2 April 2025

Argentex Group PLC

("Argentex" or the "Group")

Final results for the year ended 31^st December 2024

Full year revenues and profit margins ahead of expectations

Revenue diversification plans on track

Argentex Group PLC (AIM: AGFX), the global specialist in currency risk management and alternative banking, today issues its final results for the year ended 31 December 2024.

Financial summary

·      Group revenue of £50.3m (FY23: £49.9m), with growth in the number of clients offset by a reduction in average spend

·      Improving trading momentum with revenue growth of 6% yoy in H2 (vs. 4% yoy decline in H1)

·      EBITDA margin of 8% comfortably ahead of previous expectations of low single digit EBITDA margin

·      Operating loss of £0.2m (12 months to 31 December 2023: operating profit of £8.1m), with margin reduction as a result of planned investment in business transformation

·      Strong balance sheet: debt free with net cash of £18.4m at 31 December 2024(1)

·      Earnings/ (Loss) per share of (1.1p) (12 months to 31 December 2023: 4.6p)

·      Nil dividend (12 months to 31 December 2023: 0.75p per share)

Operational summary

·      Total number of clients(2) increased by 9% to 2,113 (12 months to 31 December 2023: 1,938)

·      Average revenue per client fell by 9% during the period compared to the previous 12 months due to a combination of product/client mix, volatility and margin compression

·      International expansion continued with licences obtained in both Australia and Dubai. Both regions are now fully operational and serving clients

·      Revenue diversification plans on track. Argentex Global Platform (on which both new and existing services will run) on track to launch in Summer 2025

·      Strengthened leadership. Experienced permanent executive team in place to deliver growth plans

·      Management incentivised and aligned with shareholders. New LTIP for Executive team and CSOP for select employees.

Board changes

·      Digby Jones to step down as a Non-Executive Director at AGM in June

·      Jeff Parker joins Board as a Non-Executive Director from 1 April

1 Net cash represents cash and cash equivalents less amounts payable to clients

2 Excludes private clients

Outlook

The positive momentum delivered in H2 2024 has continued into the current financial year and we have made further progress in implementing our strategic growth agenda, with delivery remaining on-track. With trading having commenced in Australia and Dubai and the planned launch of digital accounts and payments in summer 2025, we anticipate a return to revenue growth in FY25. We will continue to invest in growth, and as we accelerate our progression into new products and services, we remain confident in our medium-term outlook and continue to expect revenue growth in FY26 in the 15% - 20% range, with EBITDA margins in the mid-teens.

Jim Ormonde, Chief Executive Officer said: 

 "Having actively reset the business in 2024, we are now well positioned to take advantage of exciting growth opportunities in our markets and are confident about the year ahead. With regulatory and operational hubs now fully established in the Netherlands, Australia and Dubai, we believe we have strong prospects to grow our market share overseas. Domestically, we have restructured our front office teams and re-aligned our cost base and believe we are now better placed to serve both new and existing clients. As a result of the investments made in technology and people as we continue to diversify our offering, all regions will benefit from the suite of new services we plan to launch this year and beyond, together with easier, automated onboarding processes which will drive operational leverage. It has been a year of significant change in the business, but I believe we are now well placed to return to profitable growth."

For further information, please contact:

Argentex Group PLC

Jim Ormonde - Chief Executive Officer

Guy Rudolph - Chief Financial Officer

investorrelations@argentex.com

Teneo (Financial PR)

James Macey-White / Victoria Boxall

argentex@teneo.com, 020 7260 2700

Singer Capital Markets (Nominated Adviser and Broker)

Tom Salvesen / James Maxwell / James Todd

020 7496 3000

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation ("MAR") which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018; as amended.  Upon publication of this announcement, the inside information is now considered to be in the public domain for the purposes of MAR.

About Argentex

Argentex (AIM: AGFX) is a global specialist in currency risk management and alternative banking. Established in 2012 and headquartered in London, Argentex listed on London's AIM market in mid-2019 and has since added operations in Amsterdam, Dubai and Australia.

Chairman's Statement  

Executing on our strategy 

We have a clear strategy in place and the right people and processes in place to execute it.   

Overview 

2024 has been a year of necessary reset to reposition the business for growth following the completion of a comprehensive strategic review of the Group. We set out a clear strategy in May 2024 to scale the business and expand our customer offering, whilst driving a more efficient and effective operating model. At the same time, we announced the completion of a placing of new shares, raising a net £3m to accelerate the implementation of our new strategy, including the development of the new Argentex Global Platform ("AGP").

As part of the strategic review, we appointed new management, led by Jim Ormonde as Chief Executive Officer ("CEO"), who strengthened the executive team with further appointments during the course of the year. The team has been actively executing our revised strategy, which seeks to diversify our revenue streams, bring a rigorous approach to costs and efficiencies, and build better visibility into future revenues.

Higher FX volatility generally acts as a tailwind for Argentex revenues. However, despite lower levels of volatility in early 2024, full year revenues and profit margins were ahead of our original expectations, with momentum picking up in the second half of the year.

Governance 

We are committed to keeping our stakeholders informed and taking their views into consideration. This has been particularly important in a year where we have changed management, raised capital, and outlined and embarked on a new strategic direction. We also acknowledge our responsibilities with regard to governance and sustainability, recognising the ongoing need for high standards across the business.

In terms of Board changes during the period, we welcomed Guy Rudolph who joined the Group and Board in a permanent capacity in July, following five months operating as our Interim Chief Financial Officer ("CFO"). We also welcomed Rina Ladva who joined as a Non-Executive Director in October. Rina brings over 25 years of organisational and technology transformation experience to Argentex.

I am also pleased that effective 1 April 2025, Jeff Parker joined the Board as a Non-Executive Director, bringing over two decades of significant experience of operating in the global fintech and financial services sectors. My predecessor as Chairman of the Group, Digby Jones has confirmed that he will not be seeking re-election as a Director at the AGM in June. Digby has been associated with Argentex since 2019 and was the Chairman of the Board from when the Group floated on AIM in 2019 until 2023, when he passed the baton to me. On behalf of myself and everyone at Argentex I would like to thank Digby for the stewardship and leadership he has given the Group, as well as the support he has consistently given to me, the Board and our colleagues.

We have also strengthened the Executive Committee with a number of key appointments to assist the Board in the day-to-day management of the business. In particular, Tim Rudman, who joined us as Chief Operating Officer ("COO"), Daniel Ross, who was appointed Chief Commercial Officer ("CCO") and Chrissie Humphrey who joined us as Chief People Officer ("CPO").

The Group is implementing a Long-Term Incentive Plan (LTIP) for its executive team in 2025, designed to align their interests with the long-term growth and transformation of the Group whilst incentivising sustainable value creation for shareholders. It is intended that the plan will be delivered through one-off awards in growth Shares that will be acquired by participants at the outset at market value. Equity value will be shared based on the performance of the Argentex Group PLC ("the PLC") share price over pre-defined price thresholds through a pre-determined performance period, transparently aligning participant and shareholder interests. Following vesting, participants will exchange growth shares for shares in the PLC or, at Argentex's option, cash. 

Dividend 

In the year ended 31 December 2023, the Board of Directors declared an interim dividend for the period ended 30 June 2023. However, given the strategy communicated to shareholders in May 2024 and, in particular, the focus on investing for growth that the Board communicated at the time of the FY23 results in May 2024 it is highly unlikely that the Group will pay dividends in the near term. Of course, the Board will continue to review this decision on a regular basis.

 Conclusion 

There is much to look forward to as 2025 unfolds: building momentum of our operations in Australia and Dubai following their launch in H2 2024. We anticipate continued growth in the Netherlands and Europe as a whole, together with a much more focused approach on clients in our core UK business. In addition, the new Argentex Global Platform, is set to launch in summer 2025, enabling all our regions to start offering new services in payments and digital accounts, which should help increase revenues, give greater visibility of earnings and enhance client retention.

I would like to thank our shareholders for their support to date and we look forward to updating them on our progress this year and beyond. I would also like to thank everyone at Argentex for their hard work and contribution in what has been a year of substantial change, but one which allows us to face the future with optimism.

Nigel Railton 

Non-Executive Chairman 

02 April 2025 

CEO's Review 

Diversifying our revenues 

Overview 

During my first full year as CEO, we have made substantial strategic and operational progress. Our focus is to diversify revenue streams, launch new products, expand the breadth of our FX, digital accounts and payment services, whilst entering additional geographic territories. Simultaneously, we are focussed on driving operational efficiencies and reducing costs in our core business. We have added significant expertise across the Group including permanent appointments to our executive team and new experienced leadership within banking, operations and technology. It has been a positive year, and I am delighted with the milestones we have achieved. With a strong team now in place, and a clear roadmap for the future, I am excited about the prospects for next year and beyond as multiple revenue streams start to reward the investments we have made in new products and technology.

Financial and Operational performance 

We have repositioned and restructured the business for profitable growth, investing in people, technology and overseas expansion.

Revenue in 2024 was £50.3m, slightly ahead of 2023 (£49.9m) despite a year of significant change and on par with 2022 which was a year of exceptional volatility. Whilst we recorded an operating loss of £0.2m (FY23 operating profit of £8.1m), this reflects the investment we have made in transforming the business as we look to return to revenue growth for 2025 and beyond. We saw trading momentum pick up in the second half of the year, with full year revenues and profit margins ahead of our original expectations.

Executing on our strategy 

We are making good progress in migrating the business to one technology platform: the Argentex Global Platform, being delivered by the existing technology team supplemented by a number of key new hires. This will enable us to drive efficiencies on a global scale by increasing automation and building a platform on which multiple new products and services can run simultaneously, and addresses our three core strategic pillars:

·      Product diversification to enhance and complement the Group's existing customer proposition, specifically through accelerating the Group's move into digital accounts and payments

·      Focused geographical expansion, leveraging existing operational centres and licences with targeted expansion into complementary markets

·      Ensuring operational excellence by driving operational and financial efficiencies whilst delivering a best-in-class customer experience

Product diversification 

We have a strong brand and a successful history in providing large corporates and institutions with high quality foreign exchange services. However, our voice brokering product suite has been historically narrow and we are therefore diversifying into the broader payments and digital accounts markets to deliver new revenue streams and higher quality of earnings. This will also allow us to increase our overall addressable market and improve customer retention. Revenue visibility and client needs will also be easier to predict as our reliance on volatile foreign exchange markets is reduced.

We made a number of key technology hires in the period to help re-platform the business and roll out our new suite of services. Tim Rudman joined as COO and brings a wealth of industry experience having overseen the technological transformation at World First and Global Reach previously. Alongside several senior technology hires, Tim and his team have developed a detailed product and technology roadmap with a key focus on automation, efficiency and improving the customer experience via a self-serve model. Progress to date has been excellent - our first two milestones have been met ahead of schedule and on budget. We remain on track to launch a number of new services in summer 2025.

Geographic diversification 

A key element of our growth strategy is to expand overseas, and we were delighted to be granted regulatory licences in both Australia and Dubai during 2024. Our front office and operational teams are already in place, allowing us to begin trading immediately. We expect both new regions to contribute incremental revenues in 2025 and will be investing in these teams organically over coming years.

In Australia, we have been granted an Australian Financial Services Licence. The licence, granted by the Australian Securities and Investments Commission, allows our Australian entity (Argentex Pty Ltd) to offer bespoke risk management solutions and global accounts to wholesale clients across Australia.

Australia is a significant addressable market for us. A$700bn of cross border payments are processed annually, and with c.180,000+ importers and exporters, we believe there is a A$3bn opportunity across both corporate and institutional clients. Our ability to partner with and offer bespoke structured solutions and treasury risk mitigation strategies coupled with our ability to offer automated onboarding and payment solutions should be a key differentiator in the market.

In Dubai, we announced the launch of Argentex (DIFC) Ltd, a fully licensed subsidiary regulated by the Dubai Financial Services Authority ("DFSA"). Led by our UAE Managing Director, Jamil Khammu, we have a highly experienced team in place to serve sophisticated corporate and institutional clients across the Dubai International Financial Centre and broader UAE market. Argentex (DIFC) Ltd is fully regulated under a Category 3A DFSA licence, enabling the team to offer comprehensive FX and payment services. We are the first listed UK FX Broker to achieve this. Again, Dubai holds significant potential for us. The UAE was the second largest in the world in 2023 in terms of remittance outflows. We believe our combination of sophisticated products and services, together with automated self-serve for clients, will differentiate us from the competition and we look forward to reporting on progress as trading gets underway in this exciting region.

In the Netherlands, we were encouraged with progressive revenue growth in the year. We are also exploring our ability to expand elsewhere in Europe, utilising our Netherlands licence and operational hub as a base. However, we are not planning on opening any more new branches in 2025 and want to see all new products and teams delivering on growth expectations before we broaden our expansion plans still further.

Operational and financial efficiencies  

We are prioritising investment into areas that will deliver profitable growth. As an indication, overall headcount was flat during the year despite significant new hires in technology, product, and our new overseas operations. We therefore reduced full time employees in our core FX Services business by 13% across the year and will continue to look for operational efficiencies as we drive towards automation.

We carried out an in-depth review of our front office operations during the year and made a number of important changes including how sales commissions and Key Performance Indicators ("KPIs") better align with the Group's long-term success. We also established a new Key Accounts team to service our largest corporate customers and are seeing improved retention as a result.

During the year we placed greater emphasis on a data driven approach to all our decision making and processes, both operational and financial. As a result, we completed the implementation of Salesforce and NetSuite in our Sales and Finance functions respectively.

Sustainability 

As a small but growing services company with a team of 197 people across our four offices, we have a limited impact on the environment. Nonetheless, we strive to minimise or mitigate any harm that we might do and also actively seek to contribute positively to the environment and our communities.

People 

Our people are essential to everything we do. We have made a number of key strategic changes during the year which will be integral to long-term profitable growth.

We have strengthened our executive team including new COO Tim Rudman, who will deliver the roll out of our global platform, launch new revenue-generating products, and automate our client onboarding processes. We have fully staffed our new operations in Australia and Dubai, in addition to making a number of key changes in our UK core operations. Finally, Chrissie Humphrey joined us in the year as Chief People Officer and joins the Executive Committee, marking a significant milestone in the Company's commitment to fostering a strong, dynamic workforce as it continues to scale its operations globally and to position ourselves as an employer of choice.

Outlook 

Foreign exchange volatility is more likely to prevail compared to the more benign conditions we experienced in H1 as the United States ushers in a second Trump presidential term which has the potential to impact inflation, tariffs and global trade dynamics, as well as central bank monetary policy and geopolitical developments. Market expectations for the timing and extent of inbound interest rate cuts from various central banks will remain a key driver, as will variable economic data between economic regions. The US has continued to outshine many other developed market economies, termed 'US exceptionalism' by market commentators in recent years. The extent to which this can continue, or slow, throughout 2025 will be key to the fate of the dollar, and the wider foreign exchange markets in general.

Having actively reset Argentex in 2024, we are well positioned to take advantage of more dynamic markets, and with regulatory and operational hubs now fully established in the Netherlands, Australia and Dubai, we believe we have strong capability to grow our market share overseas. Domestically, we have restructured our front office teams, realigned payment terms, set about the creation of new products and services with vigour, and believe we are better placed to serve both new and existing clients as a result. Globally, all regions will benefit from the suite of new services we aim to launch this year and next, together with easier, automated onboarding processes and full Application Programming Interface capability incorporated into our new Argentex Global Platform which remains on schedule to be delivered in summer 2025. It has been a year of significant change in the business, but I believe this change was necessary as costs had escalated against static revenues that were the result of a simplistic business model neither automated, nor scalable.

It has been a privilege to lead Argentex during 2024 and I am genuinely excited by the opportunities ahead of us in 2025 and beyond. We are well placed to return to profitable growth but none of this would be possible without the effort, resilience and enthusiasm shown by my colleagues every single day and I would like to take this opportunity to thank them for their ongoing and unwavering support. Our business employs 197 amazing people whose talent and commitment we cherish and who will help propel us to success, as we execute our clear strategy over coming years.

Jim Ormonde 

Chief Executive Officer 

02 April 2025 

CFO's Review  

Market Overview 

In 2024 foreign exchange volatility meaningfully increased over the year before, once again driven by monetary policy divergence and political developments, particularly in the United States with the election in November of President Trump for a second term.

Ultimately, many central banks did not cut interest rates by as much as markets had anticipated, partly owing to the inability of headline inflation to remain at target (1-3%). In the core currencies traded by most of our clients, 2024 followed a strikingly similar path to the prior year. The US dollar weakened quite significantly during the summer, only to perform an impressive volte-face in the autumn, rallying significantly as markets reacted to the re-election of Trump and his inflationary policy mix. Continuing US economic resilience and the prospect of inflation nudging higher later in the year has reduced the chance of rate cuts into 2025. Various outcomes for interest rate policy remain.

In the UK, sterling performed strongly for much of the year, fuelled by strong GDP growth, reticence from the Bank of England to begin the rate cut cycle, and a new Government promising 'fiscal responsibility'. By year end, however, sterling's H1 strength had faded, materially weakening in the aftermath of the new Labour government's first Autumn Budget, as business confidence worsened, and economic growth slowed sharply. As we transition into 2025, we see grounds for ongoing volatility in foreign exchange markets, given the scope for some monetary policy divergence, the ripple effects of President Trump's policies around international trade and the imposition of import tariffs by the United States, and geopolitical issues still capable of impacting wider markets. Higher levels of volatility have historically led our customers to hedge a higher proportion of their foreign currency transactions.

Financial Performance Overview 

Revenue 

Argentex generated revenue of £50.3m in FY24, marginally ahead of the prior year (FY23: £49.9m). An increase in total volumes traded was offset by a reduction in average revenue per client, driven by an industry-wide reduction in margins across all products.

During FY24, 2,113 clients traded with Argentex, an increase of 9% on the prior year. The teams continue to win new business and revenue from new clients of £15.8m in FY24 was ahead of the prior year (FY23: £15.2m)

The column charts below show the changing nature of our product mix year on year, with an increase in share of revenue from options, a product that was first launched during FY22, and a reduction in revenue share from both forwards and spots.

Operating headcount 

Headcount is the principal driver of operating costs for Argentex. At the very start of FY24 our Full Time Employee ("FTE") numbers increased as new colleagues hired in the second half of FY23 joined the Group for anticipated growth, which did not materialise. Throughout FY24, through a combination of natural attrition, performance management and controlled backfill, the Group has reduced the headcount supporting the core business by 13%, and increased headcount in areas supporting growth, with closing total headcount being broadly flat compared to the prior year, as illustrated in the chart below.

Improvements have been made to control cost across the Group, including the implementation of a more robust expenses policy and a tightening of discretionary spend. Whilst the impact of these measures is taking some time to flow through, we expect to see a full year of benefit in FY25.

During the year, the Group incurred a number of costs which reduced overall profitability, and which did not occur in the prior year. The most significant of these were:

            - Costs associated with transformation of the Group of c.£1.5m which we would not expect to reoccur in FY25

            - The closure / cancellation of the Argentex Group Value Creation Plan which gave rise to a one-off non-cash accounting charge of £0.6m

            - Default on a foreign exchange contract by a customer of £0.6m.

            As a result of the cost of transformation and these one-off costs, we generated EBITDA of £4.0m and operating loss of £0.2m (FY23: profit £8.1m).

Cash 

            Cash and cash equivalents as at 31 December 2024 was £48.7m, which includes £30.3m of client balances pertaining to collection of any collateral and variation margin. Net cash as at 31 December 2024 was broadly flat at £18.4m (FY23: £18.3m).

            In FY24, we spent £2.1m on capex which includes the build of the new Argentex Global Platform for which £3.0m net was raised via an equity issue in May 2024. The capex spend is lower than the prior year of £4.7m, which included significant investment in premises.

Working capital was impacted by a larger cash balance required to be segregated for mark to market movements on CASS clients positions than in December 2023.

Argentex is required to hold a minimum amount of cash for regulatory requirements, and therefore it is only the headroom above this amount that is free cash available for investing in the business. The regulatory cash requirement is calculated daily and is based on ongoing costs of running the business as well as stress tests. The headroom can vary significantly month to month due to margin calls and ongoing working capital movements.

Cash generation from the Group's revenue is a function of:

- The composition of revenue (spot, forward, option and swap revenues)

- The average duration of the FX forwards in the portfolio

In FY24, Argentex generated revenues in a proportion of approximately 46%/54% between spot and forward contracts outside of options and swap revenues. Whilst spot FX contracts attract a smaller revenue spread, the inherent risk profile is much reduced, and cash is generated almost immediately. As such, having this proportion of revenues generated by spot trades with a minimal working capital cycle creates a strong positive immediate cash flow for the business.

Excluding swap revenue, 80% of revenue converts to cash within three months, which is broadly consistent with prior years as follows:

Investing for Growth

In May 2024, we communicated our new strategy to shareholders and we have made progress against each of the three pillars of the strategy, as follows: 

Operational/financial efficiencies 

Where there has been natural attrition in our headcount, we have controlled backfill, reduced the number of FTE supporting the existing business and invested only to support growth areas, and as a result have kept overall closing headcount broadly flat year on year.

Salesforce has been implemented which allows us greater insights into how to best serve our clients and to improve our customer retention and repeat business. We also successfully migrated our accounting system from a basic system with a manual consolidation to a NetSuite ERP product which provides the functionality to support a multi-currency, multi-location Group. We will be leveraging its functionality further during FY25 with the introduction of a more robust 'Procure to Pay' process, which will strengthen our financial control. We have also tightened our cost control in FY24, reducing our discretionary spend and introducing a more robust expenses policy, and this will continue to be an area of focus in FY25.

Product expansion 

In May 2024, we raised net proceeds of £3.0m via a share issue to fund our acceleration into digital accounts and payments through the build of the Argentex Group Platform. We have hired an experienced team who are on track to deliver and launch the first phase of this new product set in summer 2025. The AGP build costs were on budget throughout FY24 and all in year milestones were achieved.

Geographic expansion 

We were granted licences in two more overseas jurisdictions during FY24: the Australian Financial Services License in May 2024 and the Category 3A licence from the Dubai Financial Services Authority in November 2024. We look forward to trading ramping up from each of these overseas entities during FY25.

Portfolio Composition 

As at 31 December 2024, 84% of the Group's portfolio was comprised of trades in the major currencies of Sterling, Euro and US dollar, in line with the prior year. Therefore, the Group's exposure to exotic currencies or currencies with higher volatility and less liquidity remains limited. 

Dividend 

Whilst we continue to invest in growth and to transform the business, the Board has decided that Argentex Group plc will not declare a dividend for the year ended 31 December 2024. 

Outlook 

With trading having commenced in Australia and Dubai, following the grant of their licences during FY24, and the launch of digital accounts and payments products in summer 2025, we anticipate a return to revenue growth in FY25.

Guy Rudolph 

Chief Financial Officer 

02 April 2025 

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024

Consolidated Statement of Financial Position as at 31 December 2024

Consolidated Statement of Financial Position (continued) as at 31 December 2024

The Consolidated Financial Statements of Argentex Group PLC were approved by the Board of Directors on 02 April 2025 and were signed on its behalf by:

Guy Rudolph

Registered number 11965856

Consolidated Statement of Changes in Equity for the year ended 31 December 2024