Buy
Sell
Share Name Share Symbol Market Type Share ISIN Share Description
Argentex Group Plc LSE:AGFX London Ordinary Share GB00BJLPH056 ORD �0.0001
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.25 -0.19% 130.50 128.00 133.00 132.50 128.00 128.50 27,320 16:35:17
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Nonequity Investment Instruments 29.0 10.2 7.1 18.4 148

Argentex Group PLC Interim Results

20/11/2020 7:00am

UK Regulatory (RNS & others)


Argentex (LSE:AGFX)
Historical Stock Chart


From Oct 2020 to Nov 2020

Click Here for more Argentex Charts.

TIDMAGFX

RNS Number : 9417F

Argentex Group PLC

20 November 2020

20 November 2020

Argentex Group PLC

("Argentex", the "Group" or the "Company")

Interim results for the six months ended 30 September 2020

Argentex Group PLC, the provider of foreign exchange services to institutions, corporates and high net worth individuals, today issues its interim results for the six-month period ended 30 September 2020.

Carl Jani and Harry Adams, Co-CEOs of Argentex commented:

"Like many other businesses, the six-month period for Argentex has been shaped by the impact of the Covid-19 pandemic and associated macro-economic uncertainty. This has caused a significant fall in our trading volumes as clients have, temporarily, put their dealing decisions on hold. However, each client has a commercial need to mitigate FX risk inherent in their business and we have started to see client activity return to more normal levels.

Importantly, the fundamentals of our business remain strong and we experienced a record number of new clients trading in the second quarter, sourced by our expanding and increasingly capable sales team. With our disciplined risk management, balance sheet strength and long-term focus, we remain confident in our ability to navigate the ongoing challenges of Covid-19 and Brexit and continue to deliver sustainable long-term growth for our shareholders."

Financial highlights

   --    Foreign Exchange ("FX") Turnover(1) : GBP5.0bn (Sept 2019: GBP6.0bn) 
   --    Revenue:  GBP11.8 million (Sept 2019: GBP13.8 m) 
   --    Underlying Operating Profit(2) : GBP3.7m (Sept 2019: GBP6.5m) 
   --    Underlying Operating Profit Margin : 31.6% (Sept 2019: 46.8%) 
   --    Profit after tax : GBP2.7m (Sept 2019: GBP3.2m) 
   --    Earnings per share: 2.4p (basic), 2.5p (underlying) (Sept 2019: 2.9p basic, 4.6p underlying) 

(1) FX turnover represents gross currency sales of the Group's FX product offering

(2) Operating profits of Argentex Group PLC, before IPO costs, share based payments and pre-IPO equity based LLP remuneration)

Operational highlights

   --    Growing client base and average trade size: 

o Record number of 126 new corporate clients traded in Q2

o 212 new corporate clients trading during the period, up 15% (FY20 - 185)

o Total number of all traded corporate clients grew by 5% to 981 (FY20 - 933)

o Average spot and forward trade size grew by 4% and 5% respectively

-- Encouraging levels of client activity in September, pointing to an unwinding of pent-up demand:

o Revenues generated in September up 57% vs August

o Average forward tenor increased by 52% during the period, a return toward historical levels

   --    Foundation for growth further enhanced: 

o 62% increase in sales team to 35 people, with a total of 23 new hires across the business

o New 12,000 square foot London headquarters opened in September providing a Covid -secure efficient working environment

   --    Traded product mix consistent with historic trends: 

o Forwards accounted for 35% of traded volume and 47% of overall group revenue

o Spot trades made up 65% and 53% of volume and revenue respectively

   --    Early international growth plans continue 

o Netherlands office opened and now contributing to revenue

   --      Successful Covid-19 mitigation plan 

o Entire operation working from home within 24 hours of first lockdown

o New office working well under current lockdown

Outlook

The Company's trading post period end, from October onwards, has been encouraging and the general economic and trading environment continues to improve. This will offer substantial opportunities for Argentex, but it is still too early for the board to be confident that trading has sustainably returned to pre-pandemic levels.

The business continues to focus on delivering high levels of client service, which have been successfully maintained despite pandemic-related challenges. Argentex has also continued its emphasis on maintaining the financial robustness of its client base through strict risk management processes and rejecting any revenue opportunity which comes at the cost of an unacceptable increase in credit risk in the trade book.

As confidence returns to the market , trading volumes are expected to recover further, and the Company's resilient business model with its highly motivated workforce, remains well placed to benefit from a growing pool of high-quality clients.

Analysts briefing:

There will be a presentation for analysts at 9.30am on 20 November 2020. To register for this event, please contact argentex@fticonsulting.com

For further in formation please contact:

Argentex Group PLC

Carl Jani, Harry Adams - Co-CEOs

(Via FTI Consulting)

FTI Consulting (Financial PR)

Ed Berry, Shiv Talwar, Ambrose Fullalove

Telephone: 0203 727 1046

argentex@fticonsulting.com

Numis Securities Limited (Nominated Adviser and Broker)

Stephen Westgate, Charlie Farquhar, Laura White, Hugo Rubinstein

Telephone: +44 (0) 20 7260 1000

Forward looking statements

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses and plans for Argentex Group PLC. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that have not yet occurred. There are a number of different factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this statement should be construed as a profit forecast.

The release, publication, transmission or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published, transmitted or distributed should inform themselves about and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

About Argentex Group PLC

Argentex is a UK-based foreign exchange service provider founded in 2011 by its current senior management and Pacific Investments. It operates as a Riskless Principal broker for non-speculative spot and forward foreign exchange and structured financial derivative contracts.

The Group delivers tailored foreign exchange advisory and execution services to a global client base consisting principally of institutions, corporates and high net worth individuals. It provides a personal client-led service, improved pricing and a more efficient execution and settlement service than existing FX service providers, such as banks and larger broker-dealers.

The business assists customers with foreign exchange transactions which are related to genuine underlying business needs. It does not engage in speculative trades for its clients, nor does it offer margin trading, spread betting, CFDs or similar products and it does not speculate with its own funds as principal.

Co-CEOs' Statement

When we came to market in June last year, we had a clear message for all our stakeholders: we would remain prudent, with a long-term focus, in our pursuit of sustainable, organic growth. This disciplined approach combined with our strong underlying business model and balance sheet strength, has continued to serve us well over the last six months, a period dominated by the unprecedented effects of Covid-19.

While our revenue and profit decline for the period reflects reduced trading activity as a result of market conditions, we are confident that the business will navigate the ongoing challenges and continue its trajectory of long-term stable growth thanks to its resilient fundamentals.

Key Highlights

The headline fall in revenue to GBP11.8m (down 14.7% on H1 2019) and underlying operating profit (down 42%) was driven by part of our client base deferring its trading activity in the face of growing uncertainty in global markets. Whilst Covid-19 has had a severe impact on market dynamics, it is important to note that short-term fluctuations in trading volumes are regularly experienced by a trading business and we have experienced this shift in trading behaviour and conviction in previous periods of significant market uncertainty.

Our data clearly shows varying degrees of temporary decision paralysis across the period. Despite an increase in the number of clients trading, their average trade size (both spot and forward) and number of new traded clients, we have seen a decrease in the number of trades along with the average tenor of a forward trade. These are all signs of reduced conviction and an unwillingness to hedge beyond absolute certainty.

Encouragingly, our September trading has shown signs of a return towards a more 'normal' level of activity, with numerous positive indicators pointing to an unwinding of pent-up trades and with 126 new trading corporates across Q2. Revenues in September were 57% higher than those in August, and it is this trend of accelerating momentum that we hope will continue in the medium term.

As we have seen after previous periods of macro-economic uncertainty, each of our clients has a commercial need to remove FX risk , so it is not a question of if these "pent-up" trades are made, but when. While the timing of this will likely depend on market and geopolitical events , we are confident that they will be reflected in our longer-term revenues.

Looking at the detail, the average trade size of spot and forwards were up 4% and 5% respectively. Our traded product mix has remained consistent with historic trends: forwards accounted for 35% of traded volume and 47% of overall group revenue while spot trades made up 65% and 53% of volume and revenue respectively. The number of forward contracts executed in September also represented a 65% increase compared to the number traded in April. The average forward tenor increased 52% during the period, from its lowest level since 2014 back in April, towards typical historic average levels by September, which also further indicates an improving level of conviction from our clients.

Operational Highlights

Despite the encouraging growth in our client base, we have not compromised our strict take-on procedures. We have experienced no material exposure to bad debt during the period and have continued to exercise vigilance and a consistent approach to credit quality and monitoring. We have seen a spike in the number of clients with trades that we have declined, falling outside our risk tolerance parameters and underlining our commitment to high levels of risk management and governance, even at the expense of quick financial gain.

The health and safety of our people and their families has been a key priority during the period and this will continue going forward. We are proud of the way our staff have responded to the extraordinary challenges of the pandemic. We successfully adapted our entire operation to work from home within 24 hours of the initiation of the first lock down, and transitioning those relevant parts of the business back to a work from home environment immediately during the current lockdown. In both instances we have done so in a safe and efficient way, remaining client-focused and without detriment to staff safety or client service levels.

We are delighted with how our staff have settled into our new premises at 25 Argyll Street in London and embraced the new environment which is focused on enhancing employee interactivity and promoting their health and wellbeing, whilst simultaneously allowing for seamless remote working where roles and responsibilities are not compatible with current government guidelines for remaining in the office.

At a time when some businesses across the country are facing irreparable damage and losing staff, we increased our commitment to invest in our most important asset, our people, and continued to attract new talent during the period. Our focus on long-term growth is evidenced through the increase in our sales team to 35 people, a 62% increase in a year, enabled by the move to our new London headquarters which was completed over the initial lockdown period.

Our early international growth plans continue to progress in line with our expectations with the office in the Netherlands opening in the period. It is now contributing to revenue, whilst we continue to progress our early stage planning in Australia. Finally, our Brexit contingency plans are in place to cater for the UK potentially leaving the EU on 1 January 2021 with no deal.

Financial review

Revenue

The six-month period to 30 September 2020 has seen Argentex experience a decline in revenues with the comparative period of 14.7%. Covid-19 has been the core driver of the reduction in revenue with Argentex's clients reducing their trading activity during the height of the pandemic. September revenues provided some indication of a return to previous levels of activity, and while short term uncertainty remains, the long terms prospects of the Group's revenue potential is bolstered by operational changes within the Group including increased headcount in the front office and the recent move to a new headquarters.

Profitability

In a period in which the business has significantly increased capacity with its new headquarters and increased headcount, Argentex's operating profit margins have reduced. The new and larger headquarters, will allow the Group to continue with its growth ambitions over the coming years, however this increase in property size and in headcount (across all aspects of the business) has naturally led to lower profitability margins for the period. The reduction in revenues combined with a new cost base has resulted in underlying operating margins of 31.6%, although the anticipated operating margins in the medium term are expected to return towards 35%-40%. In the longer term, the group expects to increase operating margins back over 40% as newer front office staff reach their revenue potential.

Argentex's commitment to an established risk framework has also proven successful to date, with no material bad debts experienced since the start of the pandemic, which continues to attest to the underlying quality of Argentex's client base. While a conservative risk appetite may result in some client opportunities being declined to preserve the integrity of the client portfolio, this is considerably outweighed by the longer-term benefits from this risk-based approach, particularly in scenarios that precipitate major market movements.

Cashflow

The Group's net cash position (total cash less amounts payable to clients) is GBP20.1m (HY 2019: GBP19.1m, YE 2020: GBP23.8m). The reduction from 31 March follows the period's capital expenditure on the new premises and the dividend paid relating to YE 2020.

 
                              30 Sept  30 Sept 2019   31 March 
                                 2020                     2020 
                              GBP'000       GBP'000    GBP'000 
 Cash at bank                  38,046        32,140     49,276 
 Less: amounts payable to 
  clients                    (17,960)      (13,009)   (25,521) 
 
 
 Net cash                      20,086        19,131     23,751 
 
 

Client balances relating to collateral have reverted to pre-pandemic levels following the reduction in FX volatility through the summer. The Group is confident in the creditworthiness of its client base going forward and will continue to request collateral from clients as the need arises.

The Group's operations continue to generate positive cash flows. Adjusting for changes to client balances (collateral received from, and funds awaiting distribution to clients), capital expenditure and dividends paid provides underlying cash generation as follows:

 
                                        30 Sept 2020  30 Sept 2019  31 March 2020 
                                             GBP'000       GBP'000        GBP'000 
 Change in cash and cash equivalents        (11,230)        18,574         35,710 
 Add: 
 Decrease/(increase) in amounts 
  payable to clients                           7,250       (4,428)       (16,943) 
 Capital expenditure                           3,454           656          1,294 
 Dividends paid                                2,264             -              - 
 Less: net IPO proceeds                            -      (10,779)       (10,779) 
 
 
 Underlying net cash generation                1,738         4,023          9,282 
 
 

The spot and forward composition of the firm's revenues remains within historic averages (53% spot/47% forward) which provides positive cash flows into the business from the core revenue line. Further to the spot FX cash flows, the average tenor of and FX forward continues to be less than five months. When combined with the cash flow profile of the spot FX contracts, the LLP measures short term cash return as follows:

 
                                    30 Sept 2020  30 Sept 2019  31 March 2020 
                                         GBP'000       GBP'000        GBP'000 
 Revenues for the last 12 months 
  (A)                                     26,954        26,296         28,986 
 less: 
 Revenues settling beyond 3 
  months                                 (5,207)       (3,704)        (7,464) 
 
 Net short term cash generation 
  (B)                                     21,747        22,592         21,522 
 Short term cash return (B/A)                81%           86%            74% 
 
 

Dividend

With the impact of Covid-19 still unclear for the short term, the Board is not recommending an interim dividend. The Board will consider the payment of a final dividend at the appropriate time.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                                              6 months            6 months         12 months 
                                                    to                  to       to 31 March 
                                          30 September        30 September    2020 (audited) 
                                      2020 (unaudited)    2019 (unaudited) 
                                                                         * 
                                                   GBP                 GBP               GBP 
 Revenue                                    11,795,413          13,827,852        28,986,444 
 
 Direct costs                                (147,810)           (190,939)         (409,350) 
 
 Gross profit                               11,647,603          13,636,913        28,577,094 
 
 Administrative expenditure                (7,912,650)         (7,159,578)      (16,075,230) 
 
 Underlying operating profit                 3,734,953           6,477,335        12,501,864 
 
 IPO costs                                           -           (563,171)         (563,171) 
 LLP equity-based remuneration 
  pre-IPO                                            -         (1,662,696)       (1,662,696) 
 Share based payments                        (106,161)            (66,861)           (5,763) 
----------------------------------  ------------------  ------------------  ---------------- 
 
 Operating profit                            3,628,792           4,184,607        10,270,234 
 
 Interest payable and similar 
  charges                                    (174,062)           (133,362)         (157,032) 
 Interest receivable and similar 
  income                                             -                   -           105,343 
 
 Profit before taxation                      3,454,730           4,051,245        10,218,545 
 
 Taxation                                    (762,046)           (859,689)       (2,127,755) 
 
 
 Profit and total comprehensive 
  income for the period                      2,692,684           3,191,556         8,090,790 
 
 
 

[*] As restated, see note 3

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 September 2020

 
                                Notes   30 September         30 September            31 March 
                                                2020                 2019                2020 
                                         (unaudited)          (unaudited)           (audited) 
                                                                        * 
                                                 GBP                  GBP                 GBP 
 Non-current assets 
 Intangible assets                         1,761,215            1,797,661           1,793,385 
 Property, plant and 
  equipment                       8        9,423,647              296,576             211,693 
 Trade and other receivables      6        2,269,391            5,552,655           7,225,042 
 Total non-current assets                 13,454,253            7,646,892           9,230,120 
 Current assets 
 Trade and other receivables      6       15,352,605           11,999,927          17,925,854 
 Cash and cash equivalents        7       38,046,223           32,140,220          49,275,808 
                                                           --------------       ------------- 
 
   Total current assets                   53,398,828           44,140,147          67,201,662 
                                       -------------       --------------       ------------- 
 
 Current liabilities 
 Trade and other payables         9     (34,584,650)         (27,920,272)        (47,425,671) 
 
 
 Total current liabilities              (34,584,650)        (27, 920,272)        (47,425,671) 
 Non-current liabilities 
 Creditors due after 
  more than one year             10      (6,751,784)          (3,722,950)         (4,024,158) 
 
 
   Net assets                             25,516,647           20,143,817          24,981,953 
                                       -------------       --------------       ------------- 
 
 Equity 
 Share capital                   12           70,295               70,295              70,295 
 Share premium account                    12,713,922           12,713,922          12,713,922 
 Share option reserve                        111,924               66,861               5,763 
 Merger reserve                            4,549,705            4,549,705           4,549,705 
 Retained earnings                         8,070,801            2,743,034           7,642,268 
 
   Total equity                           25,516,647           20,143,817          24,981,953 
 
 

[*] As restated, see note 3

CONSOLIDATED STATEMENT OF CASH FLOWS

 
                                                  6 months                  6 months           12 months 
                                                        to                        to                  to 
                                              30 September              30 September            31 March 
                                                      2020          2019 (unaudited) 
                                                                                   * 
                                               (unaudited)                                          2020 
                                                                                               (audited) 
                                                       GBP                       GBP                 GBP 
 Cash flows from operating activities 
 
 Profit after taxation                           2,692,684                 3,191,556           8,090,790 
 
 Net finance expense                               174,062                     7,785              11,247 
 Depreciation of right of use assets               357,378                   117,386             234,949 
 Amortisation of intangible assets                 610,989                   497,356           1,046,462 
 Deprecation of property, plant and 
  equipment                                         94,398                    67,535             128,087 
 Share based payment expense                       106,161                    66,861               5,763 
 (Increase)/decrease in other receivables        (979,367)                    46,013              59,389 
 (Decrease)/increase in other payables         (7,292,809)                 5,838,477          18,969,951 
 Decrease/(increase) in derivative 
  financial assets                               8,508,269               (5,090,292)        (12,701,982) 
 (Decrease)/increase in derivative 
  financial liabilities                        (8,535,575)                 2,162,498          11,287,758 
 LLP members remuneration                        1,461,126                 3,563,302           6,557,493 
 Drawings and distributions to LLP 
  members and former members                   (2,708,016)               (1,345,837)         (6,628,205) 
 
 Net cash (used by)/generated from 
  operating activities                         (5,510,700)                 9,122,640          27,061,702 
 
 Cash flow from investing activities 
 Payments to acquire property, plant 
  and equipment                                (2,459,225)                   (8,090)           (101,323) 
 Payments to acquire intangible fixed 
  assets                                         (578,820)                 (538,581)         (1,083,412) 
 Share acquisition costs                                 -                 (109,290)           (109,290) 
 Payments made during the acquisition            (416,369)                         -                   - 
  of right of use assets 
 
 Net cash used in investing activities         (3,454,414)                 (655,961)         (1,294,025) 
 
 Cash flow from financing activities 
 Payments of lease liabilities                           -                 (223,115)           (388,525) 
 Proceeds from the issue of shares                       -                14,061,302          14,061,302 
 Share issuance costs                                    -               (1,284,757)         (1,284,757) 
 Short term loans                                        -               (1,997,430)         (1,997,430) 
 Net interest expense                                (319)                         -                   - 
 Dividends paid during the period              (2,264,151)                         -                   - 
 Distributions paid under former 
  ownership structure                                    -                 (448,522)           (448,522) 
                                            --------------       ------------------- 
 
 Net cash (outflow)/inflow from financing 
  activities                                   (2,264,470)                10,107,478           9,942,068 
                                            --------------       ------------------- 
 
 Net (decrease)/increase in cash 
  and cash equivalents                        (11,229,584)                18,574,157          35,709,745 
 Cash and cash equivalents at the 
  beginning of the period                       49,275,808                13,566,063          13,566,063 
 Cash and cash equivalents at end 
  of the period                                 38,046,224                32,140,220          49,275,808 
 

[*] As restated, see note 3

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 30 September 2020

 
                      Share         Share    LLP Equity      Share      Merger      Retained         Total 
                    capital       premium       Capital     option     reserve      earnings        equity 
                                                           reserve 
                        GBP           GBP                      GBP         GBP           GBP           GBP 
 Balance as at 
  31 March 2019 
  (audited)               1             -     3,071,565          -           -             -     3,071,566 
 Profit and 
  total 
  comprehensive 
  income for the 
  period                  -             -                        -           -     3,191,556     3,191,556 
 Transactions 
 with 
 shareholders 
 Dividends paid 
  under former 
  ownership 
  structure               -             -             -          -           -     (448,522)     (448,522) 
 Merger reserve 
  arising on 
  reorganisation        (1)             -   (3,071,565)          -   4,549,705             -     1,478,139 
 Issue of share 
  capital            70,295    13,998,679             -                      -             -    14,068,974 
 Cost of issue 
  of equity 
  shares                  -   (1,284,757)             -                      -             -   (1,284,757) 
 Share based 
  payments                -             -             -     66,861           -             -        66,861 
                  ---------  ------------  ------------  ---------  ----------  ------------  ------------ 
 Balance as at 
  30 September 
  2019 
  (unaudited) *      70,295    12,713,922             -     66,861   4,549,705     2,743,034    20,143,817 
 Profit and 
  total 
  comprehensive 
  income for the 
  period                  -             -             -          -           -     4,899,234     4,899,234 
 Transactions 
 with 
 shareholders 
 Share based 
  payments                -             -             -   (61,098)           -             -      (61,098) 
                  ---------  ------------  ------------  ---------  ----------  ------------  ------------ 
 Balance as at 
  31 March 2020 
  (audited)          70,295    12,713,922             -      5,763   4,549,705     7,642,268    24,981,953 
 Profit and 
  total 
  comprehensive 
  income for the 
  period                  -             -             -          -           -     2,692,684     2,692,684 
 Transactions 
 with 
 shareholders 
 Dividends paid           -             -             -          -           -   (2,264,151)   (2,264,151) 
 Share based 
  payments                -             -             -    106,161           -             -       106,161 
                  ---------  ------------  ------------  ---------  ----------  ------------  ------------ 
 Balance as at 
  30 September 
  2020 
  (unaudited)        70,295    12,713,922             -    111,924   4,549,705     8,070,801    25,516,647 
 

[*] As restated, see note 3

NOTES TO THE INTERIM FINANCIAL STATEMENTS

   1          Corporate 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 into which the results of its subsidiaries are consolidated.

   2          Basis of preparation 

The consolidated financial information contained within these financial statements 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 year ended 31 March 2020 has been extracted from the audited financial statements for that year.

The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability or expense. The accounting policies applied in preparation of these interim financial statements are consistent with the basis that was adopted for the preparation of the full year accounts for the year ended 31 March 2020 and will be adopted for the full year accounts for the year ended 31 March 2021.

Statutory accounts for the year ended 31 March 2020 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 2020 was unqualified, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The Independent Auditor drew attention to note 3.2 of the statutory financial statements, which describes the impact of COVID-19 on the Company by way of emphasis. The audit opinion was not modified in respect of this matter.

These interim financial statements are prepared on a going concern basis as the directors have satisfied themselves that, at the time of approving these interim financial statements, the Group has adequate resources to continue in operational existence for at least the next twelve months.

   3          Accounting policies 

The accounting policies adopted in these interim financial statements are identical to the those adopted in the Group's most recent annual financial statements for the year ended 31 March 2020, which are available from the Registrar of Companies and www.argentex.com/investors .

Restatement of 30 September 2019 interim results and reconciliation to 2019 interim statement

The Group's interim financial results to 30 September 2019 were prepared on the initial assessment that the formation of the Group consolidated by the Company should be accounted for as an acquisition in accordance with IFRS 3 - Business Combinations. Following further assessment, the directors concluded that the substance of the formation of the Argentex Group was more reliably represented by the use of merger accounting (as described in note 3.4 of the Group's audited financial statements for the year ended 31 March 2020). No other accounting policies or estimates have changed as a result of this restatement.

Use of the acquisition method in accounting for the Group formation resulted in goodwill of GBP101m and net assets of the group of GBP121m in the 2019 interim results. Following the adoption of the merger accounting method in the full year audited results, no goodwill is recognised in the consolidated financial statements and the net assets of the Group as at 30 September 2019 has been restated to GBP20m.

The effect on interim profit after taxation under the two accounting methods is shown as follows:

 
 Profit after taxation under acquisition accounting 
  method (30 September 2019)                           3,177,328 
 
 Additional profits recognised in the Group under 
  merger accounting                                      448,522 
 Costs relating to group formation and IPO not 
  eligible for capitalisation                          (371,261) 
 Tax impact                                             (63,033) 
 
 Profit after taxation under merger accounting 
  method (30 September 2019)                           3,191,556 
 
 
   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 underlying earnings figure, which excludes the effects of share based payments, and non-recurring costs including costs associated with the IPO and profits earned and fully distributed to former equity holders prior to the IPO (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.

 
                               Period ended   Period ended     Year ended 
                               30 Sept 2020  30 Sept 2019*  31 March 2020 
                                        GBP            GBP            GBP 
                              -------------  -------------  ------------- 
 
 Basic earnings per share               2.4            2.9            7.1 
 Diluted earnings per share             2.4            2.9            7.1 
 Underlying - basic                     2.5            4.6            8.8 
 Underlying - diluted                   2.5            4.6            8.8 
 

[*] As restated, see note 3

The calculation of basic and diluted earnings per share is based on the following number of shares:

 
                                   Period ended  Period ended     Year ended 
                                   30 Sept 2020  30 Sept 2019  31 March 2020 
                                            No.           No.            No. 
 Basic weighted average shares      113,207,547   113,207,547    113,207,547 
 Contingently issuable shares     425,90848,427       283,010        226,408 
 Diluted weighted average 
  shares                            113,255,974   113,490,557    113,433,955 
 

The earnings used in the calculation of basic, diluted and underlying earnings per share are set out below:

 
                                  Period ended   Period ended     Year ended 
                                  30 Sept 2020  30 Sept 2019*  31 March 2020 
                                           GBP            GBP            GBP 
 Earnings - basic and diluted        2,692,682      3,191,556      8,090,790 
 IPO Costs                                   -        563,171        563,171 
 LLP equity-based remuneration 
  pre-IPO                                    -      1,662,696      1,662,696 
 Share-based payments                  106,161         66,861          5,763 
 Tax impact                                  -      (317,007)      (317,007) 
 Earnings - underlying               2,798,843      5,167,277     10,005,413 
 
   5          Dividends 
 
                                                             30 September 2020   30 September 2019   31 March 2020 
                                                                   (unaudited)         (unaudited)       (audited) 
                                                                           GBP                 GBP             GBP 
 Amounts recognised as distributions to equity holders: 
 
 Dividends declared under the former ownership structure                     -             448,552         448,552 
 Interim dividend of 2.0p per share                                  2,264,149                   -               - 
 
 

The interim dividend was declared in July 2020 in respect of the results for the year ended 31 March 2020, and paid in respect of the ordinary shares in issue of GBP0.0001 each. Prior to the IPO and change in ownership, the former owners of Argentex Foreign Exchange Limited declared dividends amounting to GBP448,552 which are included in the Consolidated Statement of Changes of Equity.

[*] As restated, see note 3

   6          Trade and other receivables 
 
                                30 September   30 September     31 March 
                                        2020           2019         2020 
                                 (unaudited)    (unaudited)    (audited) 
                                         GBP            GBP          GBP 
   Non-Current 
 
 Derivative financial assets 
  at fair value                    2,269,391      5,552,655    7,225,042 
 
 
                                   2,269,391      5,552,655    7,225,042 
 
 
 Current 
 
 Derivative financial assets 
  at fair value                   14,080,428     11,693,743   17,633,046 
 Other debtors                       838,047         90,879       90,880 
 Prepayments                         372,796        215,305      201,928 
 
 
                                  15,291,271     11,999,927   17,925,854 
 
 
   7          Cash and cash equivalents 

Cash and cash equivalents include cash on hand and at banks. Cash and cash equivalents at the end of the reporting period can be reconciled to the related items in the Statement of Financial Position as follows:

 
                                   30 September        30 September          31 March 
                               2020 (unaudited)    2019 (unaudited)    2020 (audited) 
                                            GBP                 GBP               GBP 
 Cash and cash equivalents 
 
 Cash held at banks                  38,046,224          32,140,220        49,275,808 
 
 
                                     38,046,224          32,140,220        49,275,808 
 
 

Included within cash and cash equivalents are client held funds relating to margins received and client balances payable (See note 9).

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 in authorised credit institutions.

Cash includes cash held as collateral with banking and brokerage counterparties for which the Group does not have immediate access of GBP894,267 (30 September 2019: GBP5,159,115; 31 March 2020: GBP1,140,267)

   8          Property Plant and Equipment 
 
                         Leasehold      Right of       Office     Computer         Total 
                      improvements     use asset    equipment    equipment 
 Cost                          GBP           GBP          GBP          GBP           GBP 
 At 31 March 2019          351,700     1,173,525      243,025      319,541     2,087,791 
 Additions                       -             -        3,030        5,060         8,090 
                    --------------  ------------  -----------  -----------  ------------ 
 At 30 September 
  2019                     351,700     1,173,525      246,055      324,601     2,095,881 
 Additions                       -             -            -       93,233        93,233 
                    --------------  ------------  -----------  -----------  ------------ 
 At 31 March 2020          351,700     1,173,525      246,055      417,834     2,189,114 
 Additions               1,641,144     7,174,504      477,648      370,434     9,663,730 
 Disposals               (351,700)   (1,173,525)    (241,813)    (218,716)   (1,985,754) 
                    --------------  ------------  -----------  -----------  ------------ 
 At 30 September 
  2020                   1,641,144     7,174,504      481,890      569,552     9,867,090 
 
 Depreciation 
 At 31 March 2019          252,920       880,136      241,203      240,126     1,614,385 
 Charge for the 
  period                    37,114       117,415          934       29,487       184,921 
                    --------------  ------------  -----------  -----------  ------------ 
 At 30 September 
  2019                     290,034       997,551      242,137      269,613     1,799,335 
 Charge for the 
  period                    37,113       117,534          983       22,456       178,086 
                    --------------  ------------  -----------  -----------  ------------ 
 At 31 March 2020          327,147     1,115,085      243,120      292,069     1,977,421 
 Charge for the 
  period                    38,701       357,378        8,998       46,699       451,776 
 Disposals               (351,700)   (1,173,525)    (241,813)    (218,716)   (1,985,754) 
                    --------------  ------------  -----------  -----------  ------------ 
 At 30 September 
  2020                      14,148       298,938       10,305      120,052       443,443 
 
 Net Book Value 
 At 30 September 
  2020                   1,626,996     6,875,566      471,585      449,500     9,423,647 
                    --------------  ------------  -----------  -----------  ------------ 
 At 31 March 2020           24,553        58,440        2,935      125,765       211,693 
                    --------------  ------------  -----------  -----------  ------------ 
 At 30 September 
  2019                      61,666       175,974        3,918       54,988       296,546 
                    --------------  ------------  -----------  -----------  ------------ 
 At 31 March 2019           98,780       293,389        1,822       79,415       473,406 
 
   9          Trade and other payables 
 
                                              30 September        30 September          31 March 
                                          2020 (unaudited)    2019 (unaudited)    2020 (audited) 
                                                       GBP                 GBP               GBP 
 
 Loans and other debts due to members 
  and former members of Argentex 
  LLP                                            4,694,472           7,603,675         5,315,499 
 Trade creditors                                    59,912           1,732,512             1,574 
 Amounts payable to clients                     17,960,330          13,009,694        25,524,595 
 Other creditors                                         -              46,119           625,861 
 Accruals                                        2,420,780           2,475,494         2,785,250 
 Other taxation and social security                  4,332              10,672           190,711 
 Derivative financial liabilities 
  at fair value                                  5,850,927           2,030,373        10,854,425 
 Lease liability                                   704,095             151,948                 - 
 Corporation tax                                 2,889,802             859,785         2,127,756 
 
 
                                                34,584,650          27,920,272        47,425,671 
 
 
   10        Creditors: amounts falling due after more than one year 
 
                                     30 September   30 September     31 March 
                                             2020           2019         2020 
                                      (unaudited)    (unaudited)    (audited) 
                                              GBP            GBP          GBP 
 
 Derivative financial liabilities 
  at fair value                           492,081      3,722,950    4,024,158 
 Lease liabilities                      6,259,703              -            - 
 
 
                                        6,751,784      3,722,950    4,024,158 
 
 
   11        Share capital 
 
                                    Ordinary  Management    Nominal 
                                      shares      shares      value 
  Allotted and paid up                   No.         No.        GBP 
 
 
 Ordinary shares of GBP0.0001 
  each                           113,207,547           -     11,321 
 Management shares issued 
  of GBP0.0025 each                        -  23,589,212     58,974 
 
 At 30 September 2020            113,207,547  23,589,212     70,295 
                                ============  ==========  ========= 
 
 

There were no changes to share capital during the period from 1 April 2020 to 30 September 2020.

On 7 April 2020, the Company awarded options over a total of 4,528,300 new ordinary shares in an unapproved option scheme. The share options all have an exercise price of 135p, representing a 12.0% premium to the closing midmarket price of 120.5p on 6 April 2020, the day before the awards were made. To provide long-term alignment with shareholders, the awards will vest in portions of one third on the third, fourth and fifth anniversaries of grant.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR FLFLTLFLALII

(END) Dow Jones Newswires

November 20, 2020 02:00 ET (07:00 GMT)

1 Year Argentex Chart

1 Year Argentex Chart

1 Month Argentex Chart

1 Month Argentex Chart
ADVFN Advertorial
Your Recent History
LSE
AGFX
Argentex
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20201127 00:40:44