(Alliance News) - Argo Group Ltd on Friday recorded flat asset growth in 2019, and has vowed to restart dividend payouts once it consistently records a profit.
At December 31, the emerging markets investment firm recorded assets under management of USD130.3 billion, slightly higher than the USD130.1 million seen at the end of 2018.
Chief Executive Kyriakos Rialas said: "Increased volatility in 2019 from trade war uncertainties, Brexit and the reversal of US interest rates influenced emerging markets positioning and returns."
"In this environment, the Argo Fund performed well in the first six months of the year but in August 2019 a sizeable drop in Argentina bonds all but eliminated profits for the year. The distressed credit strategy in the Argo Distressed Credit Fund did better, resulting in performance fees being paid to the management company," Rialas continued.
The CEO added: "Overall Argo Group increased profits compared to 2018 but additional growth of assets and streamlining of operations is needed going forward so as to balance income arising from management fees and performance fees."
The company recorded a pretax profit of USD1.0 million in 2019 compared to a USD1.2 million loss in 2018. Revenue was 6.5% higher year on year at USD4.9 million from USD4.6 million.
Argo Group did not declare a dividend for 2019, saying it will restart its dividend programme once it is able consistently record a profit. The company did not pay a dividend in 2018.
"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," Argo Group said.
The company made an operating loss of USD211,000 in 2019 - narrowed from USD802,000 in 2018 - but also made a USD1.0 million gain on realised investments to contribute to the pretax profit.
Argo Group said its emphasis in 2020 will be on cost control, which will include shutting its office in Cyprus and returning all office operations to London.
Shares in Argo Group were untraded in London on Friday but last closed at 26.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Argo Group (ARGO)