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

ArgoAnnouncement

01/08/2017 08:40

- Part 2: For the preceding part double click  ID:nRSA7044Ma 

third parties and we expect settlement when the third parties
repay. 
 
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  
                                  2017        2017     2016         2016         
                                  No.         US$'000  No.          US$'000      
 Issued and fully paid                                                           
 Ordinary shares of US$0.01 each  47,032,878  470      48,098,494   481          
                                  47,032,878  470      48,098,494   481          
 
 
The Directors did not recommend the payment of a final dividend for the year
ended 31 December 2016 and do not recommend an interim dividend in respect of
the current period. 
 
During the period the Directors authorised the repurchase of 1,065,616 shares
at a total cost of US$0.2 million 
 
12.     RECONCILIATION OF NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
TO PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 
 
                                                       Six months ended 30 June 2017    Six months ended 30 June 2016  
                                                       US$'000                          US$'000                        
                                                                                                                       
 Profit on ordinary activities before taxation         5,148                            4,902                          
                                                                                                                       
 Interest income                                       (88)                             (44)                           
 Depreciation                                          15                               21                             
 Realised and unrealised gains                         (1,729)                          (1,094)                        
 Net foreign exchange loss/ (gain)                     7                                (39)                           
 (Decrease)/increase in payables                       (1,538)                          29                             
 Increase in receivables, loans and advances           (2,181)                          (371)                          
 Income taxes paid                                     -                                (93)                           
 Net cash (outflow)/ inflow from operating activities  (366)                            3,311                          
 
 
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 2017 
 
                                                        Level 1   Level 2   Level 3   Total     
                                                        US$ '000  US$ '000  US$ '000  US$ '000  
 Financial assets at fair value through profit or loss  -         13,982    148       14,130    
 
 
At 31 December 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  -         12,267    134       12,401    
 
 
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 2017             119                                      15                                                  134       
 Total loss recognized in profit or loss  -                                        14                                                  14        
 Balance as at 30 June 2017               119                                      29                                                  148       
 
 
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$10.2 million, US$0.1 million,
US$0.03 million and US$3.8 million 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 2017 total US$Nil (31 December 2016:Nil) after a bad
debt provision of US$7.8 million (E6.8 million) (31 December 2016: US$6.4
million, E6.1 million). 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. 
 
At the period end the Argo Group is also owed loans repayable on demand of
US$1.9 million (E1.7 million) (31 December 2016: US$1.7 million, E1.6 million)
by AREOF accruing interest at 10%. A full provision has been made in the
consolidated financial statements against this balance at the current and
prior period. 
 
At the period end the Argo Group was owed a total balance of US$0.3 million
(E0.3 million) (31 December 2016: US$0.2 million, E0.2 million) by other AREOF
Group entities. A provision for bad debt of US$0.3 million (E0.1 million) (31
December 2016: US$0.1 million, E0.1 million) has been made in the accounts in
respect of these balances. 
 
In addition to the above, the Argo Group is owed a further US$0.3 million
(E0.3 million) (31 December 2016: US$0.3 million (E0.3 million) for expenses
paid on behalf of AREOF, against which a bad debt provision for US0.3 million
(E0.3 million) (31 December 2016: US$0.3 million, E0.3 million) 
 
In the audited consolidated financial statements of AREOF at 30 September 2016
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. 
 
15.   COMMITMENTS 
 
On 19th June 2017, the Board of Argo Property Management Limited approved the
purchase of a piece of land in Romania for US$ 223.233 (RON891,613).  The 10%
guarantee deposit in respect of the purchase was paid in June 2017. The
purchase completed on 4 July 2017. 
 
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