REG - ARGO Group Limited - Interim Results for six months ended 30 June 2023
10/08/2023 09:00
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RNS Number : 9342I ARGO Group Limited 10 August 2023
Argo Group Limited
("Argo" or the "Company")
Interim Results for the six months ended 30 June 2023
Argo today announces its interim results for the six months ended 30 June
2023.
Key highlights for the six months period ended 30 June 2023
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 2023.
- Revenues US$1.5 million (six months to 30 June 2022: US$1.3 million)
- Operating loss US$0.7 million (six months to 30 June 2022: US$1.5
million)
- Profit before tax US$0.1 million (six months to 30 June 2022: loss
before tax US$3.5 million)
- Net assets US$19.7 million (31 December 2022: US$19.6 million)
Commenting on the results and outlook, Kyriakos Rialas, Chief Executive of
Argo said:
"Argo Group was profitable for the first six months of 2023 mainly due to a
positive performance of its investment in The Argo Fund and continuous control
of expenses. The group maintains good liquidity and its operational and
investment team has the capacity to take on a third first loss managed account
in the second half of 2023. During the first half of 2023, the two first loss
managed accounts were up 15%. Emerging markets continue to be adversely
affected by inflation and higher interest rates but there are signs that
disinflation and lower rates has already started ahead of developed markets.
As a result, our macro strategy has outperformed distressed debt with many
sovereigns still negotiating and waiting for IMF approvals. Finally, the
situation in Ukraine remains unstable with the shopping mall in Odessa now
opened but only up to 60% capacity."
Enquiries
Argo Group Limited
Andreas Rialas
020 7016 7660
Panmure Gordon
Dominic Morley
020 7886 2500
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 as 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 2023
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 2023.
- Revenues US$1.5 million (six months to 30 June 2022: US$1.3 million)
- Operating loss US$0.7 million (six months to 30 June 2022: US$1.5
million)
- Profit before tax US$0.1 million (six months to 30 June 2022: loss
before tax US$3.5 million)
- Net assets US$19.7 million (31 December 2022: US$19.6 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 2023 the Group generated revenues of US$1.5
million (six months to 30 June 2022: US$1.3 million) with management fees
accounting for US$1.1 million (six months to 30 June 2022: US$1.1 million).
Total operating costs for the period, ignoring bad debt provisions, are US$1.8
million compared to US$2.5 million for the six months to 30 June 2022. The
Group has provided against management fees of US$0.4 million due from the
Designated share class in The Argo Fund ("TAF") (six months to 30 June 2022:
US$0.3 million). In the Directors' view these amounts are fully recoverable
however they have concluded that it would only be appropriate to recognise
income without provision from these investment management services once a
liquidity event occurs in this share class.
Overall, the financial statements show an operating loss for the period of
US$0.7 million (six months to 30 June 2022: US$1.5 million) and a profit
before tax of US$0.1 million (six months to 30 June 2022: loss before tax of
US$3.5 million). Net profit on investments of US$0.3 million (six months to
30 June 2022: net loss on investments US$2.5 million) and interest income of
US$0.5 million (six months to 30 June 2022: US$0.5 million).
At the period end, the Group had net assets of US$19.7 million (31 December
2022: US$19.6 million) and net current assets of US$5.4 million (31 December
2022: US$6.0 million) including cash reserves of US$1.2 million (31 December
2022: US$1.6 million).
Net assets include investments in The Argo Fund ("TAF") at fair values of
US$4.5 million (31 December 2022: US$4.4 million).
At the period end TAF owed the Group total fees of US$2.4 million (31 December
2022: US$2.1 million). At 30 June 2023, a provision for US$2.3 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$110.5 million
(31 December 2022: US$109.8 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 2023 was 20 (30 June 2022: 20).
Fund performance
The Argo Funds
Fund Launch 30 June 30 June 2022 Since inception Annualised performance Sharpe
date 2023 2022 year ratio Down
6 months 6 months total months
% % % % CAGR %
The Argo Fund - A class Oct-00 1.46 -14.25 -12.54 219.78 6.00 0.39 92 of 273
The Argo Fund - X2 class Feb21 -1.16 -21.39 -16.83 -8.05 -3.42 -0.22 12 of 29
The Argo Fund - DI Class Jan-20 1.96 -6.20 -2.82 92.88 N/A N/A N/A
In the first half of 2023, global macroeconomic trends continued to have a
significant impact on the outlook for and performance of emerging market
("EM") assets. Ongoing uncertainty over the path of inflation and policy
trajectory led to false dawns around a peak in US rates. The Federal Reserve
raised rates three times in the period and although left fed funds unchanged
at 5 -5.25% at the meeting in June, it increased the fed funds rate to a
target range of 5.25%-5.5% at its meeting in late July. By contrast, ten-year
US Treasury yields were much more volatile, starting the period at 3.9% before
dropping below 3.4% by mid-January only to exceed 4% in early March. After
falling back to 3.3% in early April they had moved up to over 4% in early
July.
After a strong post-pandemic recovery, concern over the evolution of China's
economic growth picked up through the second quarter of 2023, as macroeconomic
data began to disappoint. This has led to speculation around stimulus measures
in recent weeks, although the consensus does not expect a major announcement,
even if some targeted support may come through.
However, against this backdrop both EM equities and bonds broadly advanced.
The former, as measured by the MSCI Emerging Markets Index, returned close to
5% in the first half of 2023, lagging the MSCI World which was up just over
15%. As mentioned previously, China, which is the largest index market in EM,
has been a drag. However, the stunning rally from March onwards of the Super-7
stocks (Apple, Microsoft, Alphabet, Amazon, Tesla, Meta, Nvidia) in the MSCI
World has been a factor.
EM bonds and currencies have generated positive returns year-to-date. In
sovereign and corporate credit, the impact of higher US Treasury yields was
offset by credit spread compression, while EM local debt continued to
outperform core fixed income markets almost entirely driven by lower yields.
The global inflation surge in 2021-2022 caught the attention of central banks
worldwide. However, EM central banks were quicker to respond to this
inflationary shock, initiating a remarkable series of rate hikes in the first
quarter of 2021 that continued until late 2022/early 2023.
This swift action allowed EM countries to witness falling core inflation in
recent months, unlike the developed world, which continues to grapple with
entrenched core inflation.
Emerging markets currencies were roughly flat against the US dollar, although
Latin American currencies have seen the most appreciation relative to the US
dollar year to-date. Turkey and South Africa have seen the greatest currency
depreciation.
Meanwhile, market access has remained a concern for high yield EM issuers.
While investment grade EM issuance is almost in line with the average over the
past few years, for high yield sovereigns and corporates the equivalent figure
is around a third. Inevitably, this increases the likelihood of restructurings
particularly if world growth proves disappointing.
The NAV of the Class A shares of the TAF increased by 1.46 % in the first half
of 2023, compared to the drop of 14.25% in the same period of the previous
year. The fund benefited from a recovery in Argentine bond prices, though they
remained volatile. There were also positive contributions from long positions
in local currency bonds (mainly Latin American and East European). The main
detractors were corporates in the throes of restructuring and generic credit
hedges. 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 launched in 2021); macro strategies (Class
X3, launched last year) and also special situations where the timeline to
investment realisation will be longer.
Loan to Argo Real Estate Limited Partnership
On 21(st) March 2023, the back to back loans from the Group to Argo Real
Estate Limited Partnership to Novi Biznes Poglyady LLC were replaced by a
direct loan from the Group to Novi Biznes Poglyaddy LLC. The Shopping Centre
partially reopened in November 2022. As the loan receivable is still exposed
to the performance of this investment property held in Ukraine, the Group
continues to hold an IFRS 9 valuation adjustment for US$0.5 million for
expected losses at the reporting date (note 10).
Dividends and share purchase programme
The Group did not pay a dividend during the current or prior period. The
Directors intend to restart dividend payments as soon as the Group's
performance provides a consistent track record of profitability.
Outlook
The Board remains optimistic about the Group's prospects based on the
transactions in the pipeline and the Group's initiatives to increase AUM. A
significant increase in AUM is still required to ensure sustainable profits on
a recurring management fee basis and the Group is well placed with capacity to
absorb such an increase in AUM with negligible impact on operational costs.
Boosting AUM will be Argo's top priority in the next six months. The Group's
marketing efforts continue to focus on TAF which has a 22-year track record as
well as identifying acquisitions that are earnings enhancing.
Over the longer term, the Board believes there is significant opportunity for
growth in assets and profits and remains committed to ensuring the Group's
investment management capabilities and resources are appropriate to meet its
key objective of achieving a consistent positive investment performance in the
emerging markets sector.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Six months Six months
ended ended
30 June 30 June
2023 2022
Note US$'000 US$'000
Management fees 1,111 1,140
Performance fees - -
Other income 400 125
Revenue 1,511 1,265
Legal and professional expenses (119) (128)
Management fees payable (141) (180)
Operational expenses (402) (362)
Employee costs (1,108) (1,752)
Bad debt provision 9, 10 (367) (320)
Foreign exchange (loss)/profit (9) 9
Depreciation 7 (48) (71)
Operating loss (683) (1,539)
Interest income 496 499
Realised and unrealised gain/(loss) on investments 308 (2,507)
Profit/(loss) on ordinary activities before taxation 121 (3,547)
Taxation 5 - -
Profit/(loss) for the period after taxation attributable to members of the 6 121 (3,547)
Company
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 6 (107)
Total comprehensive income for the period 127 (3,654)
Six months Six months
Ended Ended
30 June 30 June
2023 2022
US$ US$
Earnings per share (basic) 6 0.003 (0.09)
Earnings per share (diluted) 6 0.003 (0.08)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
30 June 31 December
2023 2022
Note US$'000 US$'000
Assets
Non-current assets
Land, fixtures, fittings and equipment 7 571 607
Loans and advances receivable 10 14,147 13,416
Total non-current assets 14,718 14,023
Current assets
Financial assets at fair value through profit or loss 8 4,451 4,387
Loan and advances receivable 10 9 -
Trade and other receivables 9 309 413
Cash and cash equivalents 1,241 1,642
Total current assets 6,010 6,442
Total assets 20,728 20,465
Equity and liabilities
Equity
Issued share capital 11 390 390
Share premium 25,353 25,353
Retained earnings (2,856) (2,977)
Foreign currency translation reserve (3,203) (3,209)
Total equity 19,684 19,557
Current liabilities
Trade and other payables 15 662 497
Total current liabilities 662 497
Non-current liabilities
Trade and other payables 15 382 411
Total non-current liabilities 382 411
Total equity and liabilities 20,728 20,465
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Foreign currency translation reserve
Issued share capital
Share premium Retained earnings
Total
2022 2022 2022 2022 2022
US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2022 390 25,353 420 (3,086) 23,077
Total comprehensive income
Loss for the period after taxation - - (3,547) - (3,547)
Other comprehensive income - - - (107) (107)
As at 30 June 2022 390 25,353 (3,127) (3,193) 19,423
Foreign currency translation reserve
Issued share capital
Share premium Retained earnings
Total
2023 2023 2023 2023 2023
US$'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
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Six months ended Six months ended
30 June 30 June
2023 2022
Note US$'000 US$'000
Net cash outflow from operating activities 12 (387) (332)
Cash flows used in investing activities
Purchase of fixtures, fittings and equipment 7 (3) (4)
Net cash (used)/ generated from investing activities (3) (4)
Cash flows from financing activities
Payment of lease liabilities - (78)
Net cash used in financing activities - (78)
Net decrease in cash and cash equivalents (390) (414)
Cash and cash equivalents at 1 January 2023 and 1,642 1,709
1 January 2022
Foreign exchange loss on cash and cash equivalents (11) (63)
Cash and cash equivalents as at 30 June 2023 and 30 June 2022 1,241 1,232
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2023
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 2023 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 2022 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 United Kingdom
management
Argo Property Management Srl Property Romania
management
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 2022.
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 2022.
These condensed consolidated interim financial statements
were approved by the Board of Directors on 9 August 2023.
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:
Six months ended
Argo Group Ltd Argo Capital Management Ltd Argo Property Management 30 June
Srl
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$'000
Revenues
Total revenues for reportable segments 1,511
Elimination of intersegment revenues -
Group revenues 1,511
Profit or loss
Profit for reportable segments 121
Elimination of intersegment loss -
Other unallocated amounts -
Loss on ordinary activities before taxation -
Assets
Total assets for reportable segments 20,728
Elimination of intersegment receivables -
Group assets 20,728
Liabilities
Total liabilities for reportable segments 4,321
Elimination of intersegment payables (3,277)
Group liabilities 1,044
Six months ended
Argo Group Ltd Argo Capital Management Ltd Argo Property Management 30 June
Srl
2022 2022 2022 2022
US$'000 US$'000 US$'000 US$'000
Total revenues for reportable segments customers - 1,140 125 1,265
Intersegment revenues - - -
-
Total profit/(loss) for reportable segments (2,329) (1,215) (211) (3,755)
Intersegment loss 208 - - 208
Total assets for reportable segments assets 18,046 1,279 207 19,532
Total liabilities for reportable segments 6 77 26 109
Revenues, profit or loss, assets and liabilities may be reconciled as follows: Six months
Ended
30 June 2022
US$'000
Revenues
Total revenues for reportable segments 1,265
Elimination of intersegment revenues -
Group revenues 1,265
Profit or loss
Loss for reportable segments (3,755)
Elimination of intersegment loss 208
Other unallocated amounts -
Loss on ordinary activities before taxation (3,547)
Assets
Total assets for reportable segments 19,536
Elimination of intersegment receivables (4)
Group assets 19,532
Liabilities
Total liabilities for reportable segments 3,466
Elimination of intersegment payables (3,357)
Group liabilities 109
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
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 (2022: £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 (2022: £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% (2022: 0% to 19%).
Consolidated statement of profit or loss Six months Six months
ended Ended
30 June 30 June
2023 2022
US$'000 US$'000
Taxation charge for the period on Group companies - -
The charge for the period can be reconciled to the profit shown on the
Condensed Consolidated Statement of profit or loss as follows:
Six months Six months
Ended Ended
30 June 30 June
2023 2022
US$'000 US$'000
Profit/(loss) before tax 121 (3,547)
Applicable Isle of Man tax rate for Argo Group Limited of 0% - -
Timing differences - -
Non-deductible expenses - -
Other adjustments - -
Tax effect of different tax rates of subsidiaries operating in other - -
jurisdictions
Tax charge - -
Consolidated statement of financial position
30 June 31 December
2023 2022
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
2023 2022
US$'000 US$'000
Net profit/( loss) for the period after taxation attributable to members 121 (3,547)
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
2023 2022
US$ US$
Earnings per share (basic) 0.003 (0.09)
Earnings per share (diluted) 0.003 (0.08)
7. LAND, FIXTURES, FITTINGS AND EQUIPMENT
Fixtures, fittings and equipment
Right
of use Total
assets Land
USD'000000 US$'000 US$'000 US$'000
Cost
At 1 January 2022 732 201 182 1,115
Additions 455 7 - 462
Disposals (732) (3) - (735)
Foreign exchange movement - (17) (10) (27)
At 31 December 2022 455 188 172 815
Additions - 3 - 3
Disposals - (31) - (31)
Foreign exchange movement 22 5 (7) 20
At 30 June 2023 477 165 165 807
Accumulated Depreciation
At 1 January 2022 825
634 191 -
Depreciation charge for period 120 5 - 125
Disposals (732) (3) - (735)
Foreign exchange movement 8 (16) - (8)
At 31 December 2022 30 177 - 207
Depreciation charge for period 46 2 - 48
Disposals - (31) - (31)
Foreign exchange movement 3 9 - 12
At 30 June 2023 79 157 - 236
Net book value
At 31 December 2022 425 11 172 608
At 30 June 2023 398 8 165 571
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 2023 30 June 2023
Holding Investment in management shares Total cost Fair value
US$'000 US$'000
10 The Argo Fund Ltd - -
- -
Holding Investment in ordinary shares Total cost Fair value
US$'000 US$'000
13,920 The Argo Fund Ltd* 4,648 4,451
4,648 4,451
31 December 31 December
2022 2022
Holding Investment in management shares Total cost Fair value
US$'000 US$'000
10 The Argo Fund Ltd - -
- -
Holding Investment in ordinary shares Total cost Fair value
US$'000 US$'000
13,920 The Argo Fund Ltd* 3,824 4,387
3,824 4,387
*Classified as current in the consolidated statement of Financial Position
9. TRADE AND OTHER RECEIVABLES
At 30 June 2023 At 31 December 2022
US$ '000 US$ '000
Trade receivables - Gross 2,500 2,255
Less: provision for impairment of trade receivables (2,358) (1,980)
Trade receivables - Net 142 275
Other receivables 34 41
Prepayments and accrued income 133 97
309 413
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 2023 At 31 December 2022
US$ '000 US$ '000
As at 1 January 14,019 14,252
Bad debt recovered - (125)
Charged during the period 368 636
Foreign exchange movement 209 (744)
Closing balance 14,596 14,019
10. LOANS AND ADVANCES RECEIVABLE
At 30 June At 31 December
2023 2022
US$'000 US$'000
Deposits on leased premises - current 9 -
Deposits on leased premises - non-current (see below) 89 96
9
Other loans and advances receivable - non-current (note 14) 14,058 13,320
14,156 13,416
The deposits on leased premises relate to the Group's offices in London and
Romania.
The Group also has a balance receivable for $12.2 million (€11.2 million)
from Argo Real Estate Limited Partnership that was assigned from Argo Real
Estate Opportunities Fund Limited during 2021. The carrying value of this
balance is $nil.
11. SHARE CAPITAL
The Company's authorised share capital is unlimited with a nominal value
of US$0.01.
30 June 30 June 31 December 31 December
2023 2023 2022 2022
No. US$'000 No. US$'000
Issued and fully paid
Ordinary shares of US$0.01 each 38,959,986 390 38,959,986 390
38,959,986 390 38,959,986 390
The Directors did not recommend the payment of a final dividend for the year
ended 31 December 2022 and do not recommend an interim dividend in respect of
the current period.
12. RECONCILIATION OF NET CASH INFLOW/(OUTFLOW) FROM OPERATING
ACTIVITIES TO PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
Six months ended Six months ended
30 June 2023 30 June 2022
US$'000 US$'000
Profit/(loss) on ordinary activities before taxation 121 (3,547)
Interest income (496) (499)
Depreciation on fixtures, fittings and equipment 2 3
Depreciation on right of use asset 46 68
Realised and unrealised (profit)/loss on investments (308) 2,507
Net foreign exchange loss/(profit) 9 (9)
Increase/(decrease) in payables 136 (49)
Decrease in receivables, loans and advances 103 1,194
Corporation tax paid - -
Net cash outflow from operating activities (387) (332)
13. FAIR VALUE HIERARCY
The table below analyses financial instruments measured at fair value at the
end of the reporting period by the level of the fair value hierarchy (note
2b).
At 30 June 2023
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets at fair value through profit or loss 4,451 - 4,451
-
At 31 December 2022
Level 1 Level 2 Level 3 Total
US$ '000 US$ '000 US$ '000 US$ '000
Financial assets at fair value through profit or loss
- 4,387 - 4,387
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$4.5
million (31 December 2022: $4.4 million).
At the period end, the Group was owed $14.6 million (note
10) by Novi Biznes Poglyady LLC, an entity that is 100% ultimately owned by
Andreas Rialas. The adjusted IFRS 9 valuation of the loan after providing for
expected losses was US$14.1 million. This balance relates to a loan that was
originally made to ARE LP in February 2020 that was lent onwards to Novi
Biznes Poglyady LLC for the refinancing of Riviera Shopping City in Odessa,
Ukraine. During the period, the original back to back loans were replaced by a
direct loan from Argo Group Limited to Novi Biznes Poglyady LLC.
The Group is also owed US$12.2 million (€11.2 million) (31 December 2022:
US$12.0 million (€11.2 million)) by ARE LP, which were previously owed by
the now liquidated Argo Real Estate Opportunities Fund Limited. These balances
are carried at US$ nil (31 December 2020: US$ nil) in the financial
statements.
15. TRADE AND OTHER PAYABLES
At 30 June At 31 December
2023 2022
US$ '000 US$ '000
Trade creditors 72 26
Other creditors and accruals 590 471
Total current trade and other payables 662 497
Trade creditors are normally settled on 30-day terms.
At 30 June At 31 December
2023 2022
US$ '000 US$ '000
Other creditors and accruals 382 411
Total non-current trade and other payables 382 411
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