Argentex Group PLC – AGFX – Interim Results

Argentex Group PLC – AGFX – Interim Results

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): £5.0bn (Sept 2019: £6.0bn)

·    Revenue:  £11.8 million (Sept 2019: £13.8 m)

·    Underlying Operating Profit(2): £3.7m (Sept 2019: £6.5m)

·    Underlying Operating Profit Margin: 31.6% (Sept 2019: 46.8%)

·    Profit after tax: £2.7m (Sept 2019: £3.2m)

·    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:  

Record number of 126 new corporate clients traded in Q2

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

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

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:

Revenues generated in September up 57% vs August

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

·    Foundation for growth further enhanced:

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

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

·    Traded product mix consistent with historic trends:

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

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

·    Early international growth plans continue 

Netherlands office opened and now contributing to revenue

·      Successful Covid-19 mitigation plan

Entire operation working from home within 24 hours of first lockdown

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.

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