TIDMARGO

RNS Number : 9848G

ARGO Group Limited

30 July 2021

Argo Group Limited

("Argo" or the "Company")

Interim Results for the six months ended 30 June 2021

Argo today announces its interim results for the six months ended 30 June 2021.

The Company will today make available its interim report for the six months period ended 30 June 2021 on the Company's website www.argogrouplimited.com.

Key highlights for the six months period ended 30 June 2021

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 2021.

   -     Revenues US$1.6 million (six months to 30 June 2020: US$1.4 million) 
   -     Operating loss US$0.7 million (six months to 30 June 2020: US$0.4 million) 
   -     Loss before tax US$0.2 million (six months to 30 June 2020: profit before tax US$0.2 million) 
   -     Net assets US$22.6 million (31 December 2020: US$22.8 million) 

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

" Argo Group is pleased to present its six months results for the period ending 30 June 2021. Income derived from management fees remains stable reflecting assets under management but excludes any potential performance fees that would crystallise at year end provided the NAV of The Argo Fund does not fall below the highwater mark. Costs have gone up slightly due to some exceptional non-repetitive expenses but additional AUM are needed to comfortably cover running expenses.

Argo is currently focusing on its single Emerging Markets Fund with different share classes to reflect its strategies. A new share class was launched earlier this year to attract investors looking for distressed situations in Emerging market bonds."

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 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended) ("MAR").

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 2021 the Group generated revenues of US$1.6 million (six months to 30 June 2020: US$1.4 million) with management fees accounting for US$1.2 million (six months to 30 June 2020: US$1.2 million). The Group does not accrue for performance fees until they are crystalized at the year end. Unrecognised performance fees at 30 June 2021 amounted to US$0.9 million (2020: US$ nil).

Total operating costs for the period, ignoring bad debt provisions, are US$2.0 million compared to US$1.6 million for the six months to 30 June 2020 . The Group has provided against management fees of US$0.4 million due from the Designated share class in The Argo Fund ("TAF") (six months to 30 June 2020: US$0.2 million). 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$0.7 million (six months to 30 June 2020: US$0.4 million) and a loss before tax of US$0.2 million (six months to 30 June 2020: profit before tax of US$0.2 million). Net loss on investments of US$0.04 million (six months to 30 June 2020: net profit on investments US$0.2 million) and interest income of US$0.5 million (six months to 30 June 2020: US$0.4 million).

At the period end, the Group had net assets of US$22.6 million (31 December 2020: US$22.8 million) and net current assets of US$8.4 million (31 December 2020: US$8.8 million) including cash reserves of US$1.2 million (31 December 2020: US$0.7 million).

Net assets include investments in The Argo Fund ("TAF") at fair values of US$7.1 million (31 December 2020: US$6.8 million)

At the period end TAF owed the Group total fees of US$1.1 million ( 31 December 2020 : US$1.0 million). At 30 June 2021, a provision for US$0.9 million was made against this amount as the timing of the receipt of the fees from the designated share class in TAF is unknown.

TAF ended the period with Assets under Management ("AUM") at US$126.7 million (2020: 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 2021 was 19 ( 30 June 2020 : 20).

Fund performance

The Argo Funds

 
                            30 June    30 June    2020 
                   Launch    2021       2020       year                             Sharpe   Down 
                                                          Since       Annualised 
Fund                date     6 months   6 months   total   inception   performance   ratio    months  AUM 
                            %          %          %       %           CAGR %                          US$m 
                   -------  ---------  ---------  ------  ----------  ------------  ------  --------  ----- 
The Argo Fund                                                                                  82 of 
 - A class         Oct-00        4.28       4.55    5.53      256.95          7.06    0.51       249   90.1 
                   -------  ---------  ---------  ------  ----------  ------------  ------  --------  ----- 
The Argo Fund 
 - Other classes                                                                                       36.6 
                            ---------  ---------  ------  ----------  ------------  ------  --------  ----- 
Total                                                                                                 126.7 
                            ---------  ---------  ------  ----------  ------------  ------  --------  ----- 
 

Following the wild gyrations in financial markets in the first half of 2020 due to Covid-19, the first six months of this year were relatively calm. Business sentiment and equity markets rose as vaccination campaigns got underway and then accelerated in most developed economies, especially in the US, UK and Europe. In addition, many governments also began to ease Covid-related mobility restrictions and activity levels picked up. Economic data in the period has generally been very strong, especially in the US, which posted an annualised growth rate of 6.4% in the first quarter. Although the eurozone economy contracted in the first quarter, indicators point to a strong economic rebound having taken place in Europe. After an estimated contraction of over 3% in 2020, the IMF have upgraded their global growth forecast to 6% in 2021, before moderating in 2022.

However, the reopening of economies and the quick rebound in activity that has followed has fuelled inflation in some countries. In June, the US consumer price index increased by 5.4% year on year, although some of the underlying details suggest that there are temporary factors at play, such as the rise in used car prices. The US Federal Reserve continues to see this inflation increase as transitory but has acknowledged that tapering is being discussed as are two rate hikes sometime in 2023. Notwithstanding the concerns about inflationary pressure, 10-year US Treasury yields have dropped by 50 bps from the end of March, falling to 1.25%.

The Covid recession has had - so far at least - less impact than the 2008 global financial crisis due to an unprecedented policy response in the major economies, combining accommodative monetary measures with the running of large fiscal deficits. However, some emerging market economies have been hit harder and are expected to suffer more significant medium-term losses, for example countries that rely on tourism and for those with limited policy space to respond. Efforts to relieve financial strain on these countries such as the Debt Service Suspension Initiative and the allocation of additional SDR reserves by the IMF together with enhanced vaccine rollout should help emerging markets growth to rebound towards the end of 2021.

The NAV of the Class A shares of the TAF increased by 4.28% in the first half of 2021, compared to a rise of 4.55% in the same period of the previous year; the benchmark JP Morgan EMBI+ bond index fell by 3.12% in the first six months. The fund benefitted from the effect of higher oil prices on several long bond positions but was held back by various macro hedges and the failure of Argentine sovereign bonds to attract a bid post-restructuring. 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 other share classes within the TAF master/feeder structure which offer investors exposure to distressed debt portfolio and also special situations where the timeline to investment realisation will be longer.

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 continue to focus on TAF which has a 20-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 2021

 
                                                       Six months    Six months 
                                                            ended         ended 
                                                          30 June       30 June 
                                                             2021          2020 
                                                Note      US$'000       US$'000 
 
 Management fees                                            1,250         1,227 
 Performance fees                                             283             - 
 Other income                                                 131           144 
=============================================  =====  ===========   =========== 
 Revenue                                                    1,664         1,371 
=============================================  =====  ===========   =========== 
 
 Legal and professional expenses                            (249)         (267) 
 Management fees payable                                    (157)             - 
 Operational expenses                                       (339)         (335) 
 Employee costs                                           (1,129)       (1,202) 
                                                 9, 
 Bad debt provision                              10         (365)         (203) 
 Foreign exchange profit/(loss)                               (4)           313 
 Depreciation                                    7          (103)          (97) 
 Operating loss                                             (682)         (420) 
=============================================  =====  ===========   =========== 
 
 Interest income                                              519           409 
 Realised and unrealised (loss)/gain 
  on investments                                             (38)           205 
=============================================  =====  ===========   =========== 
 (Loss)/profit on ordinary activities 
  before taxation                                           (201)           194 
=============================================  =====  ===========   =========== 
 
 Taxation                                        5              -             - 
=============================================  =====  ===========   =========== 
 (Loss)/profit for the period after 
  taxation attributable to members of 
  the Company                                    6          (201)           194 
 Other comprehensive income 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Exchange differences on translation 
  of foreign operations                                      (10)          (15) 
=============================================  =====  ===========   =========== 
 Total comprehensive income for the 
  period                                                    (211)           179 
=============================================  =====  ===========   =========== 
 
                                                       Six months    Six months 
                                                            Ended         Ended 
                                                          30 June       30 June 
                                                             2021          2020 
                                                              US$           US$ 
 Earnings per share (basic)                      6        (0.005)         0.005 
=============================================  =====  ===========   =========== 
 Earnings per share (diluted)                    6        (0.005)         0.004 
=============================================  =====  ===========   =========== 
 
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2021

 
                                            30 June   31 December 
                                               2021          2020 
                                   Note     US$'000       US$'000 
 Assets 
 Non-current assets 
 Land, fixtures, fittings and 
  equipment                         7           386           484 
 Loans and advances receivable      10       13,837        13,645 
================================  =====  ==========  ============ 
 Total non-current assets                    14,223        14,129 
================================  =====  ==========  ============ 
 
 Current assets 
 Financial assets at fair value 
  through profit or loss            8         7,110         6,818 
 Loan and advances receivable       10           12            13 
 Trade and other receivables        9           351         1,669 
 Cash and cash equivalents                    1,236           675 
 Total current assets                         8,709         9,175 
================================  =====  ==========  ============ 
 
 Total assets                                22,932        23,304 
================================  =====  ==========  ============ 
 
 Equity and liabilities 
 
 Equity 
 Issued share capital               11          390           390 
 Share premium                               25,353        25,353 
 Revenue reserve                               (79)           122 
 Foreign currency translation 
  reserve                                   (3,065)       (3,055) 
================================  =====  ==========  ============ 
 Total equity                                22,599        22,810 
================================  =====  ==========  ============ 
 
 Current liabilities 
 Trade and other payables                       333           415 
 Total current liabilities                      333           415 
--------------------------------  -----  ----------  ------------ 
 
   Non-current liabilities 
 Trade and other payables           15            -            79 
--------------------------------  -----  ----------  ------------ 
 Total non-current liabilities                    -            79 
--------------------------------  -----  ----------  ------------ 
 
 Total equity and liabilities                22,932        23,304 
--------------------------------  -----  ----------  ------------ 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHSED 30 JUNE 2021

 
                                                                      Foreign 
                             Issued                                  currency 
                              share       Share     Revenue       translation 
                            capital     premium     reserve           reserve     Total 
                               2020        2020        2020              2020      2020 
                            US$'000     US$'000     US$'000           US$'000   US$'000 
 
 As at 1 January 2020           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 
=======================  ==========  ==========  ==========  ================  ======== 
 
 
                                                                           Foreign 
                                  Issued                                  currency 
                                   share       Share     Revenue       translation 
                                 capital     premium     reserve           reserve     Total 
                                    2021        2021        2021              2021      2021 
                                 US$'000     US$'000     US$'000           US$'000   US$'000 
 
 As at 1 January 2021                390      25,353         122           (3,055)    22,810 
 
 Total comprehensive income 
 Loss for the period after 
  taxation                             -           -       (201)                 -     (201) 
 Other comprehensive income            -           -           -              (10)      (10) 
 As at 30 June 2021                  390      25,353        (79)           (3,065)    21,599 
============================  ==========  ==========  ==========  ================  ======== 
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHSED 30 JUNE 2021

 
                                                   Six months   Six months 
                                                        ended        ended 
                                                      30 June      30 June 
                                                         2021         2020 
                                            Note      US$'000      US$'000 
 
 Net cash (outflow)/inflow from 
  operating activities                       12         (300)          195 
=========================================  =====  ===========  =========== 
 
 Cash flows used in investing activities 
 Interest received on cash and 
  cash equivalents                                          1            3 
 Purchase of fixtures, fittings 
  and equipment                              7            (2)          (1) 
 Proceeds from sale of financial 
  assets at fair value through profit 
  or loss                                               1,001       11,779 
 Loan investments                                           -     (11,200) 
 
 
 Net cash generated from investing 
  activities                                            1,000          581 
=========================================  =====  ===========  =========== 
 
 Cash flows from financing activities 
 Payment of lease liabilities                           (119)         (44) 
 Repurchase of own shares                                   -            - 
 
 Net cash used in financing activities                  (119)         (44) 
=========================================  =====  ===========  =========== 
 
 Net decrease in cash and cash 
  equivalents                                             581          732 
 
 Cash and cash equivalents at 1 
  January 2021 and 
  1 January 2020                                          675          863 
 
 Foreign exchange loss on cash 
  and cash equivalents                                   (20)            6 
 
 Cash and cash equivalents as at 
  30 June 2021 and 30 June 2020                         1,236        1,601 
=========================================  =====  ===========  =========== 
 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2021

   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 2021 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 2020 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 currency of the Group undertakings are US dollars, Sterling and Romanian Lei. The presentational currency is US dollars.

Wholly owned subsidiaries Country of incorporation

 
 Argo Capital Management Limited   United Kingdom 
 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 2020.

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 2020.

These condensed consolidated interim financial statements were approved by the Board of Directors on 29 July 2021.

   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 Capital     Argo Property   Six months 
                                 Argo Group       Management        Management        ended 
                                        Ltd              Ltd               Srl      30 June 
                                       2021             2021              2021         2021 
                                    US$'000          US$'000           US$'000      US$'000 
 
 Total revenues for 
  reportable segments 
  customers                               -            1,533               131        1,664 
 Intersegment revenues                    -                -                              - 
                                                                             - 
 
 Total profit/(loss) 
  for reportable segments                86            (316)             (193)        (423) 
 Intersegment profit/(loss)           (222)                -                 -        (222) 
 
 Total assets for 
  reportable segments 
  assets                             21,561            1,066               305       22,932 
 Total liabilities 
  for reportable segments                 7              275                51          333 
============================  =============  ===============  ================  =========== 
 
 
 Revenues, profit or loss, assets and liabilities    Six months 
  may be reconciled as follows: 
                                                          Ended 
                                                        30 June 
                                                           2021 
                                                        US$'000 
 Revenues 
 Total revenues for reportable segments                   1,664 
 Elimination of intersegment revenues                         - 
==================================================  =========== 
 Group revenues                                           1,664 
==================================================  =========== 
 
 Profit or loss 
 Loss for reportable segments                             (423) 
 Elimination of intersegment loss                           222 
 Other unallocated amounts                                    - 
==================================================  =========== 
 Loss on ordinary activities before taxation              (201) 
==================================================  =========== 
 
 Assets 
 Total assets for reportable segments                    22,936 
 Elimination of intersegment receivables                    (4) 
 Group assets                                            22,932 
==================================================  =========== 
 
 Liabilities 
 Total liabilities for reportable segments                3,716 
 Elimination of intersegment payables                   (3,383) 
==================================================  =========== 
 Group liabilities                                          333 
==================================================  =========== 
 
 
 
                                       Argo Capital                      Argo Capital 
                                         Management     Argo Capital       Management   Six months 
                          Argo Group       (Cyprus)       Management         Property        ended 
                                 Ltd            Ltd              Ltd              Ltd      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    Six months 
  may be reconciled as follows: 
                                                          Ended 
                                                        30 June 
                                                           2020 
                                                        US$'000 
 Revenues 
 Total revenues for reportable segments                   1,491 
 Elimination of intersegment revenues                     (120) 
==================================================  =========== 
 Group revenues                                           1,371 
==================================================  =========== 
 
 Profit or loss 
 Total 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 
==================================================  =========== 
 
   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 2020: 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          4,115,000 
 Granted during the period                    -                 - 
 Forfeited during the period                24.0p         (3,865,000) 
====================================  =================  ============= 
 Outstanding at end of period               24.0p            250,000 
====================================  =================  ============= 
 Exercisable at end of period               24.0p            250,000 
====================================  =================  ============= 
 

The options outstanding at 30 June 2021 have an exercise price of 24p and a weighted average contractual life of 5.6 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 UK and Romanian subsidiaries range from 0% to 19% (2020: 0% to 19%).

 
 Consolidated statement of profit or 
  loss                                     Six months     Six months 
                                                ended          Ended 
                                              30 June        30 June 
                                                 2021           2020 
                                              US$'000        US$'000 
 
 Taxation charge for the period on Group            -              - 
  companies 
========================================  ===========    =========== 
 

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 
                                                           2021         2020 
                                                        US$'000      US$'000 
 
 (Loss)/profit before tax                                 (201)          194 
================================================  =============  =========== 
 
 Applicable Isle of Man tax rate for                          -            - 
  Argo Group Limited of 0% 
 Timing differences                                           -            - 
 Non-deductible expenses                                      -            - 
 Other adjustments                                            -            - 
 Tax effect of different tax rates of                         -            - 
  subsidiaries operating in other jurisdictions 
================================================  =============  =========== 
 Tax charge                                                   -            - 
================================================  =============  =========== 
 
 
 Consolidated statement of financial 
  position 
                                       30 June     31 December 
                                          2021            2020 
                                       US$'000         US$'000 
 
 Corporation tax payable                     -               - 
====================================  ========    ============ 
 
   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 
                                                   2021           2020 
                                                US$'000        US$'000 
 
 Net (loss)/profit for the period after 
  taxation attributable to members                (201)            194 
========================================  =============  ============= 
 
                                                 No. of         No. of 
                                                 shares         shares 
 
 Weighted average number of ordinary 
  shares for basic earnings per share        38,959,986     38,959,986 
 Effect of dilution (Note 4)                    250,000      4,115,000 
========================================  =============  ============= 
 Weighted average number of ordinary 
  shares for diluted earnings per share      39,209,986     43,074,986 
========================================  =============  ============= 
 
 
                                 Six months   Six months 
                                      Ended        ended 
                                    30 June      30 June 
                                       2021         2020 
                                        US$          US$ 
 
 Earnings per share (basic)         (0.005)        0.005 
 Earnings per share (diluted)       (0.005)        0.004 
==============================  ===========  =========== 
 
   7.      LAND, FIXTURES, FITTINGS AND EQUIPMENT 
 
                                                  Fixtures, 
                                     Right         fittings 
                                    of use    and equipment                              Total 
                                    assets                       Land 
                                USD'000000          US$'000   US$'000                  US$'000 
 Cost 
 At 1 January 2020                     808              260       179                    1,247 
 Additions                               -                -         -                        - 
 Disposals                               -                -         -                        - 
 Foreign exchange movement              25                6        17                       48 
===========================  =============  ===============  ========  ======================= 
 At 31 December 2020                   833              266       196                    1,295 
 Additions                               -                2         -                        2 
 Disposals                               -             (62)         -                     (62) 
 Foreign exchange movement               9                -       (5)                        4 
===========================  =============  ===============  ========  ======================= 
 At 30 June 2021                       842              206       191                    1,239 
===========================  =============  ===============  ========  ======================= 
 
 Accumulated Depreciation 
 
 At 1 January 2020                     344              242         -                      586 
 Depreciation charge for 
  period                               188               10         -                      198 
 Disposals                               -                -         - 
 Foreign exchange movement              23                4         -                       27 
===========================  =============  ===============  ========  ======================= 
 At 31 December 2020                   555              256         -                      811 
 Depreciation charge for 
  period                                99                4         -                      103 
 Disposals                               -             (62)                               (62) 
 Foreign exchange movement               6              (5)         -                        1 
===========================  =============  ===============  ========  ======================= 
 At 30 June 2021                       660              193         -                      853 
===========================  =============  ===============  ========  ======================= 
 
 Net book value 
 At 31 December 2020                   278               10       196                      484 
                                                         28 
===========================  =============  ===============  ========  ======================= 
 At 30 June 2021                       342               18       181                      541 
===========================  =============  ===============  ========  ======================= 
 
   8.       FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 
 
 
                                        30 June 2021       30 June 2021 
 Holding   Investment in management       Total cost         Fair value 
            shares 
                                             US$'000            US$'000 
 
   10      The Argo Fund Ltd                       -                  - 
                                                   -                  - 
========  =========================  ===============    =============== 
 
 
 Holding   Investment in ordinary     Total cost       Fair value 
            shares 
                                         US$'000          US$'000 
 
 19,920    The Argo Fund Ltd*              5,511            7,110 
                                           5,511            7,110 
========  =======================  =============    ============= 
 
 
                                        31 December       31 December 
                                               2020              2020 
 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 
 
 20,061    The Argo Fund Ltd*              5,511            6,818 
                                           5,511            6,818 
========  =======================  =============    ============= 
 

*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 
                                           2021               2020 
                                       US$ '000           US$ '000 
 
 Trade receivables - Gross                1,306              1,292 
 Less: provision for impairment 
  of trade receivables                  (1,139)              (780) 
--------------------------------  -------------  ----------------- 
 Trade receivables - Net                    167                512 
 Other receivables                           47              1,062 
 Prepayments and accrued income             137                 95 
================================  =============  ================= 
                                            351              1,669 
================================  =============  ================= 
 

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     At 31 December 
                                      2021               2020 
                                  US$ '000           US$ '000 
 
 Opening balance                    14,101             12,405 
 Bad debt recovered                      -                  - 
 Charged during the period             365                484 
 Foreign exchange movement           (417)              1,212 
===========================  =============  ================= 
 Closing balance                    14,049             14,101 
===========================  =============  ================= 
 

10. LOANS AND ADVANCES RECEIVABLE

 
                                                At 30 June                   At 31 December 
                                                      2021                             2020 
                                                   US$'000                          US$'000 
 
 Deposits on leased premises - current                  12                               13 
 Deposits on leased premises - non-current 
  (see below)                                          113                              111 
                                                                                          9 
 Other loans and advances receivable 
  - non-current (note 14)                           13,724                           13,534 
===============================================  =========      =========================== 
                                                    13,849                           13,658 
===============================================  =========      =========================== 
 
 

The deposits on leased premises relate to the Group's offices in London and Romania.

Other loans and advances receivable relates to a loan for $12.1 million (EUR10.2 million) principal made by Argo Group Limited to Argo Real Estate Limited Partnership in February 2020, an entity that is 100% owned by Andreas Rialas. The loan accrues interest at 9%.

The Group also has a balance receivable for $12.9 million (EUR10.9 million) from Argo Real Estate Limited Partnership that was assigned from Argo Real Estate Opportunities Fund Limited during the period. The carrying value of this balance is $nil.

   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 
                                  2021        2021           2020          2020 
                                   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 2020 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 2021        30 June 
                                                                       2020 
                                                     US$'000        US$'000 
 
 (Loss)/profit on ordinary activities 
  before taxation                                      (201)            194 
 
 Interest income                                       (519)          (409) 
 Depreciation on fixtures, fittings 
  and equipment                                            4              6 
 Depreciation on right of use asset                       99             91 
 Realised and unrealised loss/(gain)                      38          (205) 
 Net foreign exchange loss/(profit)                        4          (313) 
 (Decrease)/increase in payables                        (42)             97 
 Decrease in receivables, loans and 
  advances                                               317            754 
 Corporation tax paid                                      -           (20) 
 Net cash (outflow)/inflow from operating 
  activities                                           (300)            195 
==========================================  ================  ============= 
 
   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 2021

 
                             Level 1    Level 2    Level 3      Total 
                            US$ '000   US$ '000   US$ '000   US$ '000 
 Financial assets 
  at fair value through 
  profit or loss                   -      7,110          -      7,110 
========================  ==========  =========  =========  ========= 
 

At 31 December 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                   -      6,818          -      6,818 
========================  ==========  =========  =========  ========= 
 

14. RELATED PARTY TRANSACTIONS

Most Group revenues derive from The Argo Fund in which two of the Company's directors, Kyriakos Rialas and Kenneth Watterson, have influence through directorships and the provision of investment management services.

At the reporting date the Company holds investments in The Argo Fund Limited. These investments are reflected in the accounts at fair value of US$7.1 million (31 December 2020: $6.8 million).

At the period end, the Group was owed $13.7 million (note 10) by Argo Real Estate Limited Partnership, an entity that is 100% owned by Andreas Rialas. The loan carries an interest rate of 9% per annum.

During the period, a balance owed by Argo Real Estate Opportunities Fund Limited for US$12.9 million (EUR10.9 million) (31 December 2020: US$13.3 million (EUR10.9 million)) was assigned to Argo Real Estate Limited Partnership. These balances are carried at US$ nil (31 December 2020: US$ nil) in the financial statements.

15. TRADE AND OTHER PAYABLES

 
                                  At 30 June   At 31 December 
                                        2021             2020 
                                    US$ '000         US$ '000 
 
 Trade creditors                          99              118 
 Other creditors and accruals            234              297 
===============================  ===========  =============== 
 Total current trade and other 
  payables                               333              415 
===============================  ===========  =============== 
 

Trade creditors are normally settled on 30-day terms.

 
                                       At 30 June    At 31 December 
                                             2021              2020 
                                         US$ '000          US$ '000 
 
 Other creditors and accruals                    -               79 
===================================  =============  =============== 
 Total non-current trade and other 
  payables                                       -               79 
===================================  =============  =============== 
 

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