TIDMAGFX
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 GBP25.0m (H122: GBP19.5m)
with revenues from new products and geographies now representing
23% of revenues (H1 22 : 14%)
-- Operating profit increased by 16% to GBP5.2m (H122: GBP4.5m)
and adjusted operating profit(2) increased by 13% to GBP5.4m (H122:
GBP4.8m)
-- 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 GBP3m 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 GBP16.5k
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 GBP18.6k
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 GBP2.6m
(H1 22: GBP1.7m)
o International expansion
-- Revenue contribution of Argentex Europe more than doubled to
GBP1.8m (H1 22: GBP0.8m), 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 GBP35m to 05 September 2023 (same period
2022 - GBP29m). 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
FTI Consulting LLP (Financial PR)
Ed Berry / Ambrose Fullalove / Jenny Boyd
07703 330 199
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 . Argentex's Half
Year results announcement will also be available today on the
Group's website at 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
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 GBP25 million (H1 22 : GBP19.5m), 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
GBP16.5k (H1 22 : GBP14k).
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 GBP5.2 million (H1 22 : GBP4.5 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. GBP2.6 million was
invested in technology during the six-month period (H1 22 : GBP1.7
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 GBP1.4m 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
GBP1.8m in the period, more than double the same period last year
(H1 22 : GBP0.8m) 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 GBP35m to 05 September 2023 (same period
2022 - GBP29m). 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 GBP5.4m, a 22% margin
(H1 22 : GBP4.8m / 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 GBP25m 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 GBP5.7m in H1 23 (H1 22
GBP3.5m) 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
GBP5.2m, an increase of 16% from the prior period. Adjusted
operating profit(2) in the half was GBP5.4m, or 22% margin (H1 22:
GBP4.8m / 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 GBP2.6m (H1 22 : GBP1.7m). Of the GBP2.6m technology
spend, GBP0.8m was capitalised (H1 22 : GBP1.7m of which GBP1m
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 : GBP1.8m; H1 22 : GBP0.7m) 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 GBP2.0m in
the period, with revenues generated in Argentex Europe for the
six-month period to 30 June 2023 totalling GBP1.8m (H1 22:
GBP0.8m). 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 GBP4.5m (FY 22 : GBP10.0m) is recorded in other
assets of the statement of financial position.
As at As at
June 23 Dec 22
Cash and Collateral GBPm GBPm
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 GBP3m to GBP19.2m
in the period (FY 22 : GBP16.2m). Other assets comprise collateral
held at institutional counterparties which decreased over the
period by GBP5.5m as a result of favourable movements in derivative
positions held.
Before movements in client balances held (increase of GBP0.6m in
the period) as shown in the Consolidated Financial Statements note
11, the Group generated GBP7.6m 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 : GBP1.8m ; H1 22 : GBP0.7m). Of the GBP7.6m in
cash generated from operating activities, a further GBP0.8m was
used to invest in technology, GBP2.8m was used to fund growth in
office footprints across London and The Netherlands and a further
GBP1m 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 6 months
to to
30/06/23 30/06/22
GBPm GBPm
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
GBP58.1m with current element being GBP50.8m (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%).
DIVID
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 6 months
to to
30 June 2023 30 June
2022
GBPm GBPm
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
2023 2022
GBPm GBPm
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
2023 2022
GBPm GBPm
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 Share Share Merger Retained Total
capital premium option reserve earnings equity
reserve
GBPm GBPm GBPm GBPm GBPm GBPm
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
GBPm GBPm
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 .
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 Six months
ended 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 Six months
ended 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 Six months
ended ended
30 June 2023 30 June 2022
GBPm GBPm
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 30 6 months ended 30 6 months ended 30 6 months ended 30
June 2023 June 2022 June 2023 June 2022
Pence per share Pence per share GBPm GBPm
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 2022: nil per
share) 0.75 - 0.9 -
---------------------- ---------------------- ---------------------- ----------------------
0.75 - 0.9 -
A final dividend of 2.25p per share (GBP2.5m) 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 (GBP0.9m).
6 Property, plant and equipment
Leasehold Right of Office equipment Computer Total
improvements use asset equipment
Cost GBPm GBPm GBPm GBPm GBPm
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 31 December
2023 2022
GBPm GBPm
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
GBPm GBPm
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 GBP13.4m
(December 2022: GBP12.8m) 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
GBPm GBPm
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
GBPm GBPm
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
GBPm GBPm
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 GBPm GBPm
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) GBP
Ordinary shares of GBP0.0001
each 113.2 - 11,321
Management shares issued
of GBP0.0025 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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END
IR GPUUABUPWPUP
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