Argo Group
Limited
("Argo" or the
"Company")
Interim Results for the six
months ended 30 June 2024
Change of name of nominated
adviser and broker
Argo today announces its interim
results for the six months ended 30 June 2024.
Key highlights for the six
months period ended 30 June 2024
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 2024.
-
Revenues US$4.6 million (six months to 30 June
2023: US$1.5 million)
-
Operating profit US$2.4 million (six months to 30
June 2023: operating loss US$0.7 million)
-
Profit before tax US$2.5 million (six months to
30 June 2023: profit before tax US$0.1 million)
-
Net assets US$7.3 million (31 December 2023:
US$5.1 million)
Commenting on the results and
outlook, Kyriakos Rialas, Chief Executive of Argo said:
"We are pleased with the results
of the Argo Group for the first six months of 2024 which were
boosted by positive performance of The Argo Fund Limited as well as
fee income from the management of a Romanian shopping mall that
enabled Argo Property Management Srl to repay a previously fully
provided loan to its parent. The months of May and June 2024
were subdued with outperformers such as Argentina giving back some
of the earlier months' profit. The Argo Fund Limited is
currently trading near its high watermark and as stated before, if
this is maintained until year end some performance fees may also
crystallise."
Change of Name of Nominated Adviser and
Broker
The Company also announces that
its Nominated Adviser and Broker has changed its name to Panmure
Liberum Limited following completion of its own corporate
merger.
Enquiries
Argo Group Limited
Andreas Rialas
020 7016 7660
Panmure Liberum Limited
Atholl Tweedie
020 7886 2500
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) No 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018.
CHAIRMAN'S STATEMENT
Key highlights for the six
months ended 30 June 2024
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 2024.
-
Revenues US$4.6 million (six months to 30 June
2023: US$1.5 million)
-
Operating profit US$2.4 million (six months to 30
June 2023: operating loss US$0.7 million)
-
Profit before tax US$2.5 million (six months to
30 June 2023: profit before tax US$0.1 million)
-
Net assets US$7.3 million (31 December 2023:
US$5.1 million)
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
2024 the Group generated revenues of US$4.6 million (six months to
30 June 2023: US$1.5 million) with management fees accounting for
US$1.0 million (six months to 30 June 2023: US$1.1 million). During
the period the Group earned a one-off bonus fee of US$3.2 million
upon the sale of an asset in Romania.
Total operating costs for the
period, ignoring bad debt provisions, are US$2.0 million compared
to US$1.8 million for the six months to 30 June
2023. The Group
has provided against management fees of US$0.2 million due from the
Designated share class in The Argo Fund ("TAF") (six months to 30
June 2023: US$0.4 million). In the
Directors' view, these amounts are fully recoverable. However, the
Directors 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 profit for the period of US$2.4 million (six
months to 30 June 2023: operating loss US$0.7 million) and a profit
before tax of US$2.5 million (six months to 30 June 2023: profit
before tax of US$0.1 million). Net profit on investments was
US$0.1 million (six months to 30 June 2023: net profit on
investments US$0.3 million) and interest income was US$0.00 million
(six months to 30 June 2023: US$0.5 million).
At the period end, the Group had
net assets of US$7.3 million (31 December 2023: US$5.1 million) and
net current assets of US$7.0 million (31 December 2023: US$4.8
million) including cash reserves of US$5.1 million (31 December
2023: US$1.3 million).
Net assets include investments in
The Argo Fund ("TAF") at fair value of
US$2.7 million (31 December 2023: US$3.7
million).
At the period end TAF owed the
Group total fees of US$2.9 million (31
December 2023: US$2.8 million). At 30 June
2024, a provision for US$2.8 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$100.1 million (31 December 2023:
US$102.0 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 2024 was 20
(30 June 2023:
20).
Fund performance
The Argo
Funds
|
Fund
|
Launch
date
|
30 June
2024
6
months
|
30 June
2023
6
months
|
2023
year
total
|
Since inception
|
Annualised performance
|
Sharpe
ratio
|
Down
months
|
|
|
|
%
|
%
|
%
|
%
|
CAGR %
|
|
|
|
The Argo Fund - A class
|
Oct-00
|
1.42
|
1.46
|
7.83
|
244.68
|
6.13
|
0.38
|
98 of
285
|
|
The Argo Fund - X2
class
|
Feb-21
|
9.08
|
-1.16
|
30.34
|
32.25
|
8.53
|
0.35
|
15 of
41
|
|
The Argo Fund - Designated
Investment Class
|
Jan-20
|
-7.08
|
1.96
|
-35.84
|
12.77
|
N/A
|
N/A
|
N/A
|
The global outlook has improved in
the first half of 2024 despite some disappointing news along the
way. Real GDP growth expectations for the United States have
increased and the jobs market has remained robust, but inflation
has been stickier than previously expected as nominal wage growth
remained brisk. China took additional, albeit still insufficient,
steps to address the residential real estate crisis that has sapped
consumer confidence. The Eurozone appears to have stabilised whilst
Japan surprised on the upside, with higher-than-expected wage
increases potentially signalling the beginning of a virtuous
domestic wage-price feedback loop. This positive trend has been
sustained despite ongoing crises in Ukraine and the Middle East and
trade tensions between the West and China. There were also
elections held in the first half of 2024 in a number of key
emerging markets namely India, South Africa, Mexico and Indonesia
and of course there is the US presidential vote to look forward to
in November.
Equity markets delivered
broad-based gains. The US advance has been narrowly led by a short
list of AI and tech beneficiaries; the S&P 500 Index rose by
15% in the six months to end-June, but the median stock is up just
4%, and a single stock, Nvidia, accounted for about a third of the
year-to-date S&P 500 Index rise. Other international stocks
also performed well, with the MSCI World Index increasing by 10.8%
and the MSCI Emerging Markets Index rising by 6.1%.
US Treasury 10-year yields started
the period under review at 3.9%, peaked at 4.7%, but fell to 4.4%
at end-June as weaker inflation numbers triggered hopes for earlier
rate cuts, reflecting data variability and market dynamics. The
rate cut cycle is seen as postponed rather than cancelled. Other
major markets' 10-year yields were mostly unchanged, except
Japan's, which rose to 1% for the first time in 11 years as the
Bank of Japan (BOJ) gradually exits negative interest rates. The
first week of June saw central bank divergence, with several banks
beginning their easing cycles while the Fed is expected to remain
on hold. The Bank of Canada, European Central Bank, and Swiss
National Bank each cut rates by 25 bps, citing an improved
inflation outlook.
The policy divergence has
continued to support the U.S. dollar. The Japanese yen
significantly underperformed, exceeding 161 against the dollar for
the first time since 1986, driven by the BOJ's reluctance to
tighten monetary policy. At the same time, a number of central
banks in emerging market economies remain cautious in regard to
cutting rates owing to external risks triggered by changes in
interest rate differentials and associated depreciation of those
economies' currencies against the dollar.
Emerging market fundamentals
remain resilient against a backdrop of firm global growth, but
uncertainty over the timing of easing cycles may limit the
performance of EM assets. While Asian growth is projected to be
healthy, growth is picking up from a low base in Latin America, and
in Europe, the Middle East and Africa (EMEA).
The NAV of the Class A shares of
the TAF increased by 1.42 % in the first half of 2024, broadly
similar to the same period last year. The fund benefited from the
renewed confidence in Argentina following the election of President
Milei, though the sovereign bonds ended the period off their recent
highs and have remained volatile. There were also positive
contributions from long positions in other sovereign dollar bonds
including Zambia, which has just completed a debt restructuring.
The main detractors were the macro strategies and in particular the
rates trades in Brazil and Mexico. Class A shares issued by TAF
continue to be invested in diversified sovereign and corporate debt
and macro positions which seek to capture alpha through long and
short investment. In addition, there are other share classes within
the TAF master/feeder structure which offer investors exposure to a
distressed debt portfolio (Class X2, which gained 9% in the first
half); macro strategies (Class X3) and also special situations
where the timeline to investment realisation is likely to 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 23-year track record as well
as identifying acquisitions that are earnings enhancing.
Over the longer term, the Board
believes there is significant opportunity for growth in assets and
profits and remains committed to ensuring the Group's investment
management capabilities and resources are appropriate to meet its
key objective of achieving a consistent positive investment
performance in the emerging markets sector.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
|
Six months
|
|
Six months
|
|
|
|
|
Ended
|
|
ended
|
|
|
|
|
30 June
|
|
30 June
|
|
|
|
|
2024
|
|
2023
|
|
|
|
Note
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
Management fees
|
|
990
|
|
1,111
|
|
|
Performance fees
|
|
-
|
|
-
|
|
|
Other income
|
|
3,646
|
|
400
|
|
|
Revenue
|
|
4,636
|
|
1,511
|
|
|
|
|
|
|
|
|
|
Legal and professional
expenses
|
|
(115)
|
|
(119)
|
|
|
Management fees payable
|
|
(147)
|
|
(141)
|
|
|
Operational expenses
|
|
(417)
|
|
(402)
|
|
|
Employee costs
|
|
(1,271)
|
|
(1,108)
|
|
|
Bad debt provision
|
9,
10
|
(201)
|
|
(367)
|
|
|
Foreign exchange
(loss)/profit
|
|
(11)
|
|
(9)
|
|
|
Depreciation
|
7
|
(50)
|
|
(48)
|
|
|
Operating profit/(loss)
|
|
2,424
|
|
(683)
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
8
|
|
496
|
|
|
Realised and unrealised gain on
investments
|
|
86
|
|
308
|
|
|
Profit on ordinary activities before
taxation
|
|
2,518
|
|
121
|
|
|
|
|
|
|
|
|
|
Taxation
|
5
|
(350)
|
|
-
|
|
|
Profit/(loss) for the period after taxation attributable to
members of the Company
|
6
|
2,168
|
|
121
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
Items that may be reclassified
subsequently to
profit or loss:
|
|
|
|
|
|
|
Exchange differences on
translation of foreign operations
|
|
(24)
|
|
6
|
|
|
Total comprehensive income for the period
|
|
2,144
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
Six months
|
|
Six months
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
|
30 June
|
|
30 June
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
US$
|
|
US$
|
|
|
Earnings per share (basic)
|
6
|
0.056
|
|
0.003
|
|
|
Earnings per share (diluted)
|
6
|
0.051
|
|
0.003
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2024
|
|
|
30 June
|
|
31
December
|
|
|
|
|
2024
|
|
2023
|
|
|
|
Note
|
US$'000
|
|
US$'000
|
|
|
Assets
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Land, fixtures, fittings and
equipment
|
7
|
468
|
|
526
|
|
|
Loans and advances
receivable
|
10
|
89
|
|
98
|
|
|
Total non-current assets
|
|
557
|
|
624
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Financial assets at fair value
through profit or loss
|
8
|
2,729
|
|
3,711
|
|
|
Loan and advances
receivable
|
10
|
9
|
|
-
|
|
|
Trade and other
receivables
|
9
|
289
|
|
400
|
|
|
Cash and cash
equivalents
|
|
5,092
|
|
1,333
|
|
|
Total current assets
|
|
8,119
|
|
5,444
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
8,676
|
|
6,068
|
|
|
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Issued share capital
|
11
|
390
|
|
390
|
|
|
Share premium
|
|
25,353
|
|
25,353
|
|
|
Retained earnings
|
|
(15,239)
|
|
(17,407)
|
|
|
Foreign currency translation
reserve
|
|
(3,242)
|
|
(3,218)
|
|
|
Total equity
|
|
7,262
|
|
5,118
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
15
|
1,084
|
|
618
|
|
|
Total current liabilities
|
|
1,084
|
|
618
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
15
|
330
|
|
332
|
|
|
Total non-current liabilities
|
|
330
|
|
332
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
8,676
|
|
6,068
|
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
Issued share
capital
|
Share
premium
|
Retained
earnings
|
Foreign currency
translation reserve
|
Total
|
|
|
2023
|
2023
|
2023
|
2023
|
2023
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
|
As at 1 January 2023
|
390
|
25,353
|
(2,977)
|
(3,209)
|
19,557
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
Profit for the period after
taxation
|
-
|
-
|
121
|
-
|
121
|
|
Other comprehensive
income
|
-
|
-
|
-
|
6
|
6
|
|
As at 30 June 2023
|
390
|
25,353
|
(2,856)
|
(3,203)
|
19,684
|
|
|
Issued share
capital
|
Share
premium
|
Retained
earnings
|
Foreign currency
translation reserve
|
Total
|
|
|
2024
|
2024
|
2024
|
2024
|
2024
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
|
As at 1 January 2024
|
390
|
25,353
|
(17,407)
|
(3,218)
|
5,118
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
Profit for the period after
taxation
|
-
|
-
|
2,168
|
-
|
2,168
|
|
Other comprehensive
income
|
-
|
-
|
-
|
(24)
|
(24)
|
|
As at 30 June 2024
|
390
|
25,353
|
(15,239)
|
(3,242)
|
7,262
|
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
|
Six months
ended
|
|
Six months
ended
|
|
|
|
30 June
|
|
30 June
|
|
|
|
2024
|
|
2023
|
|
|
Note
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from operating
activities
|
12
|
2,787
|
|
(387)
|
|
|
|
|
|
|
|
Cash flows used in investing activities
|
|
|
|
|
|
Interest received on cash and cash
equivalent
|
|
8
|
|
-
|
|
Purchase of fixtures, fittings and
equipment
|
7
|
-
|
|
(3)
|
|
Disposal of financial assets at
fair value through profit or loss
|
8
|
1,068
|
|
-
|
|
|
|
|
|
|
|
Net cash generated/(used) from investing
activities
|
|
1,076
|
|
(3)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Payment of lease
liabilities
|
|
(74)
|
|
-
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
(74)
|
|
-
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
|
3,789
|
|
(390)
|
|
|
|
|
|
|
|
Cash and cash equivalents at 1
January 2024 and
1 January
2023
|
|
1,333
|
|
1,642
|
|
|
|
|
|
|
|
Foreign exchange loss on cash and
cash equivalents
|
|
(30)
|
|
(11)
|
|
|
|
|
|
|
|
Cash and cash equivalents as at 30 June 2024 and 30 June
2023
|
|
5,092
|
|
1,241
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June
2024
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
2024 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 2023 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
Principal
activity
Country of incorporation
|
Argo Capital Management
Limited
Investment management
|
United Kingdom
|
|
Argo Property Management
Srl
Property management
|
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 2023.
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 2023.
These
condensed consolidated interim financial statements were approved
by the Board of Directors on 29 July
2024.
b)
Financial
instruments and fair value hierarchy
The following represents the fair
value hierarchy of financial instruments measured at fair value in
the Condensed Consolidated Statement of Financial Position. The
hierarchy groups financial assets and liabilities into three levels
based on the significance of inputs used in measuring the fair
value of the financial assets and liabilities. The fair value
hierarchy has the following levels:
Level 1: quoted prices
(unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted
prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
Level 3: inputs for the asset or
liability that are not based on observable market data
(unobservable inputs).
The level within which the
financial asset or liability is classified is determined based on
the lowest level of significant input to the fair value
measurement.
3. SEGMENTAL
ANALYSIS
The Group operates as a single
asset management business.
The operating results of the
companies are regularly reviewed by the Directors of the Group for
the purposes of making decisions about resources to be allocated to
each company and to assess performance. The following summary
analyses revenues, profit or loss, assets and
liabilities:
|
|
Argo Group
Ltd
|
Argo Capital Management
Ltd
|
Argo Property
Management
Srl
|
Six months
ended
30
June
|
|
|
2024
|
2024
|
2024
|
2024
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
Total revenues for reportable
segments customers
|
-
|
990
|
3,646
|
4,636
|
|
Intersegment revenues
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Total profit/(loss) for reportable
segments
|
(48)
|
(692)
|
2,908
|
2,168
|
|
Intersegment loss
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Total assets for reportable
segments assets
|
5,919
|
1,953
|
804
|
8,676
|
|
Total liabilities for reportable
segments
|
5
|
481
|
928
|
1,414
|
|
Revenues, profit or loss, assets
and liabilities may be reconciled as follows:
|
Six months
|
|
|
Ended
|
|
|
30 June
2024
|
|
|
US$'000
|
|
Revenues
|
|
|
Total revenues for reportable
segments
|
4,636
|
|
Elimination of intersegment
revenues
|
-
|
|
Group revenues
|
4,636
|
|
|
|
|
Profit or loss
|
|
|
Profit for reportable
segments
|
5,085
|
|
Elimination of intersegment
loss
|
(2,917)
|
|
Other unallocated
amounts
|
-
|
|
Profit on ordinary activities before
taxation
|
2,168
|
|
|
|
|
Assets
|
|
|
Total assets for reportable
segments
|
8,676
|
|
Elimination of intersegment
receivables
|
-
|
|
Group assets
|
8,676
|
|
|
|
|
Liabilities
|
|
|
Total liabilities for reportable
segments
|
1,706
|
|
Elimination of intersegment
payables
|
(292)
|
|
Group liabilities
|
1,414
|
|
|
Argo Group
Ltd
|
Argo Capital Management
Ltd
|
Argo Property
Management
Srl
|
Six months
ended
30
June
|
|
|
2023
|
2023
|
2023
|
2023
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
Total revenues for reportable
segments customers
|
-
|
1,111
|
400
|
1,511
|
|
Intersegment revenues
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Total profit/(loss) for reportable
segments
|
687
|
(602)
|
36
|
121
|
|
Intersegment loss
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Total assets for reportable
segments assets
|
19,059
|
1,428
|
241
|
20,728
|
|
Total liabilities for reportable
segments
|
6
|
675
|
363
|
1,044
|
|
Revenues, profit or loss, assets
and liabilities may be reconciled as follows:
|
Six months
|
|
|
Ended
|
|
|
30 June
2023
|
|
|
US$'000
|
|
Revenues
|
|
|
Total revenues for reportable
segments
|
1,511
|
|
Elimination of intersegment
revenues
|
-
|
|
Group revenues
|
1,511
|
|
|
|
|
Profit or loss
|
|
|
Profit for reportable
segments
|
121
|
|
Elimination of intersegment
loss
|
-
|
|
Other unallocated
amounts
|
-
|
|
Loss on ordinary activities before taxation
|
-
|
|
|
|
|
Assets
|
|
|
Total assets for reportable
segments
|
20,728
|
|
Elimination of intersegment
receivables
|
-
|
|
Group assets
|
20,728
|
|
|
|
|
Liabilities
|
|
|
Total liabilities for reportable
segments
|
4,321
|
|
Elimination of intersegment
payables
|
(3,277)
|
|
Group liabilities
|
1,044
|
4. SHARE-BASED INCENTIVE PLANS
To incentivise personnel and to
align their interests with those of the shareholders of Argo Group
Limited, Argo Group Limited has granted share options to directors
and employees under The Argo Group Limited Employee Stock Option
Plan. The options are exercisable within 10 years of the grant
date.
The fair value of the options
granted during the period 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)
|
21.0/24.0
|
|
Weighted average share price at
grant date (pence)
|
19.0
|
|
Average option life at date of
grant (years)
|
10.0
|
|
Expected volatility (%
p.a.)
|
15.0
|
|
Dividend yield (% p.a.)
|
10.0
|
|
Risk-free interest rate (%
p.a.)
|
2
|
The fair value of options granted
is recognised as an employee expense with a corresponding increase
in equity. The total charge to employee costs in respect of this
incentive plan is £nil (2023: £nil).
The number and weighted average
exercise price of the share options during the period is as
follows:
|
|
Weighted average exercise
price
|
No. of share
options
|
|
Outstanding at beginning of
period
|
21.2p
|
3,895,998
|
|
Granted during the
period
|
-
|
-
|
|
Forfeited during the
period
|
-
|
-
|
|
Outstanding at end of
period
|
21.2p
|
3,895,998
|
|
Exercisable at end of
period
|
21.2p
|
3,895,998
|
Outstanding share options are
contingent upon the option holder remaining an employee of the
Group.
The weighted average fair value of
the options issued during the period was £Nil (2023:
£Nil).
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 25% (2023: 0%
to 25%).
|
Consolidated statement of profit or loss
|
Six months
|
|
Six months
|
|
|
ended
|
|
Ended
|
|
|
30 June
|
|
30 June
|
|
|
2024
|
|
2023
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
Taxation charge for the period on
Group companies
|
350
|
|
-
|
The charge for the period can be
reconciled to the profit shown on the Condensed Consolidated
Statement of profit or loss as follows:
|
|
|
Argo
|
Argo
|
Argo
|
|
|
|
|
|
Group
|
Capital
|
Property
|
|
Six
|
|
|
|
Limited
|
Management
|
Management
|
|
Months
|
|
|
|
|
Limited
|
Srl
|
|
Ended
|
|
|
|
30 June
|
30 June
|
30 June
|
|
30 June
|
|
|
|
2024
|
2024
|
2024
|
|
2024
|
|
|
|
US$'000
|
US$'000
|
US$'000
|
|
US$'000
|
|
Profit/(loss) before
tax
|
|
(48)
|
(692)
|
3,258
|
|
2,518
|
|
Applicable tax rate
|
|
0%
|
25%
|
16%
|
|
|
|
Tax at
applicable rate
|
|
-
|
(173)
|
521
|
|
348
|
|
Current
period tax losses
|
|
-
|
173
|
-
|
|
173
|
|
Losses
from prior periods
|
|
-
|
-
|
(171)
|
|
(171)
|
|
Tax
charge
|
|
-
|
-
|
350
|
|
350
|
|
|
|
Argo
|
Argo
|
Argo
|
|
|
|
|
|
Group
|
Capital
|
Property
|
|
Six
|
|
|
|
Limited
|
Management
|
Management
|
|
Months
|
|
|
|
|
Limited
|
Srl
|
|
Ended
|
|
|
|
30 June
|
30 June
|
30 June
|
|
30 June
|
|
|
|
2023
|
2023
|
2023
|
|
2023
|
|
|
|
US$'000
|
US$'000
|
US$'000
|
|
US$'000
|
|
Profit/(loss) before
tax
|
|
687
|
(602)
|
36
|
|
121
|
|
Applicable tax rate
|
|
0%
|
25%
|
16%
|
|
|
|
Tax at
applicable rate
|
|
-
|
(151)
|
6
|
|
(145)
|
|
Current
period tax losses
|
|
-
|
151
|
-
|
|
151
|
|
Losses
from prior periods
|
|
-
|
-
|
(6)
|
|
(6)
|
|
Tax
charge
|
|
-
|
-
|
-
|
|
-
|
|
Consolidated statement of financial
position
|
|
|
|
|
|
30 June
|
|
31
December
|
|
|
2024
|
|
2023
|
|
|
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
|
|
|
|
2024
|
|
2023
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Net profit for the period after
taxation attributable to members
|
2,168
|
|
121
|
|
|
|
|
|
|
|
|
|
No. of
shares
|
|
No. of
shares
|
|
|
|
|
|
|
|
|
Weighted average number of
ordinary shares for basic earnings per share
|
38,959,986
|
|
38,959,986
|
|
|
Effect of dilution (Note
4)
|
3,895,998
|
|
3,895,998
|
|
|
Weighted average number of
ordinary shares for diluted earnings per share
|
42,855,984
|
|
42,855,984
|
|
|
|
Six months
|
|
Six months
|
|
|
Ended
|
|
ended
|
|
|
30 June
|
|
30 June
|
|
|
2024
|
|
2023
|
|
|
US$
|
|
US$
|
|
|
|
|
|
|
Earnings per share
(basic)
|
0.056
|
|
0.003
|
|
Earnings per share
(diluted)
|
0.051
|
|
0.003
|
7. LAND, FIXTURES, FITTINGS AND
EQUIPMENT
|
|
Right
of use
assets
|
Fixtures, fittings and
equipment
|
Land
|
Total
|
|
|
USD'000000
|
US$'000
|
US$'000
|
US$'000
|
|
Cost
|
|
|
|
|
|
At 1 January 2023
|
455
|
188
|
172
|
815
|
|
Additions
|
-
|
6
|
-
|
6
|
|
Disposals
|
-
|
(20)
|
-
|
(20)
|
|
Foreign exchange
movement
|
24
|
(5)
|
(6)
|
(13)
|
|
At 31 December 2023
|
479
|
169
|
166
|
814
|
|
Additions
|
-
|
-
|
-
|
-
|
|
Disposals
|
-
|
-
|
-
|
-
|
|
Foreign exchange
movement
|
(4)
|
(2)
|
(5)
|
(11)
|
|
At 30 June 2024
|
475
|
167
|
161
|
803
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
At 1 January 2023
|
30
|
177
|
-
|
207
|
|
Depreciation charge for
period
|
93
|
4
|
-
|
97
|
|
Disposals
|
-
|
(20)
|
-
|
(20)
|
|
Foreign exchange
movement
|
5
|
(1)
|
-
|
4
|
|
At 31 December 2023
|
128
|
160
|
-
|
288
|
|
Depreciation charge for
period
|
47
|
3
|
-
|
50
|
|
Disposals
|
-
|
-
|
-
|
-
|
|
Foreign exchange
movement
|
(1)
|
(2)
|
-
|
(3)
|
|
At 30 June 2024
|
174
|
161
|
-
|
335
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
At 31 December 2023
|
351
|
9
|
166
|
526
|
|
At 30 June 2024
|
301
|
6
|
161
|
468
|
8. FINANCIAL ASSETS AT
FAIR VALUE THROUGH PROFIT OR LOSS
|
|
|
|
|
|
|
|
|
30 June
2024
|
|
30 June
2024
|
|
Holding
|
Investment in management shares
|
Total cost
|
|
Fair value
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
10
|
The Argo Fund Ltd
|
-
|
|
-
|
|
|
|
-
|
|
-
|
|
Holding
|
Investment in ordinary shares
|
Total cost
|
|
Fair value
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
7,920
|
The Argo Fund Ltd*
|
2,176
|
|
2,729
|
|
|
|
2,176
|
|
2,732
|
|
|
|
31
December
|
|
31
December
|
|
|
|
2023
|
|
2023
|
|
Holding
|
Investment in management shares
|
Total cost
|
|
Fair value
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
10
|
The Argo Fund Ltd
|
-
|
|
-
|
|
|
|
-
|
|
-
|
|
Holding
|
Investment in ordinary shares
|
Total cost
|
|
Fair value
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
10,920
|
The Argo Fund Ltd*
|
3,000
|
|
3,711
|
|
|
|
3,000
|
|
3,711
|
*Classified as current in the
consolidated statement of Financial Position
9. TRADE AND OTHER
RECEIVABLES
|
|
At 30 June
2024
|
|
At 31 December
2023
|
|
|
US$ '000
|
|
US$ '000
|
|
|
|
|
|
|
Trade receivables -
Gross
|
3,009
|
|
2,947
|
|
Less: provision for impairment of
trade receivables
|
(2,875)
|
|
(2,676)
|
|
Trade receivables - Net
|
134
|
|
271
|
|
Other receivables
|
33
|
|
44
|
|
Prepayments and accrued
income
|
122
|
|
84
|
|
|
289
|
|
399
|
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
2024
|
|
At 31 December
2023
|
|
|
US$ '000
|
|
US$ '000
|
|
|
|
|
|
|
As at 1 January
|
2,676
|
|
1,980
|
|
Bad debt recovered
|
-
|
|
-
|
|
Charged during the
period
|
201
|
|
686
|
|
Foreign exchange
movement
|
(2)
|
|
10
|
|
Closing balance
|
2,875
|
|
2,676
|
10. LOANS AND ADVANCES RECEIVABLE
|
|
At 30
June
2024
|
|
At 31
December
2023
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Deposits on leased premises -
current
|
9
|
|
-
|
|
|
Deposits on leased premises -
non-current (see below)
|
89
|
|
98
9
|
|
|
Other loans and advances
receivable - non-current (note 14)
|
-
|
|
-
|
|
|
|
98
|
|
98
|
|
|
|
|
|
|
|
The deposits on leased premises
relate to the Group's offices in London and Romania.
The movement in the Group's
expected credit loss on loan receivables is as follows:
|
|
At 30 June
|
|
At 31
December
|
|
|
2024
|
|
2023
|
|
|
US$ '000
|
|
US$ '000
|
|
|
|
|
|
|
As at 1 January
|
26,224
|
|
12,570
|
|
Expected credit loss recognized
during the year
|
-
|
|
13,320
|
|
Foreign exchange
movement
|
(320)
|
|
334
|
|
Closing balance
|
25,904
|
|
26,224
|
11. SHARE CAPITAL
The Company's
authorised share capital is unlimited with a nominal value of
US$0.01.
|
|
30 June
|
30 June
|
31
December
|
31
December
|
|
|
2024
|
2024
|
2023
|
2023
|
|
|
No.
|
US$'000
|
No.
|
US$'000
|
|
Issued and fully paid
|
|
|
|
|
|
Ordinary shares of US$0.01
each
|
38,959,986
|
390
|
38,959,986
|
390
|
|
|
38,959,986
|
390
|
38,959,986
|
390
|
The Directors did not recommend
the payment of a final dividend for the year ended 31 December 2023
and do not recommend an interim dividend in respect of the current
period.
12.
RECONCILIATION OF
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES TO
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE
TAXATION
|
|
Six months
ended
30 June
2024
|
|
Six months
ended
30 June
2023
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
Profit on ordinary activities before
taxation
|
2,518
|
|
121
|
|
|
|
|
|
|
Interest income
|
(8)
|
|
(496)
|
|
Depreciation on fixtures, fittings
and equipment
|
3
|
|
2
|
|
Depreciation on right of use
asset
|
47
|
|
46
|
|
Realised and unrealised profit on
investments
|
(86)
|
|
(308)
|
|
Net foreign exchange
loss
|
11
|
|
9
|
|
Increase in payables
|
205
|
|
136
|
|
Decrease in receivables, loans and
advances
|
111
|
|
103
|
|
Corporation tax paid
|
(14)
|
|
-
|
|
Net cash inflow/(outflow) from operating
activities
|
2,787
|
|
(387)
|
13. FAIR VALUE
HIERARCY
The table below analyses financial
instruments measured at fair value at the end of the reporting
period by the level of the fair value hierarchy (note
2b).
At 30 June
2024
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
US$ '000
|
US$ '000
|
US$ '000
|
US$ '000
|
|
Financial assets at fair value
through profit or loss
|
-
|
2,729
|
-
|
2,729
|
At 31 December
2023
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
US$ '000
|
US$ '000
|
US$ '000
|
US$ '000
|
|
Financial assets at fair value
through profit or loss
|
-
|
3,711
|
-
|
3,711
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June
2024 (continued)
14. RELATED PARTY TRANSACTIONS
All of the 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$2.7 million (31
December 2023: $3.7 million).
In February 2020, the Group
granted a loan to Argo Real Estate Limited Partnership "ARE LP", an
entity that is 100% owned by Andreas Rialas of US$11.0 million
(€10.2 million). In March 2023, ARE LP assigned its loan
receivable from Novi Biznes Poglyady LLC to Argo Group Limited in
exchange for the cancellation of its loan payable to Argo Group
Limited. Interest of 9.25% per annum is receivable on this loan. As
this loan is exposed to the performance of an investment property
in Ukraine, further to an independent valuation of the property and
taking into consideration the seniority of the loan, an expected
credit loss allowance to the full loan balance was recognised
during 2023. No further interest is currently recorded until the
situation in Ukraine improves and the recoverability of the loan
becomes more certain.
The Group also has a balance
receivable for US$12.0 million (€11.2 million) from ARE LP that was
assigned from Argo Real Estate Opportunities Fund Limited during
2021. The carrying value of this balance is $nil.
15. TRADE AND OTHER PAYABLES
|
|
At 30 June
|
|
At 31
December
|
|
|
2024
|
|
2023
|
|
|
US$ '000
|
|
US$ '000
|
|
|
|
|
|
|
Trade creditors
|
67
|
|
16
|
|
Other creditors and
accruals
|
1,017
|
|
602
|
|
Total current trade and other
payables
|
1,084
|
|
618
|
Trade creditors are normally settled on 30-day terms.
|
|
At 30 June
|
|
At 31
December
|
|
|
2024
|
|
2023
|
|
|
US$ '000
|
|
US$ '000
|
|
|
|
|
|
|
Other creditors and
accruals
|
330
|
|
332
|
|
Total non-current trade and other
payables
|
330
|
|
332
|
|
Total trade and other payables
|
1,414
|
|
950
|
16. EVENTS AFTER THE REPORTING PERIOD
There were no material events
after the reporting period, which have a bearing on the
understanding of the consolidated financial statements.