REG - ARGO Group Limited - Half-year Report <Origin Href="QuoteRef">ARGOA.L</Origin> - Part 2

ArgoAnnouncement

08/09/2016 07:06

- Part 2: For the preceding part double click  ID:nRSH2548Ja 

                                            At 30 June 2016    At 31 December 2015  
                                                           US$'000            US$'000              
                                                                                                   
 Loan to Bel Rom Trei (see note (a) below)                 -                  1,437                
 Loan to AREOF  (see note (b) below)                       377                24                   
 Loan to The Argo Fund Limited                             -                  22                   
 Loans to other AREOF Group entities (see note (c) below)  216                208                  
 Other loans                                               7                  2                    
                                                           600                1,693                
 
 
(a)      In 2013 Argo Group advanced US$1,109,400 (E1,000,000) to Bel Rom Trei
("Bel Rom"), an AREOF group entity based in Romania that owns Sibiu Shopping
City, in order to assist with its operational cash requirements. The full
amount of the loan and accrued interest amounting to US$1,490,031 (E1,337,611)
was repaid during the six month period ended 30 June 2016. 
 
(b)      On 21 November 2013 the Argo Group provided a loan of US$431,901
(E388,960) to AREOF at a rate of 10% per annum to enable the company to
service interest payments under a bank loan agreement. A bad debt provision
has been raised against the full amount of the loan and accrued interest
amounting to US$544,550 (E490,408). 
 
The Argo Group has provided further loans totalling US$742,191 (E668,400) to
AREOF to assist with its operational cash requirements. These loans are
repayable on demand and accrue interest at 7%-10%. A bad debt provision of
US$365,278 (E328,961) has been raised against these debts. 
 
(c)      At 30 June 2016 the Argo Group was owed USD308,864 (E278,156) by
various AREOF group entities being loans provided to assist those entities
with their operational cash requirements. The loans are repayable on demand,
accrue interest at 7% and remain fully outstanding at 30 June 2016. A bad debt
provision of US$92,759 (E83,537) has been raised against these debts. 
 
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  
                                  2016        2016     2015         2015         
                                  No.         US$'000  No.          US$'000      
 Issued and fully paid                                                           
 Ordinary shares of US$0.01 each  48,473,494  485      67,428,494   674          
                                  48,473,494  485      67,428,494   674          
 
 
The Directors did not recommend the payment of a final dividend for the year
ended 31 December 2015 and do not recommend an interim dividend in respect of
the current period. 
 
During the period the Directors authorised the repurchase of 18,955,000 shares
at a total cost of US$2.8 million. 
 
12.     RECONCILIATION OF NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
TO PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 
 
                                                        Six months ended 30 June 2016    Six months ended 30 June 2015  
                                                        US$'000                          US$'000                        
                                                                                                                        
 Profit/(loss) on ordinary activities before taxation   4,902                            (4,163)                        
                                                                                                                        
 Interest income                                        (44)                             (88)                           
 Depreciation                                           21                               23                             
 Realised and unrealised (gains)/losses on investments  (1,094)                          4,482                          
 Net foreign exchange gain                              (39)                             (59)                           
 Increase in payables                                   29                               40                             
 Increase in receivables, loans and advances            (371)                            (1,959)                        
 Income taxes paid                                      (93)                             (13)                           
 Net cash inflow/(outflow) from operating activities    3,311                            (1,737)                        
 
 
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 2016 
 
                                                        Level 1   Level 2   Level 3   Total     
                                                        US$ '000  US$ '000  US$ '000  US$ '000  
 Financial assets at fair value through profit or loss  -         12,283    136       12,419    
 
 
At 31 December 2015 
 
                                                        Level 1   Level 2   Level 3   Total     
                                                        US$ '000  US$ '000  US$ '000  US$ '000  
 Financial assets at fair value through profit or loss  -         11,896    4,896     16,792    
 
 
The following table shows a reconciliation from the opening balances to the
closing balances for fair value measurements in Level 3 of the fair value
hierarchy: 
 
                                          Unlisted closed ended investment fund    Listed open ended investment fund Emerging Markets            
                                          Real Estate                              Total                                               
                                          US$ '000                                 US$ '000                                            US$ '000  
                                                                                                                                                 
 Balance as at 1 January 2016             119                                      4,777                                               4,896     
 Total loss recognized in profit or loss  -                                        (2,881)                                             (2,881)   
 Sales                                    -                                        (1,879)                                             (1,879)   
 Balance as at 30 June 2016               119                                      17                                                  136       
 
 
14.   RELATED PARTY TRANSACTIONS 
 
All Group revenues derive from funds or entities in which two of the Company's
directors, Andreas Rialas and Kyriakos Rialas, have an influence through
directorships and the provision of investment advisory services. 
 
At the reporting date the Company holds investments in The Argo Fund Limited,
Argo Real Estate Opportunities Fund Limited ("AREOF"), Argo Special Situations
Fund LP and Argo Distressed Credit Fund Limited. These investments are
reflected in the accounts at a fair value of US$9,702,625, US$118,865,
US$16,849 and US$2,580,941 respectively. 
 
The Group has provided AREOF with a notice of deferral in relation to the
amounts due from the provision of investment management services, under which
it will not demand payment of such amounts until the Group judges that AREOF
is in a position to pay the outstanding liability. These amounts accrued or
receivable at 30 June 2016 total US$Nil (31 December 2015:Nil) after a bad
debt provision of US$5,629,179 (E5,069,505) (31 December 2015: US$7,164,702,
E6,569,505). AREOF continues to meet part of this obligation to the Argo Group
as and when liquidity allows. During the period AREOF settled total fees of
US$2,776,000 (E2,500,000). In November 2013 AREOF offered Argo Group Limited
additional security for the continued support in the form of debentures and
guarantees by underlying intermediate companies.  The AREOF management
contract has a fixed term expiring on 31 July 2018. 
 
On 21 November 2013 the Argo Group provided a loan of US$431,901 (E388,960) to
AREOF at a rate of 10% per annum to enable the company to service interest
payments under a bank loan agreement. A bad debt provision has been raised
against the full amount of the loan and accrued interest amounting to
US$544,550 (E490,408). 
 
At the period end the Argo Group was owed a further US$742,191 (E668,400) by
AREOF comprising loans repayable on demand and accruing interest at 7%-10%. A
bad debt provision of US$365,278 (E328,961) has been raised against these
debts. 
 
At the period end the Argo Group was owed a total balance of USD308,864
(E278,156) by other AREOF Group entities. This balance comprises various loans
that are all unsecured, repayable on demand and accrue interest at 7%. A bad
debt provision of US$92,759 (E83,537) has been raised against these debts. 
 
In the audited consolidated financial statements of AREOF at 30 September 2015
a material uncertainty surrounding the refinancing of bank debts was referred
to in relation to the basis of preparation of the consolidated financial
statements. In the view of the directors of AREOF, discussions with the banks
are continuing satisfactorily and they have therefore concluded that it is
appropriate to prepare those consolidated financial statements on a going
concern basis. 
 
David Fisher, a non-executive director of the Company, is also a non-executive
director of AREOF. 
 
This information is provided by RNS
The company news service from the London Stock Exchange