25th Sep 2014 08:52
LONDON (Alliance News) - Argo Group Ltd, the AIM-listed investment manager, Thursday said it swung to a first-half pretax loss, as it failed to generate incentive fees during the period.
In a statement, Argo Group said it made a USD516,000 pretax loss in the six months ended June 30, compared with a USD1.7 million pretax profit in the corresponding period last year. The group's revenue fell to USD3.9 million from USD4.7 million. Management fees were stable at USD3.5 million, but there was no repeat of the USD803,000 of incentive fees received in the corresponding period last year on the back of the revaluation of an investment in an Indonesian petrochemicals refinery, PT Trans-Pacific Petrochemical Industries, which has not been realised.
Core operating costs rose to USD2.7 million from USD2.6 million, but Argo said they will trend lower in the second-half of the year due to cost cutting measures already taken. Total operating costs rose to USD4.4 million from USD4.0 million, including bad debt provision.
Argo did not pay an interim dividend, unlike in the corresponding period last year, when it paid a dividend of 2.1 cents. The company reiterated that it is working towards resuming dividend payments. It did not pay a final dividend for 2013.
Chief Executive Kyriakos Rialas cautioned that the potential for rising US interest rates is a continuing concern for emerging markets.
"Nevertheless, Argo's hedge strategy and the workout of its private equity illiquid assets resulted in satisfactory comparative fund performance. Since the period end liquidity has improved at management company level," Rialas said in a statement.
Chairman Michael Kloter was cautious about the second-half of the year, citing the continuing conflict in Eastern Ukraine. He also raised concerns about the uncertainty as to how markets will respond if the US Federal Reserve reduces quantitative easing.
"The top priority in the next six months will be to continue with our program to monetise certain of our investments. In the very near term our growth rate will be heavily influenced by the success of this program as well as events in Europe. Over the longer term the board believes there is significant opportunity for growth in assets and profits and remains committed to the emerging markets sector," Kloter said.
Argo Group shares were Thursday quoted down 4.5% at 13.38 pence per share.
By Samuel Agini; [email protected]; @samuelagini
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