REG - ARGO Group Limited - Interim Results <Origin Href="QuoteRef">ARGOA.L</Origin> - Part 2

ArgoAnnouncement

30/09/2015 07:02

- Part 2: For the preceding part double click  ID:nRSd6288Aa 

its banks. The loan is repayable on demand and accrues interest at 12%. The
full amount of the loan and accrued interest amounting to US$1,394,987
(E1,257,424) remains outstanding at the period end. The Directors consider
this loan to be fully recoverable on the basis that conditional offers to buy
the centre have been received that indicate a value in excess of the debt
attached to the project. Notwithstanding its repayable on demand terms, the
Directors have classified this amount as non-current within the financial
statements as it is not their intention to demand repayment in the immediate
future and it is unlikely that Bel Rom will repay the amount in the next 12
months even if it were demanded. 
 
(b)      On 21 November 2013 the Argo Group provided a loan of US$431,512
(E388,960) to AREOF to enable the company to service interest payments under a
bank loan agreement. The loan is repayable on demand and accrues interest at
10%. The full amount of the loan and accrued interest amounting to USD500,908
(E451,513) remains outstanding at the period end and is secured by debentures
and guarantees from underlying intermediate companies in the AREOF Group 
 
The Argo Group provided further loans totalling US$55,597 (E50,114) to AREOF
to assist with its operational cash requirements. These loans are repayable on
demand and accrue interest at 7%. The full amount of these loans remain
outstanding at the period end. 
 
(c)      On 5 December 2014 the Argo Group provided a loan of USD150,000 to
The Argo Fund Limited to assist with its operational cash requirements. This
was followed by a further loan of USD180,000 on 24 March 2015. Both loans are
repayable on demand, accrue interest at 5% and remain outstanding at the
period end. 
 
(d)      At the period end the Argo Group was owed USD93,329 (E84,126) 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 the period end. 
 
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  
                                  2015        2015     2014         2014         
                                  No.         US$'000  No.          US$'000      
 Issued and fully paid                                                           
 Ordinary shares of US$0.01 each  67,428,494  674      67,428,494   674          
                                  67,428,494  674      67,428,494   674          
 
 
The directors did not recommend the payment of a final dividend for the year
ended 31 December 2014 and do not recommend an interim dividend in respect of
the current period. 
 
12.     RECONCILIATION OF NET CASH OUTFLOW FROM OPERATING ACTIVITIES TO LOSS
ON ORDINARY ACTIVITIES BEFORE TAXATION 
 
                                              Six months ended 30 June 2015    Six months ended 30 June 2014  
                                              US$'000                          US$'000                        
                                                                                                              
 Loss on ordinary activities before taxation  (4,163)                          (516)                          
                                                                                                              
 Interest income                              (88)                             (115)                          
 Depreciation                                 23                               72                             
 Unrealised loss on investments               4,482                            105                            
 Net foreign exchange (gain)/loss             (59)                             129                            
 Increase in payables                         40                               18                             
 Increase in receivables, loans and advances  (1,959)                          (1,175)                        
 Income taxes paid                            (13)                             (8)                            
 Net cash outflow from operating activities   (1,737)                          (1,490)                        
 
 
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
2). 
 
At 30 June 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  -         13,774    179       13,953    
 
 
At 31 December 2014 
 
                                                        Level 1   Level 2   Level 3   Total     
                                                        US$ '000  US$ '000  US$ '000  US$ '000  
 Financial assets at fair value through profit or loss  -         -         18,435    18,435    
 
 
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 balance sheet date the Company holds investments in The Argo Fund
Limited, Argo Real Estate Opportunities Fund Limited ("AREOF") and Argo
Special Situations Fund LP. These investments are reflected in the accounts at
a fair value of US$13,773,333, US$119,366 and US$59,514 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 2015 total US$ Nil (31 December 2014: US$ Nil) after a
bad debt provision of US$6,178,809 (E5,569,505) (31 December 2014:
US$5,554,234, E4,569,505). AREOF continues to meet part of this obligation to
the Argo Group as and when liquidity allows. 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 Argo Group was owed US$1,394,986 (E1,257,425) including
interest of US$285,586 (E257,424) by Bel Rom Trei Srl ("Bel Rom"), an AREOF
Group entity based in Romania that owns Sibiu Shopping City. The full amount
of the loan and accrued interest remains outstanding at the period end. The
Directors consider this loan to be fully recoverable on the basis that
conditional offers to buy the centre have been received that indicate a value
in excess of the debt attached to the project. Notwithstanding its repayable
on demand terms, the Directors have classified this amount as non-current
within the financial statements as it is not their intention to demand
repayment in the immediate future and it is unlikely that Bel Rom will repay
the amount in the next 12 months even if it were demanded. The loan is
repayable on demand and accrues interest at 12%. 
 
At the period end Argo Group was owed a total balance of US$556,505 (E501,627)
including interest of US$69,396 (E62,553) by AREOF. This balance comprises
various loans that are all repayable on demand and accrue interest at 7% and
10%. Of this balance US$500,908 (E451,513) is secured by debentures and
guarantees from underlying intermediate companies in the AREOF Group. At the
period end the Argo Group was owed a further USD93,329 (E84,126) by various
other AREOF Group entities. This balance comprises loans that are all
repayable on demand and accrue interest at 7%. 
 
At the period end the Argo Group was owed USD330,000 by The Argo Fund Limited.
The loan is repayable on demand and accrues interest at 5%. 
 
In the audited financial statements of AREOF at 30 September 2014 a material
uncertainty surrounding the refinancing of bank debts was referred to in
relation to the basis of preparation of the 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 financial statements on a going concern basis. 
 
David Fisher, a non-executive director of the Company, is also a non-executive
director of AREOF. 
 
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