Argo Group Swings To Operating Profit Boosted By Investment Gains

LONDON (Alliance News) - Argo Group Ltd on Wednesday reported a year of "solid" performance as it saw a rise in profit and performance fees.

The AIM-listed investment manager reported pretax profit of USD4.7 million for 2017, compared with USD649,000 a year earlier, as revenue grew to USD10.3 million from USD6.4 million the prior year.

The profit figure was boosted by a rise in investment gains to USD2.5 million from USD1.1 million the prior year.

Management fees reduced slightly to USD4.2 million from USD4.3 million the prior year, but it generated an incentive fees of USD5.9 million, compared to USD1.7 million. The group said the incentive fees earned during the year were from The Argo Fund and Argo Distressed Credit Fund.

Net assets on the company's books rose to USD24.7 million from USD20.1 million at the end of December. Assets under management hit USD146.8 million, 33% higher than at the beginning of the year. Without performance fees, however, Argo said the level of assets under management remains below the level needed to deliver sustainable profit.

The group's operating profit swung to USD2.0 million from USD564,000 loss in 2016. Argo said it believes that the markets in which the Funds operate have now established a recovery following the 2008 economic collapse.

Argo said it decreased the number of permanent employees to 23 from 27 the prior year.

Argo Chief Executive Officer Kyriakos Rialas said: ''I am very pleased with the funds' exceptional performance in 2017 derived mostly from two restructured distressed transactions and I am also most encouraged by the active strategies of the Argo Fund Ltd with double digit return in 2017 and the successful navigation of the market turmoil in February 2018. This is what distinguishes Hedge Funds from long only directional funds. The challenge for our group remains to increase assets under management in 2018.''

Argo did not declare a final dividend, but said it intend to restart dividend payments as soon as the group's performance provides a consistent track record of profitability.

The group remains optimistic about its prospects, particularly in light of its transactions pipeline, it said, with Boosting AUM remaining Argo's top priority over the coming year.