REG - Argentex Group PLC - Interim results for the six months to 30 June 2023
13/09/2023 07:15
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RNS Number : 2340M Argentex Group PLC 13 September 2023
13 September 2023
Argentex Group PLC
("Argentex" or the "Group")
Interim results for the six-month period ended 30 June 2023
Record half year driven by continued execution of Group strategy
Argentex Group PLC (AIM: AGFX), the service led, tech enabled provider of
currency management and payment services to international institutions and
corporates, today issues its results for the six-month period ended 30 June
2023. (1)
Financial Highlights
· Group revenue increased by 28% to £25.0m (H122: £19.5m) with revenues
from new products and geographies now representing 23% of revenues (H1 22 :
14%)
· Operating profit increased by 16% to £5.2m (H122: £4.5m) and
adjusted operating profit(2) increased by 13% to £5.4m (H122: £4.8m)
· Group EBITDA margins maintained at 29% with a modest decrease in
operating margins to 21% (H1 22: 23%) as a result of planned investment
· Earnings per share (EPS) of 2.8p basic and 3.1p adjusted (H1 22:
2.4p basic and 2.7p adjusted)
· Continued strong cash generation funding investment in growth
with £3m net increase in cash
· Interim dividend of 0.75p per share reflecting strong performance
over the six-month period and confidence in the Group's future prospects
(1 )As previously announced, at the end of the last financial year, the
Group transitioned from a 31 March year end to a 31 December year end.
Comparisons with H122 included in financial highlights refer to the six-month
period to 30 June 2022.
(2 )Adjusted operating profit excludes one off costs in relation to the
set-up of overseas offices and any restructuring costs incurred in the period,
in line with accounting policy.
Operational Highlights
· Continued delivery of our three-pillar diversification and growth
strategy, with enhanced higher-margin product mix and new geographies
contributing to volume and client growth:
o Despite an increasingly challenging macro-economic environment, clients(3)
trading increased by 8% to 1,493 (H1 22 : 1,381) with 305 new clients traded
in the period (H1 22: 284)
o Wallet share increasing evidenced by 18% growth in average revenue per
client traded to £16.5k
o New business revenue growth indicative of enhanced client quality driven
by broader product offering, with average revenue per new client traded up by
55% to £18.6k
o Investment in new higher margin products including Structured Solutions
now contributing meaningfully, accounting for 15% of revenues (H1 22: 9%)
o Alternative Transaction Banking, which launched in late March, is already
outperforming management's expectations
3 Refers to clients as corporate or institutional, discounting private
clients.
· Strong progress across Group's three strategic pillars:
o People
§ Number of full-time employees increased by 28 to 165 over the period to
support the Group strategy in either front office or growth-related
Argentepositions.
§ Further investment planned to support technology development, international
growth and anticipated market share gains
o Technology & Product
§ Digital revenues have increased 100% during the period with 16% of clients
using the platform (H1 22 : 11%)
§ Phase two of our technology and product strategy and the overall digital
transformation programme continued with Alternative Transaction Banking
successfully launching in late March and already trading ahead of expectations
§ Phase three is well underway, with the development of mass payments and
hedging analysis tools in addition to ongoing digital transformation to
support increased operational efficiency
§ Increase in Technology & Product investment to £2.6m (H1 22: £1.7m)
o International expansion
§ Revenue contribution of Argentex Europe more than doubled to £1.8m (H1 22:
£0.8m), providing a gateway to Continental Europe, with 24% of these revenues
generated outside of The Netherlands
§ Through leveraging the credible licence from the Dutch National Bank, the
Group has now launched its Alternative Transactional Banking product in Europe
§ Argentex Australia continues to generate revenue, pending grant of the
wholesale Australian Financial Services License
· As announced, Nigel Railton (previously Senior Independent
Director) was appointed Chair of Argentex on 1 September 2023. Lord Digby
Jones stepped down as Chair on 1 September 2023 and will continue as a
Non-Executive Director.
Outlook
Despite more challenging trading conditions post period end, the Group
continues to deliver double digit growth of 20%, with revenues increasing to
£35m to 05 September 2023 (same period 2022 - £29m). Whilst the core UK
corporate currency management business remained resilient, our Institutional
and European divisions have more recently experienced a greater season
reduction in market activity.
The Board has implemented a focused strategy to develop an increasingly
diversified business, underpinned by new higher margin products and investment
in technology. This strategy is helping to drive improved customer adoption,
which is abating the impact of short-term macroeconomic fluctuations, meaning
the Group remains well positioned to deliver profitable growth through the
cycle.
The Group continues to trade in-line with the Board's expectations for the
full year. Our approach to balancing cost discipline with re-investment for
growth remains unchanged, enabled by a strong balance sheet and continued high
levels of cash generation.
Harry Adams, Chief Executive Officer, said:
"I am very pleased to announce another strong set of results for Argentex,
despite a continuation of the prevailing macro-economic challenges,
demonstrating significant progress in the diversification and growth of our
offering both by product and geography. Our core business is driving
double-digit revenue growth supported by the return on investments across new
technology and product initiatives.
"Our business is attracting high quality corporates and institutions looking
for a trusted, service-led and tech-enabled provider of currency management
and payment services. The performance of our newly launched Alternative
Transaction Banking product has exceeded initial expectations, demonstrating
the potential of new tech-enabled products to increase our share of wallet
while diversifying our revenue streams with new, higher-margin products. Phase
three of our technology and product strategy provides further opportunity to
enhance this trend, with a pipeline of new products in development.
"Our people are a key differentiator to the Group. We know that for our
business to excel and deliver its ambition, the business needs to attract and
retain a high quality and diverse team. We therefore place great value in
investing in their wellbeing and our culture, as the business continues to
grow.
"Our focus remains to capitalise on the significant market opportunities to
grow wallet share across an increasing international, high quality client base
whilst prioritising a sustainable model that delivers for all of our
stakeholders.
"On behalf of everyone at Argentex, I would like to welcome Nigel Railton into
his new position as Chair, taking over from Lord Digby Jones who left the role
on 1 September with our thanks, remaining a Non-Executive Director of the
Group."
For further information please contact:
Argentex Group PLC
Harry Adams - CEO
Jo Stent - CFO
investorrelations@argentex.com (mailto:investorrelations@argentex.com)
FTI Consulting LLP (Financial PR)
Ed Berry / Ambrose Fullalove / Jenny Boyd
07703 330 199
argentex@fticonsulting.com (mailto:argentex@fticonsulting.com)
Singer Capital Markets (Nominated Adviser and Broker)
Tom Salvesen / James Maxwell / Justin McKeegan
020 7496 3000
Analyst briefing
A meeting for analysts will be held virtually at 9.30am today, 13 September
2023. Analysts wishing to attend this event can register via email
to argentex@fticonsulting.com (mailto:argentex@fticonsulting.com) .
Argentex's Half Year results announcement will also be available today on the
Group's website at www.argentex.com (http://www.argentex.com/) .
Retail investor presentation
Management will additionally host a presentation for retail investors via the
Investor Meet Company platform at 16:00 on Thursday 14 September 2023. The
presentation is open to all existing and potential shareholders. Questions can
be submitted via the Investor Meet Company dashboard up until 09:00 on the day
before the meeting, or at any time during the live presentation.
Investors who already follow Argentex Group PLC on the Investor Meet Company
platform will automatically be invited. Those wishing to sign up for free, and
meet Argentex, can do so
via https://www.investormeetcompany.com/argentex-group-plc/register-investor
(https://www.investormeetcompany.com/argentex-group-plc/register-investor)
CEO review
Overview
I am pleased that the Group has maintained strong momentum over the six-month
period to June 2023, delivering a record performance on the back of an
exceptionally strong 2022. Despite a challenging macroeconomic backdrop with
clients adjusting to the higher interest rate environment, the Group's
continued delivery on its strategic objectives to invest in People, Technology
& Product and International expansion is resulting in an exciting
evolution of our business and its capabilities as a leading tech-enabled
provider of currency management and payment services.
While the core business continues to strengthen, driving 28% revenue growth to
£25 million (H1 22 : £19.5m), it is the contribution of our new products
(including Alternative Transaction Banking which launched late March) that
enhanced our performance over the period. These products are already
outperforming management's initial expectations which reinforces the potential
of our broader growth strategy and the significant opportunity as we gain
greater wallet share from both new and existing clients.
Client demand for our evolving proposition is clear as demonstrated by the 8%
increase in number of clients trading with Argentex over the period to 1,493
clients (H1 22 : 1,381). The business added 305 new clients in the first
half of the financial period, compared with 284 in H1 22. We are attracting
higher quality clients, which has resulted in an 18% increase in the revenue
per client traded and a 55% increase in the average revenue per new client
traded.
We remain focused on maintaining diversification by both client type and
client industry with 38% of revenue represented by the top twenty customers
(H1 22 : 36%). We are in the early stages of cross selling these new products
to our existing clients with revenue contributing 15% in the six-month period
(H1 22 : 9%).
The Group remains well-positioned to continue capitalising on new
opportunities immediately apparent in our markets, whilst building a
diversified business capable of outperformance and profitable growth over the
long-term.
Market backdrop
The period has been defined by stubbornly high global inflation and while it
appears that an anticipated global recession has been averted, Central Bank
policies have remained changeable amongst a wave of monetary tightening as
they take an agile approach to managing their economies. To date, however,
this has not translated into significant moves in G7 currencies but has
resulted in a reduction in volatility with sterling trading in a tight range
against the euro and dollar for 2023.
Whilst these factors result in less favourable market conditions, our
increasingly diversified business has proven its resilience, in continuing to
win new and actively trading clients and the adoption of our new, higher
margin products creates less reliance on short term macroeconomic
fluctuations, meaning we are well positioned to perform and grow through this
cycle.
Financial performance
Argentex is the only UK listed non-bank that is regulated to hold client money
with both e-money and investment licences, meaning that we attract high
quality clients looking for a trusted, service-led and tech-enabled provider.
This is demonstrated by the growth in traded clients, with an increased
emphasis on quality as evidenced by the 18% increase in average revenue per
client to £16.5k (H1 22 : £14k).
The Group has remained highly focused on the continued and long-term
investment into its three-pillar growth strategy whilst maintaining a
disciplined approach to cost control. Despite this re-investment, we are
pleased to have generated a 16% increase in operating profit to £5.2 million
(H1 22 : £4.5 million). This includes contribution from the Group's new
higher-margin products in addition to improved efficiencies across the
business.
As a result of the strong performance over the six-month period and on account
of the positive outlook for the prospects of the Group, I, along with the
Board of Directors am pleased to announce an interim dividend of 0.75 pence
per share.
Growth strategy
It is now two years since we initiated our three-pillar growth strategy of
People, Technology & Product and International expansion and we are
pleased to see revenues generated from new products and new geographies
represent 23% of total revenues in the period (H1 22 : 14%).
As previously communicated, we are continuing to invest in technology to drive
growth and efficiencies with associated margin benefits to come as these new
products and geographies scale in combination with driving associated
operating leverage across the business.
People
Whilst hiring at the senior level is substantially complete, Argentex remains
committed to the development of its global teams with market-leading talent,
increasing the number of full-time employees by 28 to 165 over the period in
support of the growth strategy. We have sought opportunities to create new
roles both in the UK and in our overseas offices, reflecting the evolving
nature of our offering and business model, particularly as a result of our
continued investment in technology.
Technology & Product
Investment in technology remains central to the Group's digital transformation
and further product innovation while underpinning the strength of our
financial performance. £2.6 million was invested in technology during the
six-month period (H1 22 : £1.7 million) as our pipeline of innovative, 'right
tech, right touch' client solutions developed to help grow wallet share.
Phase one and two of our Technology & Product strategy delivered £1.4m
revenues in H1 23 representing 5% of total revenue (H1 22 : 2%). Client
adoption of these new products increased by 62% to 396 clients (H1 22 : 244)
as we progressed phase two of our Technology & Product strategy. March
2023 saw the launch of our Alternative Transaction Banking product, allowing
customers to take advantage of a compelling alternative to currency accounts
offered by traditional banks through our tech-enabled product. This product,
which allows clients to collect, hold, pay and manage their currency exposure,
has exceeded expectations in the period with 43 new clients onboarded in Q2.
Phase three is well underway, with our new mass payments and hedging analysis
tools in advanced development, in-line with expectations.
International Expansion
Our international expansion continues as we pursue opportunities in new,
highly regulated markets and pivot from a single-product, single-office
business to a multi-product, global business.
Argentex Europe continues to gain traction with revenues of £1.8m in the
period, more than double the same period last year (H1 22 : £0.8m) as the
subsidiary capitalises on the electronic money licence which it was granted by
the Dutch National Bank in 2022.
Argentex is now one of three non-bank providers of a Dutch Virtual IBAN, which
gives the Group significant growth opportunities to roll out the Alternative
Transaction Banking product, providing access to clients and currency markets
across Europe.
Argentex Australia continues to generate revenue whilst we await the grant of
our wholesale Australian Financial Services licence. We continue to explore
further territories that represent strategic growth opportunities, with
similar market dynamics.
Outlook
Despite more challenging trading conditions post period end, the Group
continues to deliver double digit growth of 20%, with revenues increasing to
£35m to 05 September 2023 (same period 2022 - £29m). Whilst the core UK
corporate currency management business remained resilient, our Institutional
and European divisions have more recently experienced a greater season
reduction in market activity.
The Board has implemented a focused strategy to develop an increasingly
diversified business, underpinned by new higher margin products and investment
in technology. This strategy is helping to drive improved customer adoption,
which is abating the impact of short-term macroeconomic fluctuations, meaning
the Group remains well positioned to deliver profitable growth through the
cycle.
The Group continues to trade in-line with the Board's expectations for the
full year. Our approach to balancing cost discipline with re-investment for
growth remains unchanged, enabled by a strong balance sheet and continued high
levels of cash generation.
Board changes
On behalf of everyone at Argentex, I would like to extend my thanks to Lord
Digby Jones, who leaves his role as Chairman of the business after more than
ten years, for his guidance and expertise which oversaw our growth from
inception to a sophisticated, public company. He remains a Non-Executive
Director on our Board. As announced, we are delighted to welcome Nigel Railton
as the Group's new Chairman (previously Senior Independent Director) and look
forward to working closely with him on the next phase of our development.
Our search for two new Non-Executive Directors continues and I look forward
to updating the market in due course.
Above all I would like to thank our team, our clients, and our shareholders
for their continued support and contribution to our ongoing success.
Harry Adams,
Chief Executive Officer
Financial Review
Argentex delivered 28% revenue growth in H1 23 alongside continuing to pursue
its ambitious investment programme across all three pillars of its growth
strategy: People, Technology & Product and International Expansion. Group
EBITDA margins were largely maintained at 29% with a planned modest decrease
in operating margins to 21% (H1 22 : 23%). Adjusted operating profit(2) in the
period increased by 13% to £5.4m, a 22% margin (H1 22 : £4.8m / 25%). As
a result of this strong performance throughout the period and positive outlook
for the growth prospects of the Group, the Board is pleased to announce an
interim dividend of 0.75p per share.
FINANCIAL PERFORMANCE
Argentex generated revenues of £25m in the six months to 30 June 23,
representing an increase of 28% compared to the same period in the prior year.
Revenues generated in the period were driven by an increase in clients
trading, increasing share of wallet (18% increase in overall average revenue
per client traded) underpinned by an enhanced product mix across hedging
solutions and contributions from the Alternative Transaction Banking platform
as well as growth in our international operations.
Revenues generated from new products and geographies represent 23% of total
revenues (H1 22 : 14%). This enhanced higher product margin mix and
geographical distribution has driven an increase in wallet share and enhanced
operating leverage to fund future growth.
Clients traded increased by 8% to 1,493 (H1 22: 1,381), of which 305 (H1 22 :
284) were new clients trading in the period. Revenue from new clients
increased by 63% to £5.7m in H1 23 (H1 22 £3.5m) representing a 55% increase
in average revenue per new client traded in the period, demonstrating traction
on growth initiatives and investments made to date.
As with other companies that can operate an e-money licence, Argentex
benefited from interest income earned on these cash balances. This interest is
classified as Other Income and, while the Group has benefited from this
interest, it is not seen as a core part of the Group's three-pillar
diversification and growth strategy.
The Group has maintained a disciplined approach to managing costs through the
half-year resulting in an operating profit of £5.2m, an increase of 16% from
the prior period. Adjusted operating profit(2) in the half was £5.4m, or 22%
margin (H1 22: £4.8m / 25%). The planned and previously flagged decline in
operating margins compared to the prior period reflects the previously
communicated ambitious investment programme across all three facets of
Argentex's growth strategy. The investment programme is on track, with 165
global employees in place at the end of June 2023 with Technology &
Product and International Expansion developing in line with plan. Revenues in
the prior period were ahead of expectation and contributed towards a higher
than anticipated operating margin at this point in the investment cycle.
Operating margins in H1 23 are in line management expectations.
People
In the six months to 30 June 2023 the average number of employees grew to 153
(H1 22 : 106) with a period end headcount of 165 (December 2022 : 137). Front
office/Back-office split (excluding Senior Management) has shifted versus
prior periods at 53%/47% (Dec 22 : 57%/43%) and reflects, in particular, the
investment in technology in support of the growth strategy and further
professionalisation in the support functions proportionate to the maturation
of the business as well as a continued balanced approach to risk.
At 30/06/23 UK Overseas Total
Headcount Headcount Headcount
Front Office 61 21 82
Support 66 8 74
Directors and Exec LLP Members 9 - 9
136 29 165
At 31/12/22 UK Overseas Total
Headcount Headcount Headcount
Front Office 57 16 73
Support 50 5 55
Directors and Exec LLP Members 9 - 9
116 21 137
Of the 74 Support headcount, 16 were technology related (12 at 31 December
2022)
Technology & Product
Total investment in technology in the six-month period to 30 June 2023
was £2.6m (H1 22 : £1.7m). Of the £2.6m technology spend, £0.8m was
capitalised (H1 22 : £1.7m of which £1m capitalised) with the impact on
operating profit margins mitigated by the fact that benefits of the technology
development spend will be realised in future periods and as such investment
spend is treated as capital investment and amortised over a three-year period
in line with accounting policy. Technology spend that is not capitalised (H1
23 : £1.8m; H1 22 : £0.7m) or operating expense in nature is embedded within
operating cashflows and is in relation to licences and other infrastructure
support costs in support of the growth strategy in addition to ongoing
programme management costs to manage execution risk.
International Expansion
Revenues generated from overseas operations totalled £2.0m in the period,
with revenues generated in Argentex Europe for the six-month period to 30
June 2023 totalling £1.8m (H1 22: £0.8m). Overseas regions are making a
small contribution to the overall cost base with Argentex Europe being the
primary driver in the period. The Netherlands will be the central hub for
European operations and licences granted and will act as a gold standard for
the region to create further opportunities in the coming years.
FINANCIAL POSITION
Argentex views its ability to generate cash from its trading portfolio as a
key indicator of performance within an agreed risk appetite framework. Total
cash and cash equivalents include client balances pertaining to collection of
any collateral and variation margin in addition to routine operating cash
balances. Further, cash and cash equivalents does not include collateral
placed with financial counterparties. Collateral placed with financial
counterparties of £4.5m (FY 22 : £10.0m) is recorded in other assets of
the statement of financial position.
As at As at
June 23 Dec 22
Cash and Collateral £m £m
Cash at bank 32.6 29.0
Less: amounts payable to clients (13.4) (12.8)
Net cash 19.2 16.2
Other assets 4.5 10.0
Excluding collateral held at financial counterparties, cash at bank less
amounts payable to clients increased by £3m to £19.2m in the period (FY 22 :
£16.2m). Other assets comprise collateral held at institutional
counterparties which decreased over the period by £5.5m as a result of
favourable movements in derivative positions held.
Before movements in client balances held (increase of £0.6m in the period) as
shown in the Consolidated Financial Statements note 11, the Group
generated £7.6m in cash from operating activities. This amount is inclusive
of any operating expenditure including the aforementioned amounts in support
of the growth strategy such as technology (H1 23 : £1.8m ; H1 22 : £0.7m).
Of the £7.6m in cash generated from operating activities, a further
£0.8m was used to invest in technology, £2.8m was used to fund growth in
office footprints across London and The Netherlands and a further £1m was
used to fund ongoing lease obligations.
Cash generation from the Group's revenues is a function of i) the composition
of revenues (principally spot, forward option and swap revenues in the period)
and ii) the average duration of the FX forwards in the portfolio. In the
period, Argentex has generated revenues in a ratio of approximately 45:55
between spot and forward contracts outside of Structured Solutions, swaps and
alternative transaction banking revenues. While 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 compared to its operating cost
base. Further, any options premiums are typically paid upfront, and therefore
options revenues contribute positively toward maintaining healthy cash
conversion ratios.
Argentex continues to enjoy a high percentage of trades converting to cash
within a short time frame, which is a result of almost 50% on average of
revenue from trades outside of Structured Solutions and swap trades being spot
contracts in addition to forward contracts carrying a relatively short tenor
on average. This in combination with premium on Structured Solutions contracts
typically being paid upfront has led to consistent healthy cash conversion
ratios for H1 23 :
CASH CONVERSION
6 months to 6 months to
30/06/23 30/06/22
£m £m
Revenues 25.0 19.5
Revenues (swap adjusted S/A) (A) 23.2 18.1
Less
Revenues settling beyond 3 months S/A (5.2) (3.7)
Net short-term cash generation (B) 18.0 14.4
Short-term cash return (B/A) 77% 80%
Derivative financial assets declined 13% in the period to £58.1m with
current element being £50.8m (87% of total derivative financial assets).
The Group diversifies liquidity requirements across five liquidity providers,
the largest providing 59% of liquidity required (62% at FY 22).
PORTFOLIO COMPOSITION
Argentex's client base continues to grow with an increase in clients traded in
the half year to 1,493 (H1 22 : 1,381), and 305 of these clients traded
representing new business. Even when taking growth into account however the
composition of our client portfolio remains consistent year-over-year, in that
it consists of similar businesses with exposures in the major currencies of
sterling, euro and US dollar. In line with prior year, the majority of the
Group's trading activity was comprised of trades in those currencies at 77%
(FY 22: 78%) and hence the Group's exposure to exotic currencies or currencies
with higher volatility and less liquidity remains significantly limited.
Further, client concentration has been maintained with 38% of revenue
represented by the top twenty customers (H1 22 : 36%).
DIVIDEND
As a result of this strong performance throughout the period and positive
outlook for the growth prospects of the Group, the Board is pleased to
announce an interim dividend of 0.75p per share. The interim dividend will be
payable on 13 November 2023 to shareholders on the register at 13 October
2023. The ex-dividend date will be 12 October 2023.
Jo Stent
Chief Financial Officer
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME
for the six months ended 30 June 2023
6 months to 6 months to
30 June 2023 30 June 2022
£m £m
Revenue 25.0 19.5
Cost of sales (0.9) (1.2)
Gross profit 24.1 18.3
Administrative expenditure (18.7) (13.5)
Adjusted operating profit 5.4 4.8
Non-adjusted expenditure - (0.2)
Share-based payments charge (0.2) (0.1)
Operating profit 5.2 4.5
Finance costs (0.4) (0.2)
Profit before taxation 4.8 4.3
Taxation (1.6) (1.5)
Profit for the period and total comprehensive income
3.2 2.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2023
Notes 30 June 31 December 2022
2023
£m £m
Non-current assets
Intangible assets 2.5 2.5
Property, plant and equipment 6 16.1 7.9
Derivative financial assets 10 7.3 8.8
Deferred tax asset 0.5 0.5
Total non-current assets 26.4 19.7
Current assets
Cash and cash equivalents 8 32.6 29.0
Trade and other receivables 7 1.1 1.0
Other Assets 9 4.5 10.0
Derivative financial assets 10 50.8 57.7
Total current assets 89.0 97.7
Current liabilities
Trade and other payables 11 (23.2) (25.9)
Derivative financial liabilities 12 (35.2) (42.0)
Total current liabilities (58.4) (67.9)
Non-current liabilities
Trade and other payables 11 (11.3) (5.5)
Derivative financial liabilities 12 (3.5) (5.2)
Total non-current liabilities (14.8) (10.7)
Net assets 42.2 38.8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
as at 30 June 2023
30 June 31 December 2022
2023
£m £m
Equity
Share capital 13 0.1 0.1
Share premium 12.7 12.7
Share option reserve 0.7 0.5
Merger reserve 4.5 4.5
Retained earnings 24.2 21.0
Total equity 42.2 38.8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2023
Share capital Share premium Share option reserve Merger reserve Retained earnings Total equity
£m £m £m £m £m £m
Balance at 1 January 2022 0.1 12.7 0.3 4.5 14.3 31.9
Profit and total comprehensive income for the period - - - - 2.8 2.8
Dividends paid - - - - (0.9) (0.9)
Share-based payments charge - - 0.1 - - 0.1
Balance at 30 June 2022 0.1 12.7 0.4 4.5 16.2 33.9
Balance at 1 January 2023 0.1 12.7 0.5 4.5 21.0 38.8
Profit for the period - - - - 3.2 3.2
Dividends paid - - - - - -
Share-based payments charge - - 0.2 - - 0.2
Balance at 30 June 2023 0.1 12.7 0.7 4.5 24.2 42.2
CONSOLIDATED STATEMENT OF CASH FLOWS
6 months to 6 months to
30 June 2023 30 June 2022
£m £m
Profit before taxation 4.8 4.3
Taxation paid (1.1) (0.8)
Net finance expense 0.4 0.2
Depreciation of property, plant and equipment 0.6 0.3
Depreciation of right of use assets 0.6 0.4
Amortisation of intangible assets 0.8 0.7
Share-based payments charge 0.2 0.1
(Increase) in receivables (0.6) (0.2)
(Decrease) in payables (3.0) (1.1)
Decrease/(increase) in derivative financial assets 8.5 (7.9)
(Decrease)/increase in derivative financial liabilities (8.5) 6.3
Decrease/(increase) in other assets 5.5 (5.1)
Net cash generated from/ (used in) operating activities 8.2 (2.8)
Investing activities
Purchase of intangible assets (0.8) (1.0)
Purchase of plant and equipment (2.8) (0.1)
Net cash used in investing activities (3.6) (1.1)
Financing activities
Payments made in relation to lease liabilities (1.0) (0.6)
Dividends paid - (0.9)
Net cash used in financing activities (1.0) (1.5)
Net increase/(decrease) in cash and cash equivalents 3.6 (5.4)
Cash and cash equivalents at the beginning of the period 29.0 37.9
Cash and cash equivalents at end of the period 32.6 32.5
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 of the Company is 25 Argyll Street, London, W1F 7TU. The
Company's shares are listed on AIM, the London Stock Exchange's market for
small and medium size growth companies. The Company is the ultimate parent
company of the group into which the results of its subsidiaries are
consolidated.
2 Basis of preparation
The consolidated financial information contained within this interim report is
unaudited and does not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006.
While the financial figures included in this interim report have been prepared
in accordance with IFRS applicable to interim periods, this interim report
does not contain sufficient information to constitute an interim financial
report as defined in IAS 34. Financial information for the period ended 31
December 2022 has been extracted from the audited financial statements for
that period.
The financial information has been prepared using the measurement bases
specified by IFRS for each type of asset, liability or expense. The accounting
policies applied in preparation of this interim report are consistent with the
basis that was adopted for the preparation of the audited accounts for the 9
months ended 31 December 2022 and will be adopted for the Group's next audited
accounts for the year ended 31 December 2023.
Statutory accounts for the period ended 31 December 2022 have been reported on
by the Company's Independent Auditor and have been delivered to the Registrar
of Companies. The Independent Auditor's Report on the Annual Report and
Financial Statements for December 2022 was unqualified, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The interim report is prepared on a going concern basis as the directors have
satisfied themselves that, at the time of approving the interim report, the
Group has adequate resources to continue in operational existence for at least
the next twelve months from the date of this report.
3 Accounting policies
The accounting policies adopted in this interim report are identical to the
those adopted in the Group's most recent annual financial statements for the
period ended 31 December 2022, which are available from the Registrar of
Companies and www.argentex.com/investor-relations
(http://www.argentex.com/investor-relations) .
4 Earnings per share
The Group calculates basic earnings to be net profit attributable to equity
shareholders for the period. The Group also calculates an adjusted earnings
figure, which excludes the effects of share based payments, and non-adjusted
expenditure (net of a tax adjustment). The calculation of diluted earnings per
share assumes conversion of all potentially dilutive ordinary shares, all of
which arise from share options.
Six months ended Six months ended
30 June 2023 30 June 2022
Basic earnings per share 2.8p 2.4p
Diluted earnings per share 2.8p 2.4p
Underlying - basic 3.1p 2.7p
Underlying - diluted 3.1p 2.7p
The calculation of basic and diluted earnings per share is based on the
following number of shares:
Six months ended Six months ended
30 June 2023 30 June 2022
m m
Basic weighted average shares 113.2 113.2
Contingently issuable shares 0.1 0.1
Diluted weighted average shares 113.3 113.3
The earnings used in the calculation of basic, diluted and underlying earnings
per share are set out below:
Six months ended Six months ended
30 June 2023 30 June 2022
£m £m
Earnings - basic and diluted 3.3 2.8
Non-underlying expenditure 0.0 0.2
Share-based payments 0.2 0.1
Earnings - underlying 3.5 3.1
5 Dividends
6 months ended 6 months ended 6 months ended 6 months ended
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Pence per share Pence per share £m £m
Amounts recognised as distributions to equity holders
Interim dividend recommended by Directors - 0.75 - 0.9
- 0.75 - 0.9
Dividends declared in the period
Final dividend recommended by Directors at previous period end 2.25 - 2.5 -
2.25 - 2.5 -
Dividends proposed in the period
Interim dividend for year ended 31 December 2023 of 0.75p per share (June 0.75 - 0.9 -
2022: nil per share)
0.75 - 0.9 -
A final dividend of 2.25p per share (£2.5m) was declared in the period in
respect of the period ended 31 December 2022. The dividend payment date is 4
August 2023.
The Directors propose an interim dividend in respect of the year ended 31
December 2023 of 0.75p (£0.9m).
6 Property, plant and equipment
Leasehold improvements Right of use asset Office equipment Computer equipment Total
Cost £m £m £m £m £m
At 1 January 2023 1.8 7.3 1.3 0.7 11.1
Additions 2.0 11.8 0.4 0.4 14.6
Disposals - (7.3) - - (7.3)
At 30 June 2023 3.8 11.8 1.7 1.1 18.4
Depreciation
At 1 January 2023 0.4 2.1 0.2 0.5 3.2
Charge for the period 0.2 0.6 0.2 0.2 1.2
Disposals - (2.1) - - (2.1)
At 30 June 2023 0.6 0.6 0.4 0.7 2.3
Net book value
At 30 June 2023 3.2 11.2 1.3 0.4 16.1
At 31 December 2022 1.4 5.2 1.1 0.2 7.9
7 Trade and other receivables
30 June 2023 31 December 2022
£m £m
Current
Other receivables 0.5 -
Prepayments 0.6 1.0
1.1 1.0
8 Cash and cash equivalents
30 June 2023 31 December 2022
£m £m
Cash and cash equivalents
Cash and cash equivalents 32.6 29.0
32.6 29.0
Included within cash and cash equivalents are client held funds relating to
margins received and client balances payable. These amounts are disclosed as
amounts payable to clients of £13.4m (December 2022: £12.8m) in note 11 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 balance.
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.
9 Other assets
30 June 2023 31 December 2022
£m £m
Other assets
Other assets 4.5 10.0
4.5 10.0
Other assets is made up of collateral with banking and brokerage
counterparties. Client margins received and disclosed within client balances
payable are used to service margin calls with counterparties.
10 Derivative financial assets
30 June 2023 31 December 2022
£m £m
Non-Current
Derivative financial assets at fair value 7.3 8.8
Current
Derivative financial assets at fair value 50.8 57.7
11 Trade and other payables
30 June 2023 31 December 2022
£m £m
Non-Current
Lease liabilities 11.0 5.3
Provisions 0.3 0.2
Trade and other payables 11.3 5.5
Current
Amounts payable to clients 13.4 12.8
Corporation tax 1.1 0.7
Amounts due to members and former members of Argentex LLP 0.8 4.4
Trade payables - 0.4
Accruals 6.6 6.1
Other taxation and social security 0.5 0.7
Lease liability 0.8 0.8
Trade and other payables 23.2 25.9
12 Derivative financial liabilities
30 June 2023 31 December 2022
Non-Current £m £m
Derivative financial assets at fair value 3.5 5.2
Current
Derivative financial assets at fair value 35.2 42.0
13 Share capital
Ordinary Management Nominal
shares shares value
Allotted and paid up No. (m) No. (m) £
Ordinary shares of £0.0001 each 113.2 - 11,321
Management shares issued of £0.0025 each - 23.6 58,974
At 30 June 2023 113.2 23.6 70,295
There were no changes to share capital during the period from 1 January 2023
to 30 June 2023.
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