

 

 

 

Other creditors and accruals

161

280

Total non-current trade and other payables

161

 

280

 

 

16.   PRIOR YEAR ADJSUTMENTS

      

The comparatives have been restated for correction of performance fees for the prior period.  Comparatives were adjusted by decreasing performance fees and debtors by $0.2 million.  As a result, the opening revenue reserve at 1 January 2020 has been adjusted downward by $0.2 million.

 

      

 

US$'000

Opening revenue reserve at 1 January 2020

(1,357)

Prior year adjustment

  (189)

Restated opening reserve at 1 January 2020

(1,546)

 


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.
 
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