REG - Argentex Group PLC - Final Results
02/04/2025 07:04
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RNS Number : 2424D Argentex Group PLC 02 April 2025
2 April 2025
Argentex Group PLC
("Argentex" or the "Group")
Final results for the year ended 31(st) December 2024
Full year revenues and profit margins ahead of expectations
Revenue diversification plans on track
Argentex Group PLC (AIM: AGFX), the global specialist in currency risk
management and alternative banking, today issues its final results for the
year ended 31 December 2024.
Financial summary
· Group revenue of £50.3m (FY23: £49.9m), with growth in the
number of clients offset by a reduction in average spend
· Improving trading momentum with revenue growth of 6% yoy in H2
(vs. 4% yoy decline in H1)
· EBITDA margin of 8% comfortably ahead of previous expectations of
low single digit EBITDA margin
· Operating loss of £0.2m (12 months to 31 December 2023:
operating profit of £8.1m), with margin reduction as a result of planned
investment in business transformation
· Strong balance sheet: debt free with net cash of £18.4m at 31
December 2024(1)
· Earnings/ (Loss) per share of (1.1p) (12 months to 31 December
2023: 4.6p)
· Nil dividend (12 months to 31 December 2023: 0.75p per share)
Operational summary
· Total number of clients(2) increased by 9% to 2,113 (12 months to
31 December 2023: 1,938)
· Average revenue per client fell by 9% during the period compared
to the previous 12 months due to a combination of product/client mix,
volatility and margin compression
· International expansion continued with licences obtained in both
Australia and Dubai. Both regions are now fully operational and serving
clients
· Revenue diversification plans on track. Argentex Global Platform
(on which both new and existing services will run) on track to launch in
Summer 2025
· Strengthened leadership. Experienced permanent executive team in
place to deliver growth plans
· Management incentivised and aligned with shareholders. New LTIP
for Executive team and CSOP for select employees.
Board changes
· Digby Jones to step down as a Non-Executive Director at AGM in
June
· Jeff Parker joins Board as a Non-Executive Director from 1 April
1 Net cash represents cash and cash equivalents less amounts payable to
clients
2 Excludes private clients
Outlook
The positive momentum delivered in H2 2024 has continued into the current
financial year and we have made further progress in implementing our strategic
growth agenda, with delivery remaining on-track. With trading having commenced
in Australia and Dubai and the planned launch of digital accounts and payments
in summer 2025, we anticipate a return to revenue growth in FY25. We will
continue to invest in growth, and as we accelerate our progression into new
products and services, we remain confident in our medium-term outlook and
continue to expect revenue growth in FY26 in the 15% - 20% range, with EBITDA
margins in the mid-teens.
Jim Ormonde, Chief Executive Officer said:
"Having actively reset the business in 2024, we are now well positioned to
take advantage of exciting growth opportunities in our markets and are
confident about the year ahead. With regulatory and operational hubs now fully
established in the Netherlands, Australia and Dubai, we believe we have strong
prospects to grow our market share overseas. Domestically, we have
restructured our front office teams and re-aligned our cost base and believe
we are now better placed to serve both new and existing clients. As a result
of the investments made in technology and people as we continue to diversify
our offering, all regions will benefit from the suite of new services we plan
to launch this year and beyond, together with easier, automated onboarding
processes which will drive operational leverage. It has been a year of
significant change in the business, but I believe we are now well placed to
return to profitable growth."
For further information, please contact:
Argentex Group PLC
Jim Ormonde - Chief Executive Officer
Guy Rudolph - Chief Financial Officer
investorrelations@argentex.com (mailto:investorrelations@argentex.com)
Teneo (Financial PR)
James Macey-White / Victoria Boxall
argentex@teneo.com (mailto:argentex@teneo.com) , 020 7260 2700
Singer Capital Markets (Nominated Adviser and Broker)
Tom Salvesen / James Maxwell / James Todd
020 7496 3000
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About Argentex
Argentex (AIM: AGFX) is a global specialist in currency risk management and
alternative banking. Established in 2012 and headquartered in London, Argentex
listed on London's AIM market in mid-2019 and has since added operations in
Amsterdam, Dubai and Australia.
Chairman's Statement
Executing on our strategy
We have a clear strategy in place and the right people and processes in place
to execute it.
Overview
2024 has been a year of necessary reset to reposition the business for growth
following the completion of a comprehensive strategic review of the Group. We
set out a clear strategy in May 2024 to scale the business and expand our
customer offering, whilst driving a more efficient and effective operating
model. At the same time, we announced the completion of a placing of new
shares, raising a net £3m to accelerate the implementation of our new
strategy, including the development of the new Argentex Global Platform
("AGP").
As part of the strategic review, we appointed new management, led by Jim
Ormonde as Chief Executive Officer ("CEO"), who strengthened the executive
team with further appointments during the course of the year. The team has
been actively executing our revised strategy, which seeks to diversify our
revenue streams, bring a rigorous approach to costs and efficiencies, and
build better visibility into future revenues.
Higher FX volatility generally acts as a tailwind for Argentex revenues.
However, despite lower levels of volatility in early 2024, full year revenues
and profit margins were ahead of our original expectations, with momentum
picking up in the second half of the year.
Governance
We are committed to keeping our stakeholders informed and taking their views
into consideration. This has been particularly important in a year where we
have changed management, raised capital, and outlined and embarked on a new
strategic direction. We also acknowledge our responsibilities with regard to
governance and sustainability, recognising the ongoing need for high standards
across the business.
In terms of Board changes during the period, we welcomed Guy Rudolph who
joined the Group and Board in a permanent capacity in July, following five
months operating as our Interim Chief Financial Officer ("CFO"). We also
welcomed Rina Ladva who joined as a Non-Executive Director in October. Rina
brings over 25 years of organisational and technology transformation
experience to Argentex.
I am also pleased that effective 1 April 2025, Jeff Parker joined the Board as
a Non-Executive Director, bringing over two decades of significant experience
of operating in the global fintech and financial services sectors. My
predecessor as Chairman of the Group, Digby Jones has confirmed that he will
not be seeking re-election as a Director at the AGM in June. Digby has been
associated with Argentex since 2019 and was the Chairman of the Board from
when the Group floated on AIM in 2019 until 2023, when he passed the baton to
me. On behalf of myself and everyone at Argentex I would like to thank Digby
for the stewardship and leadership he has given the Group, as well as the
support he has consistently given to me, the Board and our colleagues.
We have also strengthened the Executive Committee with a number of key
appointments to assist the Board in the day-to-day management of the business.
In particular, Tim Rudman, who joined us as Chief Operating Officer ("COO"),
Daniel Ross, who was appointed Chief Commercial Officer ("CCO") and Chrissie
Humphrey who joined us as Chief People Officer ("CPO").
The Group is implementing a Long-Term Incentive Plan (LTIP) for its executive
team in 2025, designed to align their interests with the long-term growth and
transformation of the Group whilst incentivising sustainable value creation
for shareholders. It is intended that the plan will be delivered through
one-off awards in growth Shares that will be acquired by participants at the
outset at market value. Equity value will be shared based on the performance
of the Argentex Group PLC ("the PLC") share price over pre-defined price
thresholds through a pre-determined performance period, transparently aligning
participant and shareholder interests. Following vesting, participants will
exchange growth shares for shares in the PLC or, at Argentex's option, cash.
Dividend
In the year ended 31 December 2023, the Board of Directors declared an interim
dividend for the period ended 30 June 2023. However, given the strategy
communicated to shareholders in May 2024 and, in particular, the focus on
investing for growth that the Board communicated at the time of the FY23
results in May 2024 it is highly unlikely that the Group will pay dividends in
the near term. Of course, the Board will continue to review this decision on a
regular basis.
Conclusion
There is much to look forward to as 2025 unfolds: building momentum of our
operations in Australia and Dubai following their launch in H2 2024. We
anticipate continued growth in the Netherlands and Europe as a whole, together
with a much more focused approach on clients in our core UK business. In
addition, the new Argentex Global Platform, is set to launch in summer 2025,
enabling all our regions to start offering new services in payments and
digital accounts, which should help increase revenues, give greater visibility
of earnings and enhance client retention.
I would like to thank our shareholders for their support to date and we look
forward to updating them on our progress this year and beyond. I would also
like to thank everyone at Argentex for their hard work and contribution in
what has been a year of substantial change, but one which allows us to face
the future with optimism.
Nigel Railton
Non-Executive Chairman
02 April 2025
CEO's Review
Diversifying our revenues
Overview
During my first full year as CEO, we have made substantial strategic and
operational progress. Our focus is to diversify revenue streams, launch new
products, expand the breadth of our FX, digital accounts and payment services,
whilst entering additional geographic territories. Simultaneously, we are
focussed on driving operational efficiencies and reducing costs in our core
business. We have added significant expertise across the Group including
permanent appointments to our executive team and new experienced leadership
within banking, operations and technology. It has been a positive year, and I
am delighted with the milestones we have achieved. With a strong team now in
place, and a clear roadmap for the future, I am excited about the prospects
for next year and beyond as multiple revenue streams start to reward the
investments we have made in new products and technology.
Financial and Operational performance
We have repositioned and restructured the business for profitable growth,
investing in people, technology and overseas expansion.
Revenue in 2024 was £50.3m, slightly ahead of 2023 (£49.9m) despite a year
of significant change and on par with 2022 which was a year of exceptional
volatility. Whilst we recorded an operating loss of £0.2m (FY23 operating
profit of £8.1m), this reflects the investment we have made in transforming
the business as we look to return to revenue growth for 2025 and beyond. We
saw trading momentum pick up in the second half of the year, with full year
revenues and profit margins ahead of our original expectations.
Executing on our strategy
We are making good progress in migrating the business to one technology
platform: the Argentex Global Platform, being delivered by the existing
technology team supplemented by a number of key new hires. This will enable us
to drive efficiencies on a global scale by increasing automation and building
a platform on which multiple new products and services can run simultaneously,
and addresses our three core strategic pillars:
· Product diversification to enhance and complement the Group's
existing customer proposition, specifically through accelerating the Group's
move into digital accounts and payments
· Focused geographical expansion, leveraging existing operational
centres and licences with targeted expansion into complementary markets
· Ensuring operational excellence by driving operational and
financial efficiencies whilst delivering a best-in-class customer experience
Product diversification
We have a strong brand and a successful history in providing large corporates
and institutions with high quality foreign exchange services. However, our
voice brokering product suite has been historically narrow and we are
therefore diversifying into the broader payments and digital accounts markets
to deliver new revenue streams and higher quality of earnings. This will also
allow us to increase our overall addressable market and improve customer
retention. Revenue visibility and client needs will also be easier to predict
as our reliance on volatile foreign exchange markets is reduced.
We made a number of key technology hires in the period to help re-platform the
business and roll out our new suite of services. Tim Rudman joined as COO and
brings a wealth of industry experience having overseen the technological
transformation at World First and Global Reach previously. Alongside several
senior technology hires, Tim and his team have developed a detailed product
and technology roadmap with a key focus on automation, efficiency and
improving the customer experience via a self-serve model. Progress to date has
been excellent - our first two milestones have been met ahead of schedule and
on budget. We remain on track to launch a number of new services in summer
2025.
Geographic diversification
A key element of our growth strategy is to expand overseas, and we were
delighted to be granted regulatory licences in both Australia and Dubai during
2024. Our front office and operational teams are already in place, allowing us
to begin trading immediately. We expect both new regions to contribute
incremental revenues in 2025 and will be investing in these teams organically
over coming years.
In Australia, we have been granted an Australian Financial Services Licence.
The licence, granted by the Australian Securities and Investments Commission,
allows our Australian entity (Argentex Pty Ltd) to offer bespoke risk
management solutions and global accounts to wholesale clients across
Australia.
Australia is a significant addressable market for us. A$700bn of cross border
payments are processed annually, and with c.180,000+ importers and exporters,
we believe there is a A$3bn opportunity across both corporate and
institutional clients. Our ability to partner with and offer bespoke
structured solutions and treasury risk mitigation strategies coupled with our
ability to offer automated onboarding and payment solutions should be a key
differentiator in the market.
In Dubai, we announced the launch of Argentex (DIFC) Ltd, a fully licensed
subsidiary regulated by the Dubai Financial Services Authority ("DFSA"). Led
by our UAE Managing Director, Jamil Khammu, we have a highly experienced team
in place to serve sophisticated corporate and institutional clients across the
Dubai International Financial Centre and broader UAE market. Argentex (DIFC)
Ltd is fully regulated under a Category 3A DFSA licence, enabling the team to
offer comprehensive FX and payment services. We are the first listed UK FX
Broker to achieve this. Again, Dubai holds significant potential for us. The
UAE was the second largest in the world in 2023 in terms of remittance
outflows. We believe our combination of sophisticated products and services,
together with automated self-serve for clients, will differentiate us from the
competition and we look forward to reporting on progress as trading gets
underway in this exciting region.
In the Netherlands, we were encouraged with progressive revenue growth in the
year. We are also exploring our ability to expand elsewhere in Europe,
utilising our Netherlands licence and operational hub as a base. However, we
are not planning on opening any more new branches in 2025 and want to see all
new products and teams delivering on growth expectations before we broaden our
expansion plans still further.
Operational and financial efficiencies
We are prioritising investment into areas that will deliver profitable growth.
As an indication, overall headcount was flat during the year despite
significant new hires in technology, product, and our new overseas operations.
We therefore reduced full time employees in our core FX Services business by
13% across the year and will continue to look for operational efficiencies as
we drive towards automation.
We carried out an in-depth review of our front office operations during the
year and made a number of important changes including how sales commissions
and Key Performance Indicators ("KPIs") better align with the Group's
long-term success. We also established a new Key Accounts team to service our
largest corporate customers and are seeing improved retention as a result.
During the year we placed greater emphasis on a data driven approach to all
our decision making and processes, both operational and financial. As a
result, we completed the implementation of Salesforce and NetSuite in our
Sales and Finance functions respectively.
Sustainability
As a small but growing services company with a team of 197 people across our
four offices, we have a limited impact on the environment. Nonetheless, we
strive to minimise or mitigate any harm that we might do and also actively
seek to contribute positively to the environment and our communities.
People
Our people are essential to everything we do. We have made a number of key
strategic changes during the year which will be integral to long-term
profitable growth.
We have strengthened our executive team including new COO Tim Rudman, who will
deliver the roll out of our global platform, launch new revenue-generating
products, and automate our client onboarding processes. We have fully staffed
our new operations in Australia and Dubai, in addition to making a number of
key changes in our UK core operations. Finally, Chrissie Humphrey joined us in
the year as Chief People Officer and joins the Executive Committee, marking a
significant milestone in the Company's commitment to fostering a strong,
dynamic workforce as it continues to scale its operations globally and to
position ourselves as an employer of choice.
Outlook
Foreign exchange volatility is more likely to prevail compared to the more
benign conditions we experienced in H1 as the United States ushers in a second
Trump presidential term which has the potential to impact inflation, tariffs
and global trade dynamics, as well as central bank monetary policy and
geopolitical developments. Market expectations for the timing and extent of
inbound interest rate cuts from various central banks will remain a key
driver, as will variable economic data between economic regions. The US has
continued to outshine many other developed market economies, termed 'US
exceptionalism' by market commentators in recent years. The extent to which
this can continue, or slow, throughout 2025 will be key to the fate of the
dollar, and the wider foreign exchange markets in general.
Having actively reset Argentex in 2024, we are well positioned to take
advantage of more dynamic markets, and with regulatory and operational hubs
now fully established in the Netherlands, Australia and Dubai, we believe we
have strong capability to grow our market share overseas. Domestically, we
have restructured our front office teams, realigned payment terms, set about
the creation of new products and services with vigour, and believe we are
better placed to serve both new and existing clients as a result. Globally,
all regions will benefit from the suite of new services we aim to launch this
year and next, together with easier, automated onboarding processes and full
Application Programming Interface capability incorporated into our new
Argentex Global Platform which remains on schedule to be delivered in summer
2025. It has been a year of significant change in the business, but I believe
this change was necessary as costs had escalated against static revenues that
were the result of a simplistic business model neither automated, nor
scalable.
It has been a privilege to lead Argentex during 2024 and I am genuinely
excited by the opportunities ahead of us in 2025 and beyond. We are well
placed to return to profitable growth but none of this would be possible
without the effort, resilience and enthusiasm shown by my colleagues every
single day and I would like to take this opportunity to thank them for their
ongoing and unwavering support. Our business employs 197 amazing people whose
talent and commitment we cherish and who will help propel us to success, as we
execute our clear strategy over coming years.
Jim Ormonde
Chief Executive Officer
02 April 2025
CFO's Review
Market Overview
In 2024 foreign exchange volatility meaningfully increased over the year
before, once again driven by monetary policy divergence and political
developments, particularly in the United States with the election in November
of President Trump for a second term.
Ultimately, many central banks did not cut interest rates by as much as
markets had anticipated, partly owing to the inability of headline inflation
to remain at target (1-3%). In the core currencies traded by most of our
clients, 2024 followed a strikingly similar path to the prior year. The US
dollar weakened quite significantly during the summer, only to perform an
impressive volte-face in the autumn, rallying significantly as markets reacted
to the re-election of Trump and his inflationary policy mix. Continuing US
economic resilience and the prospect of inflation nudging higher later in the
year has reduced the chance of rate cuts into 2025. Various outcomes for
interest rate policy remain.
In the UK, sterling performed strongly for much of the year, fuelled by strong
GDP growth, reticence from the Bank of England to begin the rate cut cycle,
and a new Government promising 'fiscal responsibility'. By year end, however,
sterling's H1 strength had faded, materially weakening in the aftermath of the
new Labour government's first Autumn Budget, as business confidence worsened,
and economic growth slowed sharply. As we transition into 2025, we see grounds
for ongoing volatility in foreign exchange markets, given the scope for some
monetary policy divergence, the ripple effects of President Trump's policies
around international trade and the imposition of import tariffs by the United
States, and geopolitical issues still capable of impacting wider markets.
Higher levels of volatility have historically led our customers to hedge a
higher proportion of their foreign currency transactions.
Financial Performance Overview
Revenue
Argentex generated revenue of £50.3m in FY24, marginally ahead of the prior
year (FY23: £49.9m). An increase in total volumes traded was offset by a
reduction in average revenue per client, driven by an industry-wide reduction
in margins across all products.
During FY24, 2,113 clients traded with Argentex, an increase of 9% on the
prior year. The teams continue to win new business and revenue from new
clients of £15.8m in FY24 was ahead of the prior year (FY23: £15.2m)
The column charts below show the changing nature of our product mix year on
year, with an increase in share of revenue from options, a product that was
first launched during FY22, and a reduction in revenue share from both
forwards and spots.
Operating headcount
Headcount is the principal driver of operating costs for Argentex. At the very
start of FY24 our Full Time Employee ("FTE") numbers increased as new
colleagues hired in the second half of FY23 joined the Group for anticipated
growth, which did not materialise. Throughout FY24, through a combination of
natural attrition, performance management and controlled backfill, the Group
has reduced the headcount supporting the core business by 13%, and increased
headcount in areas supporting growth, with closing total headcount being
broadly flat compared to the prior year, as illustrated in the chart below.
Improvements have been made to control cost across the Group, including the
implementation of a more robust expenses policy and a tightening of
discretionary spend. Whilst the impact of these measures is taking some time
to flow through, we expect to see a full year of benefit in FY25.
During the year, the Group incurred a number of costs which reduced overall
profitability, and which did not occur in the prior year. The most significant
of these were:
- Costs associated with transformation of the Group of
c.£1.5m which we would not expect to reoccur in FY25
- The closure / cancellation of the Argentex Group
Value Creation Plan which gave rise to a one-off non-cash accounting charge of
£0.6m
- Default on a foreign exchange contract by a customer
of £0.6m.
As a result of the cost of transformation and these
one-off costs, we generated EBITDA of £4.0m and operating loss of £0.2m
(FY23: profit £8.1m).
Cash
Cash and cash equivalents as at 31 December 2024 was
£48.7m, which includes £30.3m of client balances pertaining to collection of
any collateral and variation margin. Net cash as at 31 December 2024 was
broadly flat at £18.4m (FY23: £18.3m).
In FY24, we spent £2.1m on capex which includes the
build of the new Argentex Global Platform for which £3.0m net was raised via
an equity issue in May 2024. The capex spend is lower than the prior year of
£4.7m, which included significant investment in premises.
Working capital was impacted by a larger cash balance required to be
segregated for mark to market movements on CASS clients positions than in
December 2023.
£m FY24 FY23
EBITDA 4.0 11.9
Lease payments (1.9) (1.5)
Capex (2.1) (4.7)
Working capital (1.6) 1.8
Operating cash flow (1.6) 7.5
Tax paid (1.3) (2.0)
Free cash flow (2.9) 5.5
Net proceeds from equity raise 3.0 -
Dividends paid - (3.4)
Net cash flow 0.1 2.1
Net cash at beginning of period 18.3 16.2
Net cash at end of period 18.4 18.3
£m 31 December 2024 31 December 2023
Cash and cash equivalents 48.7 33.0
Less: segregated client funds (30.3) (14.7)
Net cash 18.4 18.3
Collateral held at Institutional counterparties 5.7 5.7
Argentex is required to hold a minimum amount of cash for regulatory
requirements, and therefore it is only the headroom above this amount that is
free cash available for investing in the business. The regulatory cash
requirement is calculated daily and is based on ongoing costs of running the
business as well as stress tests. The headroom can vary significantly month to
month due to margin calls and ongoing working capital movements.
Cash generation from the Group's revenue is a function of:
- The composition of revenue (spot, forward, option and swap revenues)
- The average duration of the FX forwards in the portfolio
In FY24, Argentex generated revenues in a proportion of approximately 46%/54%
between spot and forward contracts outside of options and swap revenues.
Whilst spot FX contracts attract a smaller revenue spread, the inherent risk
profile is much reduced, and cash is generated almost immediately. As such,
having this proportion of revenues generated by spot trades with a minimal
working capital cycle creates a strong positive immediate cash flow for the
business.
Excluding swap revenue, 80% of revenue converts to cash within three months,
which is broadly consistent with prior years as follows:
Cash conversion 12 months to 12 months to 9 months to 12 months to 12 months to
31 December 2024 31 December 2023 31 December 2022 31 March 2022 31 March 2021
£m £m £m £m £m
Revenues 50.3 49.9 41.0 34.5 28.1
Revenues (swap adjusted "S/A") (A) 41.0 43.6 37.7 31.5 27.2
Less
Revenues settling beyond 3 months S/A (8.2) (7.7) (7.1) (4.6) (3.1)
Net short term cash generation (B) 32.8 35.9 30.6 26.9 24.1
Short term cash return (B/A) 80% 82% 81% 85% 88%
Investing for Growth
In May 2024, we communicated our new strategy to shareholders and we have made
progress against each of the three pillars of the strategy, as follows:
Operational/financial efficiencies
Where there has been natural attrition in our headcount, we have controlled
backfill, reduced the number of FTE supporting the existing business and
invested only to support growth areas, and as a result have kept overall
closing headcount broadly flat year on year.
Salesforce has been implemented which allows us greater insights into how to
best serve our clients and to improve our customer retention and repeat
business. We also successfully migrated our accounting system from a basic
system with a manual consolidation to a NetSuite ERP product which provides
the functionality to support a multi-currency, multi-location Group. We will
be leveraging its functionality further during FY25 with the introduction of a
more robust 'Procure to Pay' process, which will strengthen our financial
control. We have also tightened our cost control in FY24, reducing our
discretionary spend and introducing a more robust expenses policy, and this
will continue to be an area of focus in FY25.
Product expansion
In May 2024, we raised net proceeds of £3.0m via a share issue to fund our
acceleration into digital accounts and payments through the build of the
Argentex Group Platform. We have hired an experienced team who are on track to
deliver and launch the first phase of this new product set in summer 2025. The
AGP build costs were on budget throughout FY24 and all in year milestones were
achieved.
Geographic expansion
We were granted licences in two more overseas jurisdictions during FY24: the
Australian Financial Services License in May 2024 and the Category 3A licence
from the Dubai Financial Services Authority in November 2024. We look forward
to trading ramping up from each of these overseas entities during FY25.
Portfolio Composition
As at 31 December 2024, 84% of the Group's portfolio was comprised of trades
in the major currencies of Sterling, Euro and US dollar, in line with the
prior year. Therefore, the Group's exposure to exotic currencies or currencies
with higher volatility and less liquidity remains limited.
Dividend
Whilst we continue to invest in growth and to transform the business, the
Board has decided that Argentex Group plc will not declare a dividend for the
year ended 31 December 2024.
Outlook
With trading having commenced in Australia and Dubai, following the grant of
their licences during FY24, and the launch of digital accounts and payments
products in summer 2025, we anticipate a return to revenue growth in FY25.
Guy Rudolph
Chief Financial Officer
02 April 2025
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024
Notes Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Revenue 5 50.3 49.9
Cost of sales (1.3) (1.7)
Gross profit 49.0 48.2
Other operating income 1.6 1.1
Administrative expenses (50.2) (40.7)
Share-based payments charge 22 (0.6) (0.5)
Operating (loss)/profit (0.2) 8.1
Finance costs 10 (0.8) (0.8)
(Loss)/profit before taxation (1.0) 7.3
Taxation 11 (0.3) (2.2)
(Loss)/profit for the year (1.3) 5.1
Other comprehensive income for the year
Foreign exchange differences on translation of foreign operations 0.1 -
Total comprehensive (loss)/income for the year (1.2) 5.1
Earnings per share
Basic 12 (1.1p) 4.6p
Diluted 12 (1.1p) 4.6p
Consolidated Statement of Financial Position as at 31 December 2024
Notes 31 December 31 December
2024 2023
£m £m
Non-current assets
Intangible assets 13 2.8 2.7
Property, plant and equipment 14 13.1 15.1
Derivative financial assets 23 13.6 9.8
Deferred tax asset 11 0.5 0.2
Trade and other receivables 15 0.1 -
Total non-current assets 30.1 27.8
Current assets
Trade and other receivables 15 1.3 1.3
Cash and cash equivalents 16 48.7 33.0
Other assets 17 18.6 10.5
Derivative financial assets 23 58.1 38.9
Total current assets 126.7 83.7
Current liabilities
Trade and other payables 18 (46.8) (29.3)
Lease liabilities 19 (1.2) (0.9)
Derivative financial liabilities 23 (46.7) (23.6)
Total current liabilities (94.7) (53.8)
Net current assets 32.0 29.9
Non-current liabilities
Trade and other payables 18 (0.3) (0.3)
Lease liabilities 19 (9.4) (10.6)
Derivative financial liabilities 23 (9.0) (5.8)
Total non-current liabilities (18.7) (16.7)
Net assets 43.4 41.0
Consolidated Statement of Financial Position (continued) as at 31 December 2024
Notes 31 December 31 December
2024 2023
£m £m
Equity
Share capital 20 0.1 0.1
Share premium 21 15.7 12.7
Share option reserve 22 - 1.0
Merger reserve 21 4.5 4.5
Translation reserve 21 0.1 -
Retained earnings 21 23.0 22.7
Total Equity 43.4 41.0
The Consolidated Financial Statements of Argentex Group PLC were approved by
the Board of Directors on 02 April 2025 and were signed on its behalf by:
Guy Rudolph
Registered number 11965856
Consolidated Statement of Changes in Equity for the year ended 31 December 2024
Share capital Share premium Share option reserve Merger reserve Translation reserve Retained earnings Total equity
Notes £m £m £m £m £m £m £m
Balance at 1 January 2023 0.1 12.7 0.5 4.5 - 21.0 38.8
Comprehensive income for the year
Profit for the year - - - - - 5.1 5.1
Total comprehensive income for the year - - - - - 5.1 5.1
Transactions with owners:
- Dividends paid 9 - - - - - (3.4) (3.4)
- Share-based payments charge 22 - - 0.5 - - - 0.5
Balance at 31 December 2023 0.1 12.7 1.0 4.5 - 22.7 41.0
Comprehensive income/(loss) for the year
Loss for the year - - - - - (1.3) (1.3)
Other comprehensive income - - - - 0.1 - 0.1
Total comprehensive income/(loss) for the year - - - - 0.1 (1.3) (1.2)
Transactions with owners:
- Issue of share capital 20 - 3.0 - - - - 3.0
- Dividends paid 9 - - - - - - -
- Share-based payments charge 22 - - 0.6 - - - 0.6
- Share scheme release 22 - - (1.6) - - 1.6 -
Balance at 31 December 2024 0.1 15.7 - 4.5 0.1 23.0 43.4
Consolidated Statement of Cash Flows for the year ended 31 December 2024
Notes Year ended 31 December 2024 Year ended 31 December 2023
£m £m
(Loss)/profit before taxation (1.0) 7.3
Taxation paid (1.3) (2.0)
Net finance expense 10 0.8 0.8
Depreciation of property, plant and equipment 14 1.1 1.1
Depreciation of right of use assets 19 1.3 1.2
Amortisation of intangible assets 13 1.8 1.6
Share-based payment charge 22 0.6 0.5
(Increase) in trade receivables 15 - (0.3)
Increase in trade and other payables 18 18.2 4.3
(Increase)/ decrease in derivative financial assets 23 (23.0) 17.8
Increase/ (decrease) in derivative financial liabilities 23 26.3 (17.8)
(Increase) in other assets 17 (8.1) (0.5)
(Increase) in operating leases - (0.4)
Net cash generated from operating activities 16.7 13.6
Investing activities
Purchase of intangible assets 13 (1.9) (1.8)
Purchase of plant and equipment 14 (0.2) (2.9)
Net cash used in investing activities (2.1) (4.7)
Financing activities
Payments made in relation to lease liabilities 19 (1.9) (1.5)
Dividends paid 9 - (3.4)
Proceeds from equity raise 20 3.0 -
Net cash generated from/ (used in) financing activities 1.1 (4.9)
Net increase in cash and cash equivalents 15.7 4.0
Cash and cash equivalents at the beginning of the year 33.0 29.0
Cash and cash equivalents at the end of the year 16 48.7 33.0
Notes to the Financial Statements for the year ended 31 December 2024
1 General information
Argentex Group PLC ("the Company") is a public limited company, limited by
shares, incorporated and domiciled in England and Wales. The address of the
registered office is 25 Argyll Street, London, W1F 7TU.
On 25 June 2019, the Company listed its shares on AIM, the London Stock
Exchange's market for small and medium size growth companies ("the IPO").
The Company is the ultimate parent company into which the results of all
subsidiaries are consolidated.
The Consolidated Financial Statements are presented in pounds sterling (£),
which is the currency of the primary economic environment in which the Group
operates, and are rounded to the nearest million, except where otherwise
indicated.
2 Material accounting policies
The material accounting policies are summarised below.
2.1 Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with
UK-adopted IFRS accounting standards.
The material accounting policies adopted in the preparation of the
Consolidated Financial Statements are set out below. The policies have been
consistently applied to all of the periods presented, unless otherwise stated.
The Consolidated Financial Statements have been prepared under the historical
cost convention, modified by the measurement at fair value of certain
financial assets and liabilities and derivative financial instruments as
stated in Note 2.7.
2.2 Adoption of new and revised standards
There are no new standards, interpretations and amendments which became
mandatorily effective for the current reporting period which have had any
material effect on the Consolidated Financial Statements for the Group.
The Group has not early adopted any new standards, interpretations or
amendments that have been issued but are not yet effective. The following new
standard is effective in future periods and has not been applied in preparing
these Consolidated Financial Statements:
IFRS 18 Presentation and Disclosure in Financial Statements: Issued in April
2024, IFRS 18 introduces new requirements for the presentation and disclosure
of financial statements. The standard is effective for annual reporting
periods on or after 01 January 2027, with earlier application permitted.
2.3 Going concern
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future and
have assessed the Group's prospects over a 12-month period from the approval
date of these Consolidated Financial Statements. The Group's principal trading
subsidiary, Argentex LLP, has been profitable since inception in 2011, the
Group has no external debt, and the LLP continues to generate sufficient cash
to support the activities of the Group. Budgets and cash flow forecasts are
prepared to cover a variety of scenarios and are subsequently reviewed by the
Directors to ensure they support the Group's continuing ability to operate as
a going concern.
Sensitivity analysis has been performed in respect of specific scenarios which
could negatively impact the future performance of the Group, including lower
levels of revenue, compression in profitability margins, extensions to the
Group's working capital cycle, and significant increases in volatility
requiring further collateral to be placed with the Group's institutional
counterparties.
In addition, the Directors have also considered mitigating actions such as
lower capital expenditure and other short-term cash management activities
within their control (see Note 23.2 for further disclosures relating to
liquidity risk).
The Board of Directors is confident that in context of the Group's financial
requirements these measures give sufficient liquidity to the Group to ensure
that the Group can withstand significant shocks, whilst remaining as a going
concern for the next twelve months from the date of approval of the Directors'
report and Consolidated Financial Statements.
For these reasons, the Directors adopt the going concern basis of accounting
in preparing these Consolidated Financial Statements.
2.4 Basis of consolidation
The Group Consolidated Financial Statements incorporate the Financial
Statements of the Company and entities controlled by the Company (its
subsidiaries) prepared to 31 December each year. Control is achieved where the
Company is exposed to, or has the rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. In assessing control, the Group takes into
consideration the existence and effect of potential voting rights that
currently are exercisable or convertible.
The Consolidated Financial Statements comprise the Company and the results,
cash flows and changes in equity of the following subsidiary undertakings:
Name of undertaking Nature of business Country of incorporation
Argentex LLP Foreign exchange broking England
Argentex Capital Limited Holding company England
Argentex Foreign Exchange Limited Holding company England
Argentex B.V. Foreign exchange broking Netherlands
Argentex PTY LTD Foreign exchange broking Australia
Argentex Technologies Limited Platform development England
Argentex (DIFC) Ltd Foreign exchange broking United Arab Emirates
All subsidiary undertakings are 100% owned either directly or indirectly by
Argentex Group PLC.
Where necessary, adjustments are made to the Financial Statements of
subsidiaries to bring the accounting policies used into line with those used
by the Group.
All intra-group transactions and balances and any unrealised gains and losses
arising from intra-group transactions are eliminated in preparing the
Consolidated Financial Statements.
The following UK subsidiaries will take advantage of the audit exemption set
out within section 479A of the Companies Act 2006 for the year ended 31
December 2024.
Name of undertaking Company number
Argentex Capital Limited 11965565
Argentex Foreign Exchange Limited 07814670
Argentex Technologies Limited 14797013
Argentex Group PLC guarantees all outstanding liabilities to which the
subsidiaries listed above are subject at the end of the financial year, until
they are satisfied in full. This is in accordance with Section 479C of the
Companies Act 2006.
2.5 Accounting for merger on formation of the Group
In June 2019, immediately prior to the Company's admission to AIM, Argentex
Group PLC acquired all equity interests in Argentex LLP. This was affected
through the acquisition of equity interests by a newly formed subsidiary,
Argentex Capital Limited, and the acquisition of Pacific Foreign Exchange
Limited (now Argentex Foreign Exchange Limited). Argentex LLP, Argentex
Capital Limited and Argentex Foreign Exchange Limited are 100% owned (either
directly or indirectly) subsidiaries of Argentex Group PLC and consolidated
into these Financial Statements.
In applying merger accounting when preparing these Consolidated Financial
Statements, to the extent the carrying value of the assets and liabilities
acquired under merger accounting is different to the cost of investment, the
difference is recorded in equity within the merger reserve.
2.6 Revenue recognition
Revenue represents the difference between the cost and selling price of
currency and is recognised after receiving the client's authorisation to
undertake a foreign exchange transaction for immediate or forward delivery.
Derivative assets and liabilities are initially measured at fair value at the
date the derivative contract is entered into and are subsequently remeasured
to fair value at each financial year end date. The resulting gain or loss is
recognised within revenue immediately.
The difference between the costs and selling price of currency is recognised
as revenue as this reflects the consideration to which the Group expects to be
entitled in exchange for those services.
In relation to structured solutions, the Group recognises the net option
premium receivable as revenue on the date that the structured solution is
executed. The execution date is when a binding contract is entered into with
the client or counterparty. The revenue is fixed and determined representing
the difference between the premiums paid. Structured solutions relate to a
range of foreign exchange option structures.
2.7 Financial instruments
The Group operates as a riskless principal deliverable foreign exchange broker
therefore financial instruments are significant to its financial position and
performance.
The Group's financial assets include derivative assets (foreign exchange spot,
foreign exchange forward and foreign exchange structured solution option
contracts with customers and banking counterparties) as well as amortised cost
assets including cash and cash equivalents, other assets and trade and other
receivables. The Group's financial liabilities include derivative liabilities
(foreign exchange spot, foreign exchange forward and foreign exchange
structured solution option contracts) and trade and other payables. The Group
does not apply hedge accounting.
The Group undertakes matched principal broking involving immediate
back-to-back derivative transactions with counterparties. These transactions
are classified as derivative financial assets and liabilities. A derivative
with a positive fair value is recognised as a financial asset and a derivative
with a negative fair value is recognised as a financial liability. Where there
is a legally enforceable right to offset the recognised amounts and an
intention to settle on a net basis or to realise the asset and the liability
simultaneously, financial assets and financial liabilities are offset, and the
net amount presented in the Consolidated Statement of Financial Position.
Management have presented the derivative assets and liabilities with banking
counterparties and with clients on a gross basis.
2.7.1 Derivative financial assets
Derivative financial assets are recognised when the Group becomes a party to
the contractual provisions of the instrument.
Derivative financial assets are measured at fair value through profit or loss
("FVTPL") as they are held for trading purposes.
Initial Recognition
Derivative assets are initially measured at fair value at the date the
derivative contract is entered into. The resulting gain or loss is recognised
within profit or loss immediately. Transaction costs directly attributable to
the acquisition of such financial assets at fair value through profit or loss
are recognised immediately in profit or loss.
Subsequent Measurement
Derivative assets are subsequently remeasured to fair value at each financial
year end date. Any gains or losses derived from instances such as foreign
exchange rate changes, which impact derivative financial asset revaluation,
would be immediately recognised through profit or loss. Valuation adjustments
to reflect potential inherent market risks on the fair value of derivative
financial assets are calculated and recorded where material. The credit
valuation adjustment ("CVA") reflects the market value of counterparty credit
risk and takes into account counterparty, applicable collateral agreements,
predicted losses and probabilities of default.
Derecognition
The Group derecognises derivative financial assets when they reach maturity
and the contractual cashflows are exchanged between the client and the Group
or the Group and the institutional counterparty. At this point, the assets
have expired and the obligations of the Group, the client and the
institutional counterparty have been discharged.
2.7.2 Other financial instrument assets
Other financial assets are those which are not derivatives in nature and have
been classified using the amortised cost method. These assets arise
principally as Solely Payments of Principal and Interest (SPPI) and are
intended to be held to maturity with all cashflows collected.
Initial Recognition
Purchases or sales of financial assets are recognised and derecognised on a
trade date basis when the Group becomes party to the contractual provisions of
the instrument. They are initially recognised at fair value plus transactions
costs that are directly attributable to their acquisition.
Subsequent Measurement
All recognised financial assets are subsequently remeasured in their entirety
at either amortised cost or fair value, depending on the classification of the
financial assets.
The Group has applied the simplified approach in IFRS 9 to measure applicable
loss allowances at lifetime expected credit loss ("ECL"). The Group determines
the expected credit losses on these items by using a provision matrix, based
on historical credit loss experience based on the past due status of the
debtors, adjusted as appropriate to reflect current conditions and estimates
of future economic conditions.
The Group writes off receivables when there is information indicating that the
debtor is in severe financial difficulty and there is no realistic prospect of
recovery, e.g. when the debtor has been placed under liquidation or has
entered into bankruptcy proceedings, or when the receivables are past due,
whichever occurs earlier.
Derecognition
On derecognition of financial assets measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received, and receivable is recognised in profit or loss.
2.7.3 Derivative financial liabilities
Derivative financial liabilities are recognised when the Group becomes a party
to the contractual provisions of the instrument.
Derivative financial liabilities are measured at FVTPL as they are held for
trading purposes.
Initial Recognition
Derivative financial liabilities are initially measured at fair value at the
date the derivative contract is entered into. The resulting gain or loss is
recognised within profit or loss immediately. Transaction costs directly
attributable to the acquisition of financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss.
Subsequent Measurement
Derivative liabilities are subsequently remeasured to fair value at each
financial year end date. Any gains or losses derived from instances such as
foreign exchange changes, which impact financial liability revaluation, would
be immediately recognised through profit or loss.
Derecognition
The Group derecognises derivative financial liabilities when they reach
maturity and the contractual cashflows are exchanged between the client and
the Group or the Group and the institutional counterparty. At this point, the
liabilities have expired and the obligations of the Group, the client and the
institutional counterparty have been discharged.
2.7.4 Other financial instrument liabilities
Other financial liabilities are obligations to pay for goods or services that
have been acquired in the ordinary course of business, not including financial
liabilities that are derivatives in nature. Other financial liabilities are
classified using amortised cost. This is used as the default classification
method for financial instruments not held as trade derivatives. The Group's
other financial liabilities include trade and other payables.
Initial Recognition
The Group holds amounts payable to customers at amortised cost. These are
short term balances that do not attract interest. Initial recognition consists
of fair value minus transaction costs.
Subsequent Measurement
Subsequent measurement makes use of the effective interest rate method, where
applicable, with interest related charges being recognised as finance costs in
the Consolidated Statement of Comprehensive Income.
Derecognition
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid and payable, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
2.8 Cash and cash equivalents
For the purpose of presentation in the Consolidated Statement of Cash Flows,
cash and cash equivalents includes cash on hand or deposits held at call with
financial institutions. Cash and cash equivalents includes client funds
disclosed in Note 16.
2.9 Other assets
Other assets presented on the Consolidated Statement of Financial Position is
made up of cash held as collateral with banking counterparties and balances
segregated to provide for out the money (OTM) positions with CASS Clients.
2.10 Leases
In accordance with IFRS 16, at inception of a contract the Group assesses
whether a contract is or contains a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of the identified asset the
Group considers whether:
1. The Group has the right to operate the asset.
2. The Group designed the asset in a way that predetermines how and for
what purpose it will be used.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless this is not
readily determinable, in which case the Group's incremental borrowing rate on
commencement of the lease is used. Lease liabilities are remeasured when there
is a change in future lease payments arising from a change in rate, if there
is a change in the Group's estimate of the amount expected to be payable under
a residual value guarantee or if the Group changes its assessment of whether
it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, either a corresponding
adjustment is made to the carrying amount of the right of use asset and the
revised carrying amount is depreciated over the remaining (revised) lease
term, or it is recorded in the Consolidated Statement of Comprehensive Income
if the carrying amount of the right to use assets has been reduced to zero.
Right of use assets are initially measured at the amount of the lease
liability and included within Property, plant and equipment on the
Consolidated Statement of Financial Position.
Subsequent to initial measurement, lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right of use assets are depreciated on a
straight-line basis over the remaining term of the lease or over the remaining
economic life of the asset if judged to be shorter than the lease term.
Dilapidation provisions in relation to Group's leases are disclosed in Trade
and other payables. The provisions relate to alterations made to the
properties leased by the Group. The provisions are expected to unwind at the
end of the leases.
The Group applies the short-term lease recognition exemption under IFRS 16 to
its short-term leases (i.e. those leases that have a lease term of 12 months
or less from the commencement date and do not contain a purchase option).
Lease payments on short-term leases are recognised as an expense in the
Consolidated Statement of Comprehensive Income on a straight-line basis over
the lease term.
2.11 Intangible assets and amortisation
Identifiable intangible assets are recognised when the Group controls the
asset, it is probable that future economic benefits attributed to the asset
will flow to the Group and the cost of the asset can be reliably measured.
Software development costs comprise the Group's bespoke dealing system and the
development of the Group's new alternative banking platform. Costs that are
directly associated with the production and development of the identifiable
system's controlled by the Group, and are probable of producing future
economic benefits, are recognised as intangible assets. Direct costs of
software development include employee costs and directly attributable
overheads.
Costs are capitalised to the extent that they represent an improvement,
enhancement or update to the intangible asset. Maintenance costs are expensed
through the Consolidated Statement of Comprehensive Income.
Amortisation is charged to the Consolidated Statement of Comprehensive Income
over the estimated useful life of three years of the dealing system from the
date developments are available for use, on a straight-line basis.
The amortisation basis adopted reflects the Group's consumption of the
economic benefit from that asset.
The intangible assets are tested annually for impairment or more frequently if
events or changes in circumstances indicate that the asset might be impaired.
2.12 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any
recognised impairment loss.
Depreciation is charged so as to write off the cost of assets to their
residual values, over their estimated useful lives, using the straight-line
method, on the following bases:
Office
equipment - Three to
five years
Computer
equipment - Three years
Leasehold improvements -
Over the period of the lease
Right of use
assets - Over the period of
the lease
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
2.13 Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the Consolidated Statement of
Financial Position date. Transactions in foreign currencies are translated
into sterling at the rate of exchange ruling at the date of the transaction.
Exchange differences are taken into account in arriving at the operating
profit.
2.14 Cost of sales
Cost of sales includes bank charges paid to banking counterparties and third
party platform fees.
2.15 Employee benefits
(i) Short term benefits
Short term employee benefits including holiday pay and annual bonuses are
accrued as services are rendered.
(ii) Defined contribution pension plans
The Group operates a defined contribution pension plan for its employees. A
defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. Once the contributions have been paid
the Group has no further payment obligations. The contributions are recognised
as an expense when they are due. Amounts not paid are shown in accruals in the
Consolidated Statement of Financial Position. The assets of the plan are held
separately from the Group in independently administered funds.
2.16 LLP Members' remuneration
LLP Members' remuneration is determined by reference to the nature of the
participation of rights of Members of Argentex LLP, the Group's main trading
subsidiary. It includes both remuneration where there is a contract of
employment and any profits that are automatically divided between members by
virtue of the members' agreement, to the extent that the Group does not have
an unconditional right to avoid payment. To the extent that these profits
remain unpaid at the year end, they are shown as liabilities in the
Consolidated Statement of Financial Position.
2.17 LLP Members' interests
LLP equity capital is only repaid to outgoing members in accordance with the
provision in the Members' Deed where the Group has both sufficient capital for
FCA regulatory requirements, and the capital is replaced by new capital
contributions from existing or new members. As such it is accounted for as
equity.
Other amounts due to Members classified as a liability relate to undistributed
profits and Members' taxation reserves.
2.18 Share-based payments
The cost of share-based employee compensation arrangements, whereby employees
receive remuneration in the form of share options, is recognised as an
employee benefit expense in the Consolidated Statement of Comprehensive
Income. Where the entity settling the share options differs from the entity
receiving the benefit of the share options (in the form of employee services),
the entity's separate Financial Statements reflect the substance of the
arrangement.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of
non-market-based vesting conditions) at the date of grant.
At the end of each reporting period the assumptions underlying the number of
awards expected to vest are adjusted for the effects of non-market-based
vesting conditions to reflect the conditions prevailing at that date. The
impact of any revisions to the original estimates is recognised in the
Consolidated Statement of Comprehensive Income, with a corresponding
adjustment to equity. Fair value of the Company Share Option Plan (CSOP)
scheme is measured using a Black-Scholes option pricing model. Fair value of
the Value Creation Plan (VCP) is measured using a Monte Carlo Simulation.
When share options are exercised, the Group issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
2.19 Taxation
The tax expense represents the sum of the tax currently payable and any
deferred tax.
Tax currently payable is based on taxable profit for the year. Taxable profit
may differ from operating profit as reported in the Consolidated Statement of
Comprehensive Income as it may exclude items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted at
the date of the Consolidated Statement of Financial Position.
To the extent it is material, deferred tax is calculated on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Consolidated Financial Statements. Deferred tax assets
are recognised to the extent that it is probable future taxable profits will
be available against which the temporary differences can be utilised.
2.20 Other operating income
Other operating income relates to net interest generated from the Group's
house cash balance and client cash balances recognised as cash and cash
equivalents on the Consolidated Statement of Financial Position along with
interest generated on the Group's other asset balances.
3 Critical accounting judgements and key sources of estimation uncertainty
In applying the Group's accounting policies, the Directors are required to
make judgements (other than those involving estimations) that have a
significant impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
3.1 Accounting judgements
The following are the critical judgements, apart from those involving
estimations (which are presented separately below), that the Directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in Consolidated
Financial Statements.
(i) Capitalisation of costs to intangible assets
The extent to which costs should be capitalised to intangible assets is a key
judgement. The Group capitalises costs as intangible assets if they have a
value that will benefit the performance of the Group over future periods.
(ii) Credit Valuation Adjustment
The CVA is a calculation based on the credit risk of counterparties inherent
in the valuation of derivative financial instruments (Note 23). The failure of
a client to settle a contracted trade carries the risk of loss equal to the
prevailing fair value of the trade. Within the CVA calculation to quantify
credit risk, judgement is required in determining the credit quality of the
client based on current market and other information and key estimates include
loss on default of a client and the probability of default. A 10 percent
increase across all Probability of Defaults (PDs) would result in decreased
operating profit of £0.1m (2023: £0.2m).
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Useful economic life of intangible assets
(see Note 13)
Technology within the financial services sector is in a perpetual state of
development and evolution, providing uncertainty over the useful economic life
of the Group's bespoke dealing system. Extending the estimated useful life of
the intangible costs from 3 years to 4 years would result in increased
operating profit of £0.4m (2023: £0.4m), decreasing the estimated useful
life from 3 years to 2 years would result in decreased operating profit of
£0.8m (2023: £0.8m)
4 Segment reporting
For the year ended 31 December 2024, the Group consisted of a single operating
segment (being Argentex LLP's foreign currency dealing business) that operated
in a market not bound by geographical constraints. This is due to the relative
size of Argentex LLP's operations compared to overseas subsidiaries and
continued investment in overseas operational readiness throughout the year. Of
the Group's revenue of £50.3m, Argentex LLP generated £46.4m (2023:
£49.7m), Argentex BV generated £3.8m (2023: £0.2m) and Argentex PTY
generated £0.1m (2023: nil).
There is no reliance on an individual customer and no customer contributed to
more than 10 percent of revenues in the year ended 31 December 2024 or year
ended 31 December 2023.
5 Revenue
Year ended Year ended 31 December 2023
31 December 2024
An analysis of the Group's revenue is as follows: £m £m
Spot foreign exchange contracts 12.0 13.4
Forward foreign exchange contracts 29.1 29.5
Structured solutions 9.2 7.0
50.3 49.9
6 Operating (loss)/profit
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Operating (loss)/profit for the year is stated after charging:
Depreciation of plant and equipment 1.1 1.1
Depreciation of right of use assets 1.3 1.2
Amortisation of intangibles 1.8 1.6
Staff costs (see Note 8) 33.0 27.7
Net foreign exchange losses/(gains) 0.1 (0.4)
7 Auditor's remuneration
Year ended Year ended
31 December 2024 31 December 2023
Fees payable to the Group's auditor and its associates for services to £m £m
the Group:
The audit of Financial Statements of the Group and subsidiaries 0.7 0.4
Other assurance and advisory services 0.1 0.1
0.8 0.5
8 Staff costs
Year ended 31 December 2024 Year ended 31 December 2023
Average No. No.
Directors 7 6
LLP members (excl. executive directors) 4 4
Sales and dealing 85 85
Operations 103 74
Average headcount 199 169
Employees, members and directors as at 31 December 2024 and 2023 197 196
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Staff costs for the above persons were:
Wages and salaries 24.0 20.3
Social security costs 3.0 2.3
Pension costs 0.6 0.5
Share-based payments 0.6 0.5
LLP members' remuneration* 2.7 2.6
Directors' remuneration 2.1 1.5
33.0 27.7
Directors' remuneration
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Directors' remuneration comprised:
Salaries and LLP members' remuneration 2.1 1.5
*Excludes Directors of Argentex Group PLC who are/were also members of
Argentex LLP.
Prior to IPO, profits from Argentex LLP were distributed according to
individual equity holdings in the LLP. Following Admission, the self-employed
LLP members are remunerated under the Amended and Restated LLP Agreement by a
combination of (i) fixed annual remuneration (ii) participation in revenue
commission schemes (iii) annual bonuses and (iv) other variable compensation
based on the LLP's performance.
Key management are those persons having authority and responsibility for
planning, controlling, and directing the activities of the Group, or in
relation to the Company. In the opinion of the Board, the Group and
Company's key management are the Directors of Argentex Group PLC. Information
regarding their compensation is provided in the Remuneration Committee Report.
9 Dividends
Year ended Year ended
31 December 2024 31 December
2023
£m £m
Amounts recognised as distributions to equity holders:
Final dividend for the year ended 31 December 2023 of nil per share (December - 2.5
2022: dividend for the 9-month period ended 31 December 2022 of 2.25p per
share)
Interim dividend for the year to 31 December 2024 of nil per share (2023: - 0.9
0.75p per share)
- 3.4
Proposed final dividend for the year ended 31 December 2024 of nil per share - -
(2023: nil)
10 Finance costs
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Interest on lease arrangements 0.8 0.8
11 Taxation
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Income tax recognised in Consolidated
Statement of Comprehensive Income
Current tax charge/(credit)
Current tax on profit for the year 0.4 1.6
Adjustments in respect of prior years 0.2 0.3
Total current tax 0.6 1.9
Deferred tax
Origination and reversal of temporary differences (0.2) 0.3
Adjustments in respect of prior years (0.1) -
Total deferred tax (0.3) 0.3
Total tax expense 0.3 2.2
Tax has been calculated using an estimated annual effective tax rate of -30.5%
(2023: 23.5%) on profit before tax. The main rate of UK corporation tax for
the year ended 31 December 2024 was 25% (2023: increased to 25% from 19%).
The difference between the total tax expense shown above and the amount
calculated by applying the standard rate of UK corporation tax to the profit
before tax is as follows:
Year ended Year ended
31 December 2024 31 December 2023
£m £m
(Loss)/profit for the year (1.3) 5.1
Income tax expense 0.3 2.2
(Loss)/ profit before income taxes (1.0) 7.3
Tax using the Company's domestic tax rate of 25% (2023: 23.5%)
(0.2) 1.7
Effects of:
Variance in overseas tax rates 0.1 -
Expenses not deductible for tax purposes 0.2 0.1
Tax losses/temp. differences for which no deferred income tax asset has been 0.1 -
recognised
Adjustments in respect of prior period 0.1 0.4
Total tax on ordinary activities 0.3 2.2
Year ended 31 December 2024 Year ended
31 December 2023
£m £m
Current tax assets and liabilities
Corporation tax asset/(liability) 0.1 (0.6)
Current tax asset/(liability) 0.1 (0.6)
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Deferred Tax
Assets
At 1 January 2024 and 1 January 2023 0.2 0.5
Current year movement 0.2 (0.3)
Prior year adjustments 0.1 -
Total deferred tax asset 0.5 0.2
Deferred tax in relation to timing differences on fixed assets and other
timing differences. There is no expiry on the deferred tax asset. The deferred
tax asset is based on the rate of corporation tax 25%. Deferred tax assets of
£0.1m relating to unused tax losses in Australian and Dubai subsidiaries have
not been recognised as there is no track record of taxable profits generated
from trading using local licences to utilise against the losses.
12 Earnings per share
The Group calculates basic earnings to be net loss attributable to equity
shareholders for the year.
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Earnings
Earnings for the purposes of basic and diluted earnings per share
- basic and diluted (1.3) 5.1
Number of shares
The calculation of basic and diluted earnings per share is based on the
following number of shares (m).
Weighted average number of ordinary shares for the purposes of basic earnings 117.8 113.2
per share
- 0.1
Number of dilutive shares under option
Weighted average number of ordinary shares for the purposes of dilutive 117.8 113.3
earnings per share
Earnings per share
Basic (1.1p) 4.6p
Diluted (1.1p) 4.6p
The calculation of diluted earnings per share assumes conversion of all
potentially dilutive ordinary shares, all of which arise from share options. A
calculation is performed to determine the number of share options that are
potentially dilutive based on the number of shares that could have been
acquired at fair value, considering the monetary value of the subscription
rights attached to outstanding share options.
As the Group has incurred a loss in the year, the diluted loss per share is
the same as the basic earnings per share as the loss has an anti-dilutive
effect (an increased number of shares gives rise to a reduced loss per share).
13 Intangible fixed assets
Software
development
costs
£m
Cost
At 1 January 2023 8.8
Additions 1.8
At 31 December 2023 10.6
Additions 1.9
At 31 December 2024 12.5
Accumulated amortisation
At 1 January 2023 6.3
Charge for year 1.6
At 31 December 2023 7.9
Charge for year 1.8
At 31 December 2024 9.7
Net book value
At 31 December 2023 2.7
At 31 December 2024 2.8
14 Property, plant and equipment
Leasehold improvements Right of use asset Office equipment Computer equipment Total
£m £m £m £m £m
Cost
At 1 January 2023 1.8 7.3 1.3 0.7 11.1
Additions 2.0 6.6 0.5 0.4 9.5
Disposals - - - - -
At 31 December 2023 3.8 13.9 1.8 1.1 20.6
Additions 0.1 0.2 - 0.1 0.4
Disposals - - - - -
At 31 December 2024 3.9 14.1 1.8 1.2 21.0
Accumulated depreciation
At 1 January 2023 0.4 2.1 0.2 0.5 3.2
Charge for the year 0.4 1.2 0.4 0.3 2.3
Disposals - - - - -
At 31 December 2023 0.8 3.3 0.6 0.8 5.5
Charge for the year 0.5 1.3 0.4 0.2 2.4
Disposals - - - - -
At 31 December 2024 1.3 4.6 1.0 1.0 7.9
Net book value
At 31 December 2023 3.0 10.6 1.2 0.3 15.1
At 31 December 2024 2.6 9.5 0.8 0.2 13.1
Right of use asset relates to leases disclosed in Note 19.
15 Trade and other receivables
31 December 2024 31 December 2023
£m £m
Non-current
Other receivables 0.1 -
Trade and other receivables
0.1 -
Current
Other receivables 0.4 0.6
Prepayments 0.9 0.7
Trade and other receivables 1.3 1.3
16 Cash and cash equivalents
31 December 2024 31 December 2023
£m £m
Cash and cash equivalents 48.7 33.0
Included within cash and cash equivalents are client held funds relating to
margins received and client balances payable. These amounts are matched by
amounts payable to clients of £30.3m (2023: £14.7m) in Note 18 and are not
available for the Group's own use. Client balances held as electronic money in
accordance with the Electronic Money Regulations 2011 are held in accounts
segregated from the firm's own bank accounts.
Client balances that fall under the scope of the FCA's Client Assets
Sourcebook ("CASS") are held in segregated client bank accounts which are off
balance sheet and excluded from the cash and cash equivalents figure.
The Directors consider that the carrying amount of these assets is a
reasonable approximation of their fair value. Cash is held at authorised
credit institutions and non-bank financial institutions with robust credit
ratings (where published) and sound regulatory capital resources.
17 Other assets
31 December 2024 31 December 2023
£m £m
Collateral with banking counterparties 5.7 5.7
Balances segregated for CASS mark to market 12.9 4.8
Other assets 18.6 10.5
Other assets are made up of collateral with banking counterparties and
balances segregated to provide for out the money positions with CASS Clients.
Client margins received and disclosed within client balances payable are used
to service margin calls with counterparties.
18 Trade and other payables
31 December 2024 31 December 2023
£m £m
Non-current
Lease dilapidation provisions 0.3 0.3
Trade and other payables
0.3 0.3
Current
Amounts payable to clients 30.3 14.7
Corporation tax - 0.6
Amounts due to members and former members of Argentex LLP - 0.4
Trade payables 7.9 6.9
Accruals 8.5 5.6
Other taxation and social security 0.1 1.1
Trade and other payables 46.8 29.3
19 Leases
In May 2020, the Group signed a ten-year lease for its head office premises at
Argyll Street, London. In February 2023, the Group signed a nine-year lease
for an additional floor for its head office at Argyll Street, London as well
as signing a deed of variation for the original lease, extending the term
until a final expiry date of January 2033. In the same month, the Group also
signed a five-year lease for its office in the Netherlands. In December 2023,
the Group signed a three-year lease for its office in Dubai.
In October 2024 and November 2024, the Group signed five-month and six-month
licence agreements for office spaces in Sydney and Melbourne, Australia
respectively. The Group has elected to apply the short-term lease exemption
under IFRS 16 for these agreements. The lease payments are recognised as an
expense in the Consolidated Statement of Comprehensive Income over the terms
of the leases.
As a lessee, the Group has recognised lease liabilities representing the
present value of the obligations to make lease payments, and related right of
use (ROU) assets, in accordance with Note 2.10. For the UK leases, the lease
payments are discounted using the interest rates implicit in the leases (both
7%). For the Netherlands and Dubai leases, the interest rates implicit in the
leases cannot be readily determined and therefore management have assessed the
incremental borrowing rates to be 7% and 4.6% respectively determined based on
the individual borrowing rates of each entity adjusted for lease-specific
factors. Information about the lease liability is presented below:
31 December 2024 31 December 2023
£m £m
Lease liability at beginning of financial year 11.5 6.1
Additions 0.2 6.1
Payments made in the year (1.9) (1.5)
Unwinding of finance costs 0.8 0.8
Lease liability at end of financial year 10.6 11.5
Of which
Current 1.2 0.9
Non-current 9.4 10.6
Amounts recognised in the Consolidated Statement of Comprehensive Income is
presented below:
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Depreciation charge on right of use assets (Note 14) 1.3 1.2
Interest on lease liabilities (Note 10) 0.8 0.8
Maturity profile of lease liability based on contractual (undiscounted)
payments disclosed in Note 23.
20 Share capital
Ordinary Management Nominal
shares shares value
No. No. £m
Authorised, allotted and paid up
At 1 January 2024 113,207,547 23,589,212 0.1
Shares issued during the year 7,221,508 - -
At 31 December 2024 120,429,055 23,589,212 0.1
On 19 June 2019, 23,589,212 Management shares were issued with nominal value
of £58,974 to establish the minimum allotted share capital for a public
limited company. So long as there are shares of any other class in issue,
Management shares have no voting rights or rights to receive dividends or
other distributions of profit.
On 25 June 2019, 113,207,547 Ordinary shares of £0.0001 each were issued for
trading on AIM at a price of 106p per share. Of these, 100,000,000 shares were
issued to the former owners of Argentex LLP as part of the Group formation.
Following this, the Group issued an additional 13,207,547 shares at 106p per
share, generating share premium of £13,988,679 before issuance costs.
On 13 May 2024, 7,221,508 Ordinary shares with a nominal value of £0.0001 per
share were issued, generating total gross proceeds of £3,249,679 before
issuance costs resulting in a net Share Premium of £3,012,568. The issued
shares are fully paid and rank pari passu in all respects with the existing
Ordinary Shares of the Company, including, without limitation, the right to
receive all dividends and other distributions declared, made, or paid after
the date of issue.
21 Reserves
Details of the movements in reserves are set out in the Consolidated Statement
of Changes in Equity. A description of each reserve is set out below.
Share premium
The share premium account is used to record the aggregate amount or value of
premiums paid in excess of the nominal value of share capital issued, less
deductions for issuance costs. Where an equity issuance is accounted for using
merger relief, no share premiums are recorded.
Merger reserve
The merger reserve represents the difference between carrying value of the
assets and liabilities acquired under merger accounting to the cost of
investment (the fair value).
Translation reserve
The translation reserve relates to foreign exchange differences which arise on
the translation of foreign operations.
Share option reserve
The Group operates share option schemes that are explained in Note 22 of these
Consolidated Financial Statements. The Group recognises the services received
from eligible scheme participants as a charge through the Consolidated
Statement of Comprehensive Income, with the corresponding entry credited to
the Share option reserve.
Retained earnings
Retained earnings are the accumulated undistributed profits of the Group that
have been recognised through the Consolidated Statement of Comprehensive
Income, less amounts distributed to shareholders.
22 Share-based payments
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of
non-market-based vesting conditions) at the date of grant.
At the end of each reporting period the assumptions underlying the number of
awards expected to vest are adjusted for the effects of non-market-based
vesting conditions to reflect the conditions prevailing at that date. The
impact of any revisions to the original estimates is recognised in the
Consolidated Statement of Comprehensive Income, with a corresponding
adjustment to equity. Fair value of the CSOP schemes is measured using a
Black-Scholes option pricing model. Fair Value of the Value Creation Plan is
measured using a Monte Carlo Simulation.
When share options are exercised, the Group issues new shares.
CSOP
In June 2019, the Group issued 311,311 share options under Part I of an
approved company share option plan ("CSOP") to participating employees. The
share options have an exercise price of £1.06, being the IPO issue price, and
vest three years after issuance. The fair value of these options at issuance
has been derived using a Black-Scholes model, with expected volatility of 30%,
based on derived volatilities of the AIM index and the similar listed entities
to the Group. The risk-free rate at the time of issuance was 0.54% for UK
Government Bonds with a similar term to the vesting period of the CSOP.
In the year to March 2021, the Group issued a total of 4,981,130 share options
under Parts I, II and III of the company share option plans ("CSOP") to
participating employees and LLP members. The share options have an exercise
price of £1.35, and vest in tranches three, four and five years after
issuance. The fair value of these options at issuance has been derived using a
Black-Scholes model, with expected volatility of 34%, based on derived
volatilities of the Group and the similar listed entities to the Group. The
risk-free rate at the time of issuance was 0.12% for UK Government Bonds with
a similar term to the vesting period of the CSOP.
During the year, all remaining employees that had retained their share options
under the CSOP left the scheme and surrendered their share options.
Accordingly, the CSOP has been cancelled.
Movements in the number of outstanding share options during the year and their
weighted average exercise prices are shown in the following table.
31 December 2024 31 December 2023
Average exercise price (£) Number of options outstanding Average exercise price (£) Number of options outstanding
At beginning of year 1.35 996,226 1.35 996,226
Granted - - - -
Forfeited 1.35 (996,226) - -
Exercised - - - -
At end of year - - 1.35 996,226
The share-based payment charge in relation to the above scheme in the year
ended 31 December 2024 is £nil (31 December 2023: £nil).
Value Creation Plan
In November 2022, selected employees and senior executives of the Group were
issued with Growth shares in Argentex Capital Limited. When and to the
extent vested, the growth shares will be exchanged into ordinary shares of
Argentex Group PLC. The Growth shares vest in two equal tranches (A and B)
over two periods. Growth A shares vest over a 3 year and 4-month period and
Growth B shares vest over a 4 year and 4-month period. The rate of exchange is
that the Growth Shares will be regarded as worth a pro rata share of the share
price gain of Argentex Group PLC above hurdle prices. Upon exchange, the
number of ordinary shares in Argentex Group PLC that a Growth shareholder will
receive is such number of shares whose value is equivalent to the Group's
closing share price at the exchange date subject to the extent that Growth
shares have vested. The average weighted value of Growth shares granted in
Argentex Capital is £85.
The fair value of the Growth shares was calculated using a Monte Carlo
simulation model. The model considers historical and expected dividends and
the share price volatility of the Group to predict the share performance. When
determining the fair value of awards, service and non-market performance
conditions are not considered. However, the likelihood of the conditions being
met is assessed as part of the Group's best estimate of the number of equity
instruments that will ultimately vest. Market performance conditions are
reflected within the fair value. The assumptions relating to the fair value
charge include share price at grant, risk free interest rate, time to vesting
and expected share price volatility.
During the year, the Committee reviewed the Argentex Value Creation Plan
("VCP") and concluded that it no longer aligned with the interests of
employees and shareholders. As a result, the Group lapsed all awards under the
VCP in October 2024 and the Plan was cancelled. This resulted in the immediate
vesting of all unvested options and the subsequent forfeiture of all
outstanding options granted under the VCP. In accordance with IFRS 2, the
cancellation was treated as an acceleration of vesting, and the remaining
unrecognised expense of £0.6m was recognised immediately in the Consolidated
Statement of Comprehensive Income. No cash or equity consideration was granted
upon the cancellation of the VCP, and the balance of the share option reserve
was transferred to retained earnings. At the end of the reporting period,
there were no outstanding options under the VCP.
The total share-based payment charge of the Value Creation Plan including the
accelerated vesting charge in the year ended 31 December 2024 was £0.6m
(2023: £0.5m).
Growth Shares
31 December 31 December
2024 2023
Number of options outstanding Number of options outstanding
Outstanding at beginning of year 18,250 20,000
Granted in year - -
Forfeited in year (18,250) (1,750)
Exercised in year - -
Outstanding at end of year - 18,250
The total balance of the share-based payment reserve was transferred to
retained earnings following the cancellation of the Value Creation Plan. The
remaining balance at 31 December 2024 is £nil (31 December 2023: £1.0m).
23 Financial instruments
The Directors have performed an assessment of the risks affecting the Group
through its use of financial instruments and believe the principal risks to
be: capital risk; credit risk; liquidity risk; and market risk, including
interest rate risk and foreign exchange risk.
23.1 Capital management
Capital risk is the risk that there are insufficient Own Funds to support the
Group's business activities and to meet its regulatory capital requirements.
Own Funds are the sum of the Group's common equity tier 1 capital, additional
tier 1 capital and tier 2 capital. The Group manages its capital to ensure
that entities in the Group will be able to continue on a going concern basis
while maximising the return. Capital is repayable in accordance with the terms
set out in the partnership agreement. Management regularly reviews the
adequacy of the Group's capital and ensures capital held remains in excess of
regulatory requirements. The Group manages its capital resources with
reference to both the business and regulatory requirements. This process also
ensures there is adequate capital and liquidity to either absorb losses or to
ensure there are adequate levels to perform an orderly wind-down without
causing undue harm to clients, counterparties, or the market.
23.2 Financial risk management objectives
The Group's principal risk management objective is to avoid financial loss and
manage the Group's working capital requirements to continue in operations and
achieve its strategic objectives.
Market risk
Market risk for the Group comprises foreign exchange risk and interest rate
risk. Foreign exchange risk arises from the exposure to changes in foreign
exchange spot and forward prices and volatilities of foreign exchange rates.
Foreign exchange risk is mitigated through the matching of foreign currency
assets and liabilities between clients and institutional counterparties which
move in parity. The Group maintains non-sterling currency balances with
institutional counterparties only to the extent necessary to meet its
immediate obligations with those institutional counterparties.
Foreign exchange risk - sensitivity analysis
The Group's significant cash balances other than those denominated in Pounds
sterling are foreign currency balances held in Euros and US Dollars.
The table below shows the impact on the Group's operating profit of a 10%
change in the exchange rate of Euros and US Dollars against pounds sterling.
31 December
31 December 2023
2024
£m £m
10% weakening in the GBP/EUR exchange rate 1.9 1.1
10% strengthening in the GBP/EUR exchange rate (1.6) (0.9)
10% weakening in the GBP/USD exchange rate 2.1 0.7
10% strengthening in the GBP/USD exchange rate (1.8) (0.6)
Interest rate risk affects the Group to the extent that forward foreign
exchange contracts and foreign exchange structured solutions have an implied
interest rate adjustment factored into their price, which is subject to
volatility. This risk is mitigated in the same way as foreign currency risk
through the matching of foreign currency assets and liabilities between
clients and institutional counterparties which move in parity.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group has extensive controls to
ensure that is has sufficient cash or working capital to meet the cash
requirements of the Group in order to mitigate this risk. The Group monitors
its liquidity requirement daily, and the Group stress tests its liquidity
position to review the sufficiency of its liquidity in stressed market
scenarios. It is management's responsibility to set appropriate limits to the
liquidity risk appetite of the Group, as well as ensuring that a robust system
of internal controls is implemented and enforced. The table below summarises
the maturity profile of the Group's derivative financial assets and
liabilities based on contractual undiscounted payments.
Derivative financial assets at balance sheet date by contractual maturity
The following table details the profile of the Group's derivative financial
assets. The amounts are based on the undiscounted cashflows based on the
earliest date on which the contractual cashflows are due to the Group.
31 December 2024 £m £m £m £m £m
0-3 months 3-6 months 6-12 months 12 Total
months +
Derivative financial assets 1,205.4 688.7 700.4 370.5 2,965.0
31 December 2023 £m £m £m £m £m
0-3 months 3-6 months 6-12 months 12 Total
months +
Derivative financial assets 1,072.7 585.1 716.1 492.4 2,866.3
Derivative financial liabilities at balance sheet date by contractual maturity
The following table details the profile of the Group's derivative financial
liabilities. The amounts are based on the undiscounted cashflows based on the
earliest date on which the Group can be required to pay.
31 December 2024 £m £m £m £m £m
0-3 months 3-6 months 6-12 months 12 Total
months +
Derivative financial liabilities 1,201.7 685.2 696.3 365.7 2,948.9
31 December 2023 £m £m £m £m £m
0-3 months 3-6 months 6-12 months 12 Total
months +
Derivative financial liabilities 1,068.0 581.9 710.1 487.7 2,847.7
Other financial liabilities
The table below summarises the maturity profile of the Group's other financial
liabilities based on contractual (undiscounted) payments.
31 December 2024 Up to 1 year 1 year + Total
£m £m £m
Amounts payable to clients 30.3 - 30.3
Other payables 10.5 0.5 11
Lease liabilities 1.9 11.7 13.6
42.7 12.2 54.9
31 December 2023 Up to 1 year 1 year + Total
£m £m £m
Amounts payable to clients 14.7 - 14.7
Other payables 10.9 - 10.9
Lease liabilities 1.7 13.6 15.3
27.3 13.6 40.9
Credit risk
The failure of a client to settle a contracted trade carries the risk of loss
equal to the prevailing fair value of the trade. The Group employs rigorous
procedures and ongoing monitoring to mitigate this risk and ensure that client
risk exposures fit within the Group's risk appetite. Before accepting any new
client, a dedicated team responsible for the determination of credit risk,
assess the potential client's credit quality and assigns a credit limit.
Limits and scoring attributed to customers are reviewed on an ongoing basis.
Individual counterparty exposures are monitored against assigned limits by the
Risk function to ensure appropriate escalation and mitigating action is taken.
Credit approvals and other monitoring procedures are also in place to ensure
that follow-up action is taken to recover overdue debts. Furthermore, the
Group reviews the recoverable amount of trade debtors at the end of the
reporting period to ensure that adequate loss allowance is made for
irrecoverable amounts. In this regard, the Directors of the Group consider
that the Group's credit risk is significantly reduced. Trade receivables
consist of a large number of clients, spread across diverse industries and
geographical areas.
Management review financial and regulatory disclosures of the Group's
institutional counterparties to ensure its cash balances and derivative assets
are maintained with creditworthy financial institutions. The Group does not
have any significant concentration of exposures within its client base. At
institutional counterparty level, trade volumes and trading cash balances are
concentrated to a small selection of institutional counterparties. A degree of
concentration is necessary for the Group to command strong pricing and
settlement terms with these institutions and is not considered a material risk
to the Group.
23.3 Categories of financial instruments
The Group operates as a deliverable foreign exchange broker therefore
financial instruments are significant to its financial position and
performance. Where the Group enters into a foreign exchange contract for a
client, a matching deal is immediately executed with one of the Group's
institutional counterparties.
The table below sets out the Group's financial instruments by class.
31 December 31 December
2024 2023
£m £m
Financial asset instruments
Measured at FVTPL
Non-current
Derivative financial assets 13.6 9.8
Current
Derivative financial assets 58.1 38.9
Total derivative financial assets 71.7 48.7
Measured at amortised cost
Current
Cash and cash equivalents 48.7 33.0
Other assets 18.6 10.5
Non- current
Other assets 0.1 -
Total amortised cost assets 67.4 43.5
31 December 31 December
2024 2023
£m £m
Financial liability instruments
Measured at FVTPL
Non-Current
Derivative financial liability (9.0) (5.8)
Current
Derivative financial liability (46.7) (23.6)
Total derivative financial liabilities (55.7) (29.4)
Measured at amortised cost
Amounts payable to clients (30.3) (14.7)
Other creditors (8.0) (8.7)
Amounts due to members and former members of Argentex LLP - (0.4)
Accruals (excluding non-financial instruments) (2.5) (1.7)
Lease liabilities (10.6) (11.5)
Non-derivative financial liabilities (51.4) (37.0)
Derivative financial assets and derivative financial liabilities include
derivative transactions with banking counterparties. The transactions are
subject to ISDA (International Swaps and Derivatives Association) Master
Agreements and similar master agreements which provide a legally enforceable
right to offset under certain conditions. These derivative financial
instruments have not been offset in the Consolidated Statement of Financial
Position but are presented separately in the table below. These derivatives
are subject to collateral and margin calls by banking counterparties and the
amounts are disclosed in Note 17.
31 December 31 December
2024 2023
Amounts with counterparties subject to Master Netting agreements: £m £m
Derivative financial assets 39.2 27.1
Derivative financial liabilities 31.5 17.8
23.4 Overview of the Group's exposure to credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations in relation to financial derivative assets resulting
in financial loss to the Group. As at 31 December 2024, the Group's maximum
exposure to credit risk without taking into account any collateral held or
other credit enhancements, which will cause a financial loss to the Group due
to failure to discharge an obligation by the counterparties arises from the
carrying amount of the respective recognised financial assets as stated in the
Consolidated Statement of Financial Position.
If deemed appropriate, the Group will make a valuation adjustment to the
estimated fair value of a financial instrument. In the year, the Group
included a CVA of £1.1m (2023: £0.5m) to represent the credit risk inherent
in the fair value of derivative financial instruments. In the opinion of the
Directors, the carrying amount of the Group's financial assets best represents
the maximum exposure.
The carrying amount of the Group's financial assets at FVTPL as disclosed in
Note 24 best represents their respective maximum exposure to credit risk.
Note 23.6 details the Group's credit risk management policies.
23.5 Counterparty risk
The Group relies on third party institutions in order to trade and clear
settlement funds through client accounts. To reduce counterparty credit risk
to acceptable levels, the Group only trades with institutional counterparties
with robust balance sheets, high credit ratings and sound capital resources
(as disclosed in accordance with the CRR and CRD IV of Basel III) and monitors
the creditworthiness of institutional counterparties on an ongoing basis. The
Group's business continuity procedures have established trading and settlement
lines with several institutional counterparties to mitigate counterparty risk.
23.6 Credit risk management
Note 23.4 details the Group's exposure to credit risk and the measurement
bases used to determine expected credit losses.
The Group undertakes continuous robust credit analysis before setting and
varying trading limits and accepting trades from each client. All open
positions are monitored automatically in real time and if deemed necessary
collateral (in the form of cash deposits) is taken from clients to mitigate
the Group's exposure to credit risk.
24 Fair value measurements
This note provides information about how the Group determines fair values of
various financial assets and financial liabilities.
24.1 Fair value of the Group's financial assets and financial liabilities that are measured at fair value on a recurring basis
Some of the Group's financial assets and financial liabilities are measured at
fair value at the end of each reporting period. The following table gives
information about how the fair values of these financial assets and financial
liabilities are determined (in particular, the valuation technique(s) and
inputs used).
Level 1: The fair value of financial instruments traded in active markets is
based on quoted market prices at the end of the reporting period. These
instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an
active market is determined using valuation techniques which maximise the use
of observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an instrument are
observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable
market data, the instrument is included in level 3.
Financial assets/ financial liabilities Fair value as at Fair value hierarchy Valuation technique(s) and key input(s)
31 December 31 December
2024 2023
Foreign exchange forward and option contracts Assets £71.7m; and Assets £48.7m; and Level 2 The price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
Liabilities £55.7m Liabilities £29.4m measurement date.
The fair value of foreign exchange forward and option contracts is measured
using observable market information provided by third party market data
providers. Future cashflows are estimated based on forward exchange rates and
contract rates, discounted to reflect maturity.
24.2 Fair value of financial assets and financial liabilities that are not measured at fair value
The Directors consider that the carrying amounts of financial assets and
financial liabilities recognised in the Consolidated Financial Statements are
a reasonable approximation of their fair value.
25 Related party transactions
As at 31 December 2024, no material related transactions require further
disclosure.
26 Contingent liabilities
As at 31 December 2024 there were no capital commitments or contingent
liabilities (2023: none). The Group has an outstanding Employment Tribunal
claim from a former Director. The Group is contesting the claim and has
assessed the likelihood of an outflow settlement as remote.
27 Controlling party
In the opinion of the Directors there is no ultimate controlling party of
Argentex Group PLC.
28 Events after the reporting date
There are no material events after the reporting period that require
disclosure.
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