TIDMARGO
RNS Number : 3867R
ARGO Group Limited
20 August 2010
Argo Group Limited
("Argo" or the "Company")
Interim Results for the six months ended 30 June 2010
Argo today announces its interim results for the six months ended 30 June 2010.
The Company will today make available its interim report for the six month
period ended 30 June 2010 on the Company's website www.argogrouplimited.com.
Key Highlights for the six month period ended 30 June 2010
- Steady, profitable performance across the Argo funds
- Positive portfolio results in an upward trend
- Revenues of US$5.6 million (six months to June 2009: US$5.8 million)
- Operating profit of US$1.1 million (six months to June 2009: US$1.5
million)
- Profit before tax of US$1.2 million (six months to June 2009: US$2.0
million)
- Operating profit and profit before tax are stated after bonus accrual of
US$840,000 (six months to June 2009: nil)
- Maintained balance sheet strength: net assets of US$43.0 million after
dividend payment and share buyback totalling US$1.5m (December 2009: US$44.5
million)
Commenting on the results and outlook, Kyriakos Rialas, Chief Executive of Argo
said:
"As Argo's flagship fund enters its 10th year of existence the Company continues
to produce a steady and profitable performance. During the period Argo paid a
dividend and carried out a successful buyback of shares whilst still maintaining
its strong balance sheet and liquidity. We are confident that Argo is
well-positioned to take advantage of the record levels of recent inflows into
emerging markets and that the Company will continue to produce positive
results."
Enquiries
Argo Group Limited
Andreas Rialas
020 7535 4000
Panmure Gordon
Dominic Morley
020 7459 3600
CHAIRMAN'S STATEMENT
Business review
Argo is pleased to report another profitable set of interim results for the half
year ended 30 June 2010. The Company was incorporated in February 2008 in the
Isle of Man and began trading as a new group holding company on 13 June 2008. It
listed on the AIM market in November 2008.
Argo's primary business is to deliver a diversified approach to investing in
emerging markets. Its investment objective is to provide investors with absolute
returns in the six funds that it manages by investing in, inter alia, fixed
income, special situations, local currencies and interest rate strategies,
private equity, real estate, quoted equities, high yield corporate debt and
distressed debt, although not every fund invests in each of these asset classes.
Argo has a performance track record dating back to 2000 and this year celebrates
its tenth anniversary.
For the six month period ended 30 June 2010 the Group generated revenues of
US$5.6 million (six months to 30 June 2009: US$5.8 million) with management fees
accounting for US$5.1 million (six months to 30 June 2009: US$5.5 million). The
small reduction in management fees arising from lower assets under management
("AUM") was partially offset by higher incentive fees and other income. The Argo
Fund Limited ("TAF") and Argo Global Special Situations Fund SP ("AGSSF"), a
segregated portfolio of the Argo Capital Investors Fund SPC, have yet to reach
their high-water mark.
AUM decreased during the six month period ended 30 June 2010 by 8.3% to US$403.1
million from their level at 31 December 2009. Despite flat to positive fund
performance year to date the decrease of US$36.4 million was mainly due to the
continued payment of "gated" redemptions from the AGSSF.
Operational review
Record levels of funds flow into emerging markets debt and equity but the
beneficiaries so far have been long-only mutual funds. We believe that the high
volatility witnessed will hit the returns of the long-only directional mutual
funds and furthermore that emerging market inflows will in time benefit the more
actively managed traditional hedge fund strategies. Whilst our marketing team
identified a number of potential leads during the period, the market volatility
induced by the crisis in confidence towards certain peripheral European states
and, more generally, the Eurozone had the effect of once again undermining
investor sentiment. The funds are encouraged by the recent raising of new money,
admittedly small amounts.
The Group employed 25 people at the end of June 2010, one lower than the end of
2009 but 14 fewer than end-2008.
Fund performance
Performance across the range of Argo funds was mixed for the half year ended 30
June 2010, but the two main funds TAF and Argo Distressed Credit Fund ("ADCF"),
which are not gated, showed positive returns at a time when the average fund
performance was flat to negative. Argo Capital Partners Fund ("ACPF"), the
closed private equity fund, and AGSSF suffer mainly from a weakening euro
against the dollar experiencing unrealised FX losses. The generally optimistic
tone experienced in the first quarter of the year gave way to concern over the
fiscal imbalances and credit metrics of peripheral European economies, most
notably Greece. Amidst mounting speculation concerning sovereign defaults,
restructurings and the status of the Euro as a reserve currency, markets became
very volatile and difficult to trade. Our funds navigated the volatility by
maintaining some short positions and we are encouraged by the return of
confidence witnessed in the few weeks prior to the date of this statement that
is contributing to a better performance by the funds.
Argo Funds
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| Fund | | 30 | 30 | 2009 | Since | Annualised | Sharpe | Down | AUM |
| | | June | June | Year | inception | performance | ratio | months | |
| | Launch | 2010 | 2009 | total | | | | | |
| | date | 6 | 6 | | | | | | |
| | | months | months | | | | | | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| | | % | % | % | % | CAGR % | | | US$m |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| The Argo | Oct-00 | 0.37 | 5.35 | 12.18 | 116.60 | 9.11 | 0.74 | 15 | 111.6 |
| Fund | | | | | | | | of | |
| | | | | | | | | 117 | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| Argo Global | Aug-04 | -1.29 | 5.49 | 12.85 | 35.31 | 5.86 | 0.52 | 16 | 98.7 |
| Special | | | | | | | | of | |
| Situations | | | | | | | | 71 | |
| Fund | | | | | | | | | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| AGSSF | Feb-09 | -5.49 | 5.75 | 7.72 | 1.81 | 1.45 | 0.20 | 9 | 76.7 |
| Holdings | | | | | | | | of | |
| | | | | | | | | 17 | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| Argo | Oct-08 | 4.67 | 5.23 | 11.06 | 16.82 | 9.09 | 1.36 | 7 | 21.5 |
| Distressed | | | | | | | | of | |
| Credit Fund | | | | | | | | 21 | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| Argo Real | Aug-06 | 9.47 | -60.52 | -78.47 | -69.90 | -26.35 | N/A | 24 | |
| Estate | | | | | | | | of | 35.3* |
| Opportunities | | | | | | | | 48* | |
| Fund | | | | | | | | | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| Argo | Aug-06 | -11.65 | -4.82 | -4.17 | 14.86 | 3.68 | N/A | N/A | 59.3 |
| Capital | | | | | | | | | |
| Partners | | | | | | | | | |
| Fund | | | | | | | | | |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
| Total | | | | | | | | | 403.1 |
+---------------+--------+--------+--------+--------+-----------+-------------+--------+--------+-------+
* NAV only officially measured twice a year, March and September.
AGSSF Holdings Limited ("AHL"), the creation of which was approved by the AGSSF
board of directors in February 2009, comprises assets that are currently more
difficult to liquidate. In the six-month period ended 30 June 2010 it delivered
a year-to-date return of -5.49%, in part driven by exchange rate fluctuations,
and despite difficult market conditions we are encouraged by the progress in
creating liquidity events for investors in the fund.
AGSSF itself recorded a smaller decline of 1.29% in the six months to June 2010
but TAF had a positive year-to-date return of 0.37%. On a more constructive
note, ADCF continued to build a solid track record of returns: after the 11.06%
recorded in 2009, ADCF achieved a return of 4.67% in the six months to June
2010.
The Argo Real Estate Opportunities Fund Limited ("AREOF"), which has been
severely affected by the downturn in Eastern Europe, reported a further write
down of investment property values in the six months to 31 March 2010. The
fund's adjusted Net Asset Value was EUR28.9 million as at end-March 2010,
compared with EUR48.3 million a year earlier and EUR26.4 million six months
earlier.
Meanwhile, ACPF reported a negative return of 11.65% for the six months ended 30
June 2010 (as at 30 June 2009: -4.82%). The realisation period for the Fund was
scheduled to commence this month but, as per the Fund prospectus, this has been
extended for one year.
Outlook
The board is satisfied with the current company composition in terms of
headcount and assets under management. Costs are appropriate and are reviewed
periodically so as to optimise the efficient deployment of company resources.
More emphasis is placed on direct communication with existing and new investors
with the purchase of two databases to assist in growing the funds with
additional subscriptions.
Management has recently observed greater mobility and a new air of optimism in
the market conditions that will affect positively the workout of some of the
less liquid and private equity transactions in the funds. A significant number
of man hours is being spent on such transactions and there is continuous
communication with investors about the funds' performance. On the more actively
traded bonds we have benefitted greatly from improved performance in some of our
key countries such as Argentina, Ukraine and Venezuela.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2010
+--------------------------------------+------+---------+----------+---------+
| | | Six | | Six |
| | | months | | months |
+--------------------------------------+------+---------+----------+---------+
| | | Ended | | Ended |
+--------------------------------------+------+---------+----------+---------+
| | | 30 | | 30 |
| | | June | | June |
+--------------------------------------+------+---------+----------+---------+
| | | 2010 | | 2009 |
+--------------------------------------+------+---------+----------+---------+
| |Note | US$'000 | | US$'000 |
+--------------------------------------+------+---------+----------+---------+
| | | | | |
+--------------------------------------+------+---------+----------+---------+
| Management fees | | 5,093 | | 5,485 |
+--------------------------------------+------+---------+----------+---------+
| Incentive fees | | 257 | | 177 |
+--------------------------------------+------+---------+----------+---------+
| Other income | | 266 | | 173 |
+--------------------------------------+------+---------+----------+---------+
| Revenue | | 5,616 | | 5,835 |
+--------------------------------------+------+---------+----------+---------+
| | | | | |
+--------------------------------------+------+---------+----------+---------+
| Legal and professional expenses | | (281) | | (294) |
+--------------------------------------+------+---------+----------+---------+
| Management and incentive fees | | (94) | | (181) |
| payable | | | | |
+--------------------------------------+------+---------+----------+---------+
| Operational expenses | | (907) | | (1,004) |
+--------------------------------------+------+---------+----------+---------+
| Employee costs | | (2,910) | | (2,660) |
+--------------------------------------+------+---------+----------+---------+
| Foreign exchange gain | | 77 | | 157 |
+--------------------------------------+------+---------+----------+---------+
| Amortisation of intangible assets | 6 | (323) | | (333) |
+--------------------------------------+------+---------+----------+---------+
| Depreciation | 7 | (52) | | (54) |
+--------------------------------------+------+---------+----------+---------+
| Operating profit | | 1,126 | | 1,466 |
+--------------------------------------+------+---------+----------+---------+
| | | | | |
+--------------------------------------+------+---------+----------+---------+
| Interest income on cash and cash | | 30 | | 99 |
| equivalents | | | | |
+--------------------------------------+------+---------+----------+---------+
| Unrealised gain on investments | | 53 | | 481 |
+--------------------------------------+------+---------+----------+---------+
| Profit on ordinary activities before | | 1,209 | | 2,046 |
| taxation | | | | |
+--------------------------------------+------+---------+----------+---------+
| | | | | |
+--------------------------------------+------+---------+----------+---------+
| Taxation | 4 | (146) | | (184) |
+--------------------------------------+------+---------+----------+---------+
| Profit for the period after taxation | 5 | 1,063 | | 1,862 |
| attributable to members of the | | | | |
| Company | | | | |
+--------------------------------------+------+---------+----------+---------+
| | | | | |
+--------------------------------------+------+---------+----------+---------+
| Other comprehensive income | | | | |
+--------------------------------------+------+---------+----------+---------+
| Exchange differences on translation | | (1,018) | | 895 |
| of foreign operations | | | | |
+--------------------------------------+------+---------+----------+---------+
| Total comprehensive income for the | | 45 | | 2,757 |
| period | | | | |
+--------------------------------------+------+---------+----------+---------+
+--------------------------------------+----+----------------+----------+--------+
| | | Six | | Six |
| | | months | | months |
+--------------------------------------+----+----------------+----------+--------+
| | | Ended | | Ended |
+--------------------------------------+----+----------------+----------+--------+
| | | 30 | | 30 |
| | | June | | June |
+--------------------------------------+----+----------------+----------+--------+
| | | 2010 | | 2009 |
+--------------------------------------+----+----------------+----------+--------+
| | | US$ | | US$ |
+--------------------------------------+----+----------------+----------+--------+
| Earnings per share (basic) | 5 | 0.01 | | 0.02 |
+--------------------------------------+----+----------------+----------+--------+
| Earnings per share (diluted) | 5 | 0.01 | | 0.02 |
+--------------------------------------+----+----------------+----------+--------+
The Directors consider that all results derive from continuing activities.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010
+--------------------------------------+------+---------+----------+----------+
| | | 30 June | | 31 |
| | | | | December |
+--------------------------------------+------+---------+----------+----------+
| | | 2010 | | 2009 |
+--------------------------------------+------+---------+----------+----------+
| |Note | US$'000 | | US$'000 |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Assets | | | | |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Non-current assets | | | | |
+--------------------------------------+------+---------+----------+----------+
| Intangible assets | 6 | 16,889 | | 17,557 |
+--------------------------------------+------+---------+----------+----------+
| Fixtures, fittings and equipment | 7 | 79 | | 136 |
+--------------------------------------+------+---------+----------+----------+
| Loans and advances receivable | | 244 | | 226 |
+--------------------------------------+------+---------+----------+----------+
| Total non-current assets | | 17,212 | | 17,919 |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Current assets | | | | |
+--------------------------------------+------+---------+----------+----------+
| Investments | 8 | 14,389 | | 14,337 |
+--------------------------------------+------+---------+----------+----------+
| Trade and other receivables | | 1,448 | | 1,972 |
+--------------------------------------+------+---------+----------+----------+
| Cash and cash equivalents | | 11,383 | | 13,069 |
+--------------------------------------+------+---------+----------+----------+
| Loans and advances receivable | | 5 | | 36 |
+--------------------------------------+------+---------+----------+----------+
| Total current assets | | 27,225 | | 29,414 |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Total assets | | 44,437 | | 47,333 |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Equity and liabilities | | | | |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Equity | | | | |
+--------------------------------------+------+---------+----------+----------+
| Issued share capital | 9 | 747 | | 769 |
+--------------------------------------+------+---------+----------+----------+
| Share premium | | 32,385 | | 32,772 |
+--------------------------------------+------+---------+----------+----------+
| Revenue reserve | | 12,585 | | 12,648 |
+--------------------------------------+------+---------+----------+----------+
| Foreign currency translation reserve | | (2,688) | | (1,670) |
+--------------------------------------+------+---------+----------+----------+
| Total equity | | 43,029 | | 44,519 |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Current liabilities | | | | |
+--------------------------------------+------+---------+----------+----------+
| Trade and other payables | | 1,152 | | 2,692 |
+--------------------------------------+------+---------+----------+----------+
| Taxation payable | 4 | 256 | | 122 |
+--------------------------------------+------+---------+----------+----------+
| Total current liabilities | | 1,408 | | 2,814 |
+--------------------------------------+------+---------+----------+----------+
| | | | | |
+--------------------------------------+------+---------+----------+----------+
| Total equity and liabilities | | 44,437 | | 47,333 |
+--------------------------------------+------+---------+----------+----------+
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2010
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | Foreign | |
| | Issued | | | currency | |
| | share | Share | Revenue | translation | |
| | capital | premium | reserve | reserve | Total |
+-----------------------+---------+---------+---------+-------------+---------+
| | 2009 | 2009 | 2009 | 2009 | 2009 |
+-----------------------+---------+---------+---------+-------------+---------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| As at 1 January 2009 | 769 | 32,772 | 9,840 | (2,455) | 40,926 |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Total comprehensive | | | | | |
| income | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Profit for the period | - | - | 1,862 | 895 | 2,757 |
| after taxation | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| As at 30 June 2009 | 769 | 32,772 | 11,702 | (1,560) | 43,683 |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | Foreign | |
| | Issued | | | currency | |
| | share | Share | Revenue | translation | |
| | capital | premium | reserve | reserve | Total |
+-----------------------+---------+---------+---------+-------------+---------+
| | 2010 | 2010 | 2010 | 2010 | 2010 |
+-----------------------+---------+---------+---------+-------------+---------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| As at 1 January 2010 | 769 | 32,772 | 12,648 | (1,670) | 44,519 |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Total comprehensive | | | | | |
| income | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Profit for the period | - | - | 1,063 | (1,018) | 45 |
| after taxation | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Transactions with | | | | | |
| owners recorded | | | | | |
| directly in equity | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Dividends to equity | - | - | (1,126) | - | (1,126) |
| holders (Note 9) | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| Purchase of own | (22) | (387) | - | - | (409) |
| shares (Note 9) | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
| As at 30 June 2010 | 747 | 32,385 | 12,585 | (2,688) | 43,029 |
+-----------------------+---------+---------+---------+-------------+---------+
| | | | | | |
+-----------------------+---------+---------+---------+-------------+---------+
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2010
+---------------------------------+------+----------+----------+----------+
| | | Six | | Six |
| | | months | | months |
| | | ended | | ended |
+---------------------------------+------+----------+----------+----------+
| | | 30 June | | 30 June |
+---------------------------------+------+----------+----------+----------+
| | | 2010 | | 2009 |
+---------------------------------+------+----------+----------+----------+
| |Note | US$'000 | | US$'000 |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Net cash inflow from operating | 10 | 409 | | 659 |
| activities | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Cash flows from investing | | | | |
| activities | | | | |
+---------------------------------+------+----------+----------+----------+
| Interest received on cash and | | 30 | | 99 |
| cash equivalents | | | | |
+---------------------------------+------+----------+----------+----------+
| Purchase of current asset | | - | | (11,000) |
| investments | | | | |
+---------------------------------+------+----------+----------+----------+
| Purchase of fixtures, fittings | 7 | (2) | | (23) |
| and equipment | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Net cash inflow/(outflow) from | | 28 | | (10,924) |
| investing activities | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Cash flows from financing | | | | |
| activities | | | | |
+---------------------------------+------+----------+----------+----------+
| Repurchase of own shares | | (409) | | - |
+---------------------------------+------+----------+----------+----------+
| Dividends paid | | (1,126) | | - |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Net cash used in financing | | (1,535) | | - |
| activities | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Net decrease in cash and cash | | (1,098) | | (10,265) |
| equivalents | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Cash and cash equivalents at 1 | | 13,069 | | 20,058 |
| January 2010 and | | | | |
| 1 January 2009 | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Foreign exchange (loss)/gain on | | (588) | | 974 |
| cash and cash equivalents | | | | |
+---------------------------------+------+----------+----------+----------+
| | | | | |
+---------------------------------+------+----------+----------+----------+
| Cash and cash equivalents as at | | 11,383 | | 10,767 |
| 30 June 2010 and 30 June 2009 | | | | |
+---------------------------------+------+----------+----------+----------+
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2010
1. CORPORATE INFORMATION
The Company is domiciled in the Isle of Man under the Companies Act
2006. Its registered office is at 33-37 Athol Street, Douglas, Isle of Man, IM1
1LB. The condensed consolidated interim financial statements of the Company as
at and for the six months ended 30 June 2010 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 2009 are available upon request from the Company's
registered office or at www.argogrouplimited.com.
The principal activity of the Company is that of a holding company and
the principal activity of the wider Group is that of an investment management
business. The functional and presentational currency of the Group undertakings
is US dollars. The Group has 25 employees.
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 Capital Management (Asia) Pte. Ltd. | Singapore |
+--------------------------------------------+---------------+
| North Asset Management Srl | Romania |
+--------------------------------------------+---------------+
| North Asset Management Sarl | Luxembourg |
+--------------------------------------------+---------------+
| Argo Investor Services AG | Switzerland |
+--------------------------------------------+---------------+
2. BASIS OF PREPARATION
These condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting. They do not
include all the information required for full annual financial statements and
should be read in conjunction with the consolidated financial statements of the
Group as at and for the year ended 31 December 2009.
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 2009.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 19 August 2010.
3. SEGMENTAL ANALYSIS
The Group operates as a single asset management business.
The operating results of the companies set out in note 1 above are regularly
reviewed by the directors of the Group for the purposes of making decisions
about resources to be allocated to each company and to assess performance. The
following summary analyses revenues, profit or loss, assets and liabilities:
+-------------------------+---------+------------+------------+------------+---------+---------+
| | | Argo | | Argo | | Six |
| | Argo | Capital | Argo | Capital | | months |
| | Group | Management | Capital | Management | | ended |
| | Ltd | (Cyprus) | Management | Property | Other | 30 |
| | | Limited | Limited | Limited | | June |
+-------------------------+---------+------------+------------+------------+---------+---------+
| | 2010 | 2010 | 2010 | 2010 | 2010 | 2010 |
+-------------------------+---------+------------+------------+------------+---------+---------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+-------------------------+---------+------------+------------+------------+---------+---------+
| | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Revenues from external | - | 4,053 | - | 1,562 | 1 | 5,616 |
| customers | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Intersegment revenues | 904 | - | 1,640 | - | 228 | 2,772 |
+-------------------------+---------+------------+------------+------------+---------+---------+
| | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Reportable segment | 597 | 591 | (481) | 452 | 50 | 1,209 |
| profit/(loss) | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Intersegment | 904 | (2,759) | 1,641 | - | 227 | 13 |
| profit/(loss) | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Profit/(loss) excluding | (307) | 3,350 | (2,122) | 452 | (177) | 1,196 |
| inter- segment | | | | | | |
| transactions | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Reportable segment | 44,498 | 4,307 | 5,206 | 4,800 | 492 | 59,303 |
| assets | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
| Reportable segment | 30 | 706 | 757 | 199 | 34 | 1,726 |
| liabilities | | | | | | |
+-------------------------+---------+------------+------------+------------+---------+---------+
+------------------------------------------------------+----------+
| Revenues, profit or loss, assets and liabilities may | Six |
| be reconciled as follows: | months |
| | |
+------------------------------------------------------+----------+
| | Ended |
+------------------------------------------------------+----------+
| | 30 June |
| | 2010 |
+------------------------------------------------------+----------+
| | US$'000 |
+------------------------------------------------------+----------+
| Revenues | |
+------------------------------------------------------+----------+
| Total revenues for reportable segments | 8,388 |
+------------------------------------------------------+----------+
| Elimination of intersegment revenues | (2,772) |
+------------------------------------------------------+----------+
| Group revenues | 5,616 |
+------------------------------------------------------+----------+
| | |
+------------------------------------------------------+----------+
| Profit or loss | |
+------------------------------------------------------+----------+
| Total profit for reportable segments | 1,209 |
+------------------------------------------------------+----------+
| Elimination of intersegment profits | (13) |
+------------------------------------------------------+----------+
| Other unallocated amounts | 13 |
+------------------------------------------------------+----------+
| Profit on ordinary activities before taxation | 1,209 |
+------------------------------------------------------+----------+
| | |
+------------------------------------------------------+----------+
| Assets | |
+------------------------------------------------------+----------+
| Total assets for reportable segments | 59,303 |
+------------------------------------------------------+----------+
| Elimination of intersegment receivables | (318) |
+------------------------------------------------------+----------+
| Elimination of Company's cost of investments | (14,548) |
+------------------------------------------------------+----------+
| Group assets | 44,437 |
+------------------------------------------------------+----------+
| | |
+------------------------------------------------------+----------+
| Liabilities | |
+------------------------------------------------------+----------+
| Total liabilities for reportable segments | 1,726 |
+------------------------------------------------------+----------+
| Elimination of intersegment payables | (318) |
+------------------------------------------------------+----------+
| Group liabilities | 1,408 |
+------------------------------------------------------+----------+
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| | | Argo | | | Six |
| | Argo | Capital | Argo | | months |
| | Group | Management | Capital | | ended |
| | Ltd | (Cyprus) | Management | Other | 30 |
| | | Limited | Limited | | June |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| | 2009 | 2009 | 2009 | 2009 | 2009 |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| |US$'000 | US$'000 | US$'000 |US$'000 | US$'000 |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Revenues from | - | 4,358 | - | 1,477 | 5,835 |
| external customers | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Intersegment | 11,479 | - | 1,728 | 221 | 13,428 |
| revenues | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Reportable segment | 11,971 | (9,426) | (502) | (1) | 2,042 |
| profit/(loss) | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Intersegment | 11,479 | (13,424) | 1,728 | 221 | 4 |
| profit/(loss) | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Profit/(loss) | 492 | 3,998 | (2,230) | (222) | 2,038 |
| excluding inter- | | | | | |
| segment | | | | | |
| transactions | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Reportable segment | 46,550 | 2,721 | 6,702 | 7,872 | 63,845 |
| assets | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
| Reportable segment | 35 | 623 | 394 | 519 | 1,571 |
| liabilities | | | | | |
+---------------------+---------+------------+------------+---------+---------------------------------------------------------------------+
+----------------------------------------------------+------------+
| Revenues, profit or loss, assets and liabilities | Six |
| may be reconciled as follows: | months |
| | ended |
| | 30 June |
+----------------------------------------------------+------------+
| | 2009 |
+----------------------------------------------------+------------+
| | US$'000 |
+----------------------------------------------------+------------+
| Revenues | |
+----------------------------------------------------+------------+
| Total revenues for reportable segments | 19,263 |
+----------------------------------------------------+------------+
| Elimination of intersegment revenues | (13,428) |
+----------------------------------------------------+------------+
| Group revenues | 5,835 |
+----------------------------------------------------+------------+
| | |
+----------------------------------------------------+------------+
| Profit or loss | |
+----------------------------------------------------+------------+
| Total profit for reportable segments | 2,042 |
+----------------------------------------------------+------------+
| Elimination of intersegment loss | (4) |
+----------------------------------------------------+------------+
| Other unallocated amounts | 8 |
+----------------------------------------------------+------------+
| Profit on ordinary activities before taxation | 2,046 |
+----------------------------------------------------+------------+
| | |
+----------------------------------------------------+------------+
| Assets | |
+----------------------------------------------------+------------+
| Total assets for reportable segments | 63,845 |
+----------------------------------------------------+------------+
| Elimination of intersegment receivables | (327) |
+----------------------------------------------------+------------+
| Elimination of Company's cost of investments | (18,597) |
+----------------------------------------------------+------------+
| Group assets | 44,921 |
+----------------------------------------------------+------------+
| | |
+----------------------------------------------------+------------+
| Liabilities | |
+----------------------------------------------------+------------+
| Total liabilities for reportable segments | 1,571 |
+----------------------------------------------------+------------+
| Elimination of intersegment payables | (333) |
+----------------------------------------------------+------------+
| Group liabilities | 1,238 |
+----------------------------------------------------+------------+
4. TAXATION
Taxation rates applicable to the parent company and the Cypriot, UK,
Singaporean, Luxembourg, Swiss, Cayman and Romanian subsidiaries range from 0%
to 28%.
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Income | Six | | Six |
| Statement | months | | months |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | ended | | ended |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 30 | | 30 |
| | June | | June |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 2010 | | 2009 |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | US$'000 | | US$'000 |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Taxation charge for the period on | 146 | | 184 |
| Group companies | | | |
+-----------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
The charge for the period can be reconciled to the profit per the Condensed
Consolidated Statement of Comprehensive Income as follows:
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | Six | | Six |
| | months | | months |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | Ended | | ended |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 30 | | 30 |
| | June | | June |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 2010 | | 2009 |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | US$'000 | | US$'000 |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Profit before tax | 1,209 | | 2,046 |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Applicable | - | | - |
| Isle of | | | |
| Man tax | | | |
| rate for | | | |
| Argo Group | | | |
| Limited of | | | |
| 0% | | | |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Other | (5) | | (9) |
| adjustments | | | |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Tax | 151 | | 193 |
| effect | | | |
| of | | | |
| different | | | |
| tax rates | | | |
| of | | | |
| subsidiaries | | | |
| operating in | | | |
| other | | | |
| jurisdictions | | | |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Tax | 146 | | 184 |
| charge | | | |
+---------------------------------------------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
| Balance | | | |
| Sheet | | | |
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
| | 30 | | 31 |
| | June | | December |
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
| | 2010 | | 2009 |
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
| | US$'000 | | US$'000 |
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
| | | | |
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
| Corporation tax payable | 256 | | 122 |
+---------------------------------------------------------------------+------------------------------------------------------------------+----------+----------------------------------------------------------------------+
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing the net profit for the
period by the weighted average number of shares outstanding during the period.
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | Six | | Six |
| | months | | months |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | ended | | ended |
| | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 30 | | 30 |
| | June | | June |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 2010 | | 2009 |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | US$'000 | | US$'000 |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Net profit for the period after | 1,063 | | 1,862 |
| taxation attributable to members | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | No. of | | No. of |
| | shares | | shares |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Weighted average of ordinary shares | 76,303,599 | | 76,931,620 |
| for basic earnings per share | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Effect of dilution | - | | - |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Weighted average number of ordinary | 76,303,599 | | 76,931,620 |
| shares for diluted earnings per share | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | Six | | Six |
| | months | | months |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | Ended | | ended |
| | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 30 | | 30 |
| | June | | June |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | 2010 | | 2009 |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | US$ | | US$'000 |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| | | | |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Earnings per share (basic) | 0.01 | | 0.02 |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
| Earnings per share (diluted) | 0.01 | | 0.02 |
+---------------------------------------+--------------------------------------------------------------------+----------+---------------------------------------------------------------------+
6. INTANGIBLE ASSETS
+--------------------------------------------------+------------+
| | Fund |
| | management |
| | contracts |
+--------------------------------------------------+------------+
| | US$'000 |
+--------------------------------------------------+------------+
| Cost | |
+--------------------------------------------------+------------+
| At 1 January 2009 | 18,490 |
+--------------------------------------------------+------------+
| Foreign exchange movement | 139 |
+--------------------------------------------------+------------+
| At 31 December 2009 | 18,629 |
+--------------------------------------------------+------------+
| Foreign exchange movement | (345) |
+--------------------------------------------------+------------+
| At 30 June 2010 | 18,284 |
+--------------------------------------------------+------------+
| | |
+--------------------------------------------------+------------+
| Amortisation and impairment | |
+--------------------------------------------------+------------+
| At 1 January 2009 | 380 |
+--------------------------------------------------+------------+
| Amortisation of Argo business intangible assets | 692 |
+--------------------------------------------------+------------+
| At 31 December 2009 | 1,072 |
+--------------------------------------------------+------------+
| Amortisation of Argo business intangible assets | 323 |
+--------------------------------------------------+------------+
| At 30 June 2010 | 1,395 |
+--------------------------------------------------+------------+
| | |
+--------------------------------------------------+------------+
| Net book value | |
+--------------------------------------------------+------------+
| At 31 December 2009 | 17,557 |
+--------------------------------------------------+------------+
| At 30 June 2010 | 16,889 |
+--------------------------------------------------+------------+
The Group tests intangible assets annually for impairment, or more frequently if
there are indications that the intangible assets may be impaired. The
recoverable amounts of the intangible assets that have been reviewed for
impairment are separately identifiable business units within the Group. The
value in use approach has been used as the businesses were not considered
saleable in their current form due to certain factors, the main being reliance
on certain key individuals.
At the balance sheet date the carrying value of goodwill was US$14.9m being
allocated to Argo Capital Management (Cyprus) Limited and Argo Capital
Management Limited as US$7.2m and US$7.7m respectively.
The key assumptions on which the directors have based their five year discounted
cash flow analysis are a pre-tax discount rate of 15%, an inflation rate of 5%
and a growth in assets under management (which determine management and
performance fee income) of 15% to 20%, with 4.5% to 6% of this estimated to be
from annual profits. The assumption of growth in assets under management has
been based on the historic performance of the funds. The calculations use cash
flow projections based on actual operating results. The result of this review
has been compared to the carrying value of goodwill and accordingly the
directors have concluded that there is no impairment to goodwill. As an added
sensitivity, if the estimated discount rate applied to the discounted cash flows
had been 25% higher or the growth rate of assets under management had been 25%
lower there would still have been no impairment of goodwill as the net present
value of future cash flows would still have been higher than the carrying value
of goodwill.
At the balance sheet date the carrying value of the Argo Real Estate
Opportunities Fund Limited management contract is US$1.9m, net of amortisation.
The intangible asset has been amortised over 5 years and 44 days, being the
remaining period of the contract.
7. FIXTURES, FITTINGS AND EQUIPMENT
+-------------------------------------------------+---------------+
| | Fixtures, |
| | fittings |
| | & |
| | equipment |
+-------------------------------------------------+---------------+
| | US$'000 |
+-------------------------------------------------+---------------+
| Cost | |
+-------------------------------------------------+---------------+
| At 1 January 2009 | 315 |
+-------------------------------------------------+---------------+
| Additions | 23 |
+-------------------------------------------------+---------------+
| Disposals | (25) |
+-------------------------------------------------+---------------+
| Foreign exchange movement | (14) |
+-------------------------------------------------+---------------+
| At 31 December 2009 | 299 |
+-------------------------------------------------+---------------+
| Additions | 2 |
+-------------------------------------------------+---------------+
| At 30 June 2010 | 301 |
+-------------------------------------------------+---------------+
| | |
+-------------------------------------------------+---------------+
| Accumulated Depreciation | |
+-------------------------------------------------+---------------+
| At 1 January 2009 | 78 |
+-------------------------------------------------+---------------+
| Depreciation charge for period | 119 |
+-------------------------------------------------+---------------+
| Disposals | (3) |
+-------------------------------------------------+---------------+
| Foreign exchange movement | (31) |
+-------------------------------------------------+---------------+
| At 31 December 2009 | 163 |
+-------------------------------------------------+---------------+
| Depreciation charge for period | 52 |
+-------------------------------------------------+---------------+
| Foreign exchange movement | 7 |
+-------------------------------------------------+---------------+
| At 30 June 2010 | 222 |
+-------------------------------------------------+---------------+
| | |
+-------------------------------------------------+---------------+
| Net book value | |
+-------------------------------------------------+---------------+
| At 31 December 2009 | 136 |
+-------------------------------------------------+---------------+
| At 30 June 2010 | 79 |
+-------------------------------------------------+---------------+
8. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
+---------+--------------------------+-----------+----------+-----------+
| | | 30 June | | 30 June |
+---------+--------------------------+-----------+----------+-----------+
| | | 2010 | | 2010 |
+---------+--------------------------+-----------+----------+-----------+
|Holding | Investment in management | Total | | Fair |
| | shares | cost | | value |
+---------+--------------------------+-----------+----------+-----------+
| | | US$'000 | | US$'000 |
+---------+--------------------------+-----------+----------+-----------+
| | | | | |
+---------+--------------------------+-----------+----------+-----------+
| 10 | The Argo Fund Ltd | 0 | | 0 |
+---------+--------------------------+-----------+----------+-----------+
| 10 | Argo Capital Investors | 0 | | 0 |
| | Fund SPC | | | |
+---------+--------------------------+-----------+----------+-----------+
| 10 | Argo Capital Partners | 0 | | 0 |
| | Fund | | | |
+---------+--------------------------+-----------+----------+-----------+
| 100 | Argo Distressed Credit | 0 | | 0 |
| | Fund Ltd | | | |
+---------+--------------------------+-----------+----------+-----------+
| 100 | AGSSF Holdings Ltd | 0 | | 0 |
+---------+--------------------------+-----------+----------+-----------+
| | | 0 | | 0 |
+---------+--------------------------+-----------+----------+-----------+
+---------+--------------------------+-----------+----------+-----------+
|Holding | Investment in ordinary | Total | | Fair |
| | shares | cost | | value |
+---------+--------------------------+-----------+----------+-----------+
| | | US$'000 | | US$'000 |
+---------+--------------------------+-----------+----------+-----------+
| | | | | |
+---------+--------------------------+-----------+----------+-----------+
| 66,435 | The Argo Fund Ltd | 14,343 | | 14,389 |
+---------+--------------------------+-----------+----------+-----------+
| | | 14,343 | | 14,389 |
+---------+--------------------------+-----------+----------+-----------+
+---------+--------------------------+-----------+----------+-----------+
| | | 31 | | 31 |
| | | December | | December |
+---------+--------------------------+-----------+----------+-----------+
| | | 2009 | | 2009 |
+---------+--------------------------+-----------+----------+-----------+
|Holding | Investment in management | Total | | Fair |
| | shares | cost | | value |
+---------+--------------------------+-----------+----------+-----------+
| | | US$'000 | | US$'000 |
+---------+--------------------------+-----------+----------+-----------+
| | | | | |
+---------+--------------------------+-----------+----------+-----------+
| 10 | The Argo Fund Ltd | 0 | | 0 |
+---------+--------------------------+-----------+----------+-----------+
| 10 | Argo Capital Investors | 0 | | 0 |
| | Fund SPC | | | |
+---------+--------------------------+-----------+----------+-----------+
| 10 | Argo Capital Partners | 0 | | 0 |
| | Fund Ltd | | | |
+---------+--------------------------+-----------+----------+-----------+
| 100 | Argo Distressed Credit | 0 | | 0 |
| | Fund Ltd | | | |
+---------+--------------------------+-----------+----------+-----------+
| 100 | AGSSF Holdings Ltd | 0 | | 0 |
+---------+--------------------------+-----------+----------+-----------+
| | | 0 | | 0 |
+---------+--------------------------+-----------+----------+-----------+
+---------+--------------------------+-----------+----------+-----------+
|Holding | Investment in ordinary | Total | | Fair |
| | shares | cost | | value |
+---------+--------------------------+-----------+----------+-----------+
| | | US$'000 | | US$'000 |
+---------+--------------------------+-----------+----------+-----------+
| | | | | |
+---------+--------------------------+-----------+----------+-----------+
| 66,435 | The Argo Fund Ltd | 14,343 | | 14,337 |
+---------+--------------------------+-----------+----------+-----------+
| | | 14,343 | | 14,337 |
+---------+--------------------------+-----------+----------+-----------+
9. SHARE CAPITAL
The Company's authorised share capital is unlimited with a nominal value of
US$0.01.
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
| | 30 | 30 | 31 | 31 |
| | June | June | December | December |
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
| | 2010 | 2010 | 2009 | 2009 |
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
| | No. | US$'000 | No. | US$'000 |
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
| Issued and fully | | | | |
| paid | | | | |
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
| Ordinary shares of | 74,663,494 | 747 | 76,931,620 | 769 |
| US$0.01 each | | | | |
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
| | 74,663,494 | 747 | 76,931,620 | 769 |
+---------------------+------------+---------+----------------------------------------------------------------------+----------------------------------------------------------------------+
The directors recommended a final dividend of 1p per share (2008: Nil) in the
financial statements for the year ended 31 December 2009. The final dividend of
US$1,125,888 was paid on 23 June 2010 to ordinary shareholders who were on the
Register of Members on 28 May 2010. Going forward, it is intended that the
Company implements a progressive dividend policy paying a final dividend each
year.
In addition the directors authorised the repurchase of 750,000 shares on 6 April
2010 and 1,518,126 shares on 3 June 2010 at respective purchase prices of
US$0.20 and US$0.18 per share.
10. RECONCILIATION OF NET CASH INFLOW FROM OPERATING ACTIVITIES TO
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
+------------------------------------+----------+----------+----------+
| | Six | | Six |
| | months | | months |
| | ended | | ended |
| | 30 June | | 30 June |
| | 2010 | | 2009 |
+------------------------------------+----------+----------+----------+
| | US$'000 | | US$'000 |
+------------------------------------+----------+----------+----------+
| | | | |
+------------------------------------+----------+----------+----------+
| Profit on ordinary activities | 1,209 | | 2,046 |
| before taxation | | | |
+------------------------------------+----------+----------+----------+
| | | | |
+------------------------------------+----------+----------+----------+
| Interest income | (30) | | (99) |
+------------------------------------+----------+----------+----------+
| Amortisation of intangible assets | 323 | | 333 |
+------------------------------------+----------+----------+----------+
| Depreciation | 52 | | 54 |
+------------------------------------+----------+----------+----------+
| Unrealised gains on investments | (53) | | (481) |
+------------------------------------+----------+----------+----------+
| Net foreign exchange gain | (77) | | (157) |
+------------------------------------+----------+----------+----------+
| (Decrease)/increase in payables | (1,540) | | 227 |
+------------------------------------+----------+----------+----------+
| Decrease/(increase) in receivables | 537 | | (143) |
+------------------------------------+----------+----------+----------+
| Income taxes paid | (12) | | (1,121) |
+------------------------------------+----------+----------+----------+
| Net cash inflow from operating | 409 | | 659 |
| activities | | | |
+------------------------------------+----------+----------+----------+
11. RELATED PARTY TRANSACTIONS
72% of revenue derives from funds in which two of the Company's
directors, Andreas Rialas and Kyriakos Rialas, have an influence through the
provision of investment advisory services.
Michael Kloter, the non-executive chairman, is also partner in a legal firm
which supplies services to the Group. This firm charged US$5,192 (six months
ended 30 June 2009: US$9,382) for services rendered to the Group in the period.
12. POSSIBLE CLAIM RELATING TO LAWSUIT AGAINST FORMER GROUP COMPANY
Argo Group Limited ("Argo") has been named as an additional defendant in a
lawsuit filed against Absolute Capital Management Holdings Limited (now named
ACMH Limited ("ACMH")) and others. The suit has been filed in the United States
District Court for the District of Colorado, by an investor in several of ACMH's
investment funds. This litigation arose after the demerger of Argo from ACMH.
The plaintiff, The Cascade Fund LLLP ("Cascade"), has made a number of claims
against ACMH. In the event that Cascade's claim against ACMH proves successful,
Cascade is seeking to include Argo assets as part of the ACMH asset pool
available to it by way of compensation.
Argo considers that the courts of Colorado do not have jurisdiction over it and
that the claim against Argo is wholly without merit. In April 2010 the Colorado
court dismissed Cascade's action against ACMH for failure to state a claim,
following which Cascade filed a second amended complaint. Argo subsequently
filed a motion to dismiss Cascade's second amended complaint, which motion is
pending before the court. Argo intends to continue to vigorously defend its
position.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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