Half-year Report

ARGO Group Limited

29 July 2024

 

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.

 

END