Full year results for period ending 31 March 2020

Consolidated Statement Of Cash Flows

	Notes	2020		2019
		£		£
Net cash generated from operating activities	24	27,061,702		3,449,925
Investing activities
Purchase of intangible assets	14	(1,083,412)		(1,417,090)
Purchases of plant and equipment		(101,323)		(53,069)
Share acquisition costs		(109,290)		-
Net cash generated used in investing activities		(1,294,025)		(1,470,159)
Financing activities
Payment of lease liabilities	20	(388,525)		(310,820)
Proceeds from issue of shares		14,061,302		-
Short term loans	25	(1,997,430)		1,997,430
Share issuance costs		(1,284,757)		-
Distributions paid under former ownership structure	10	(448,522)		(2,867,896)
Capital contributions by LLP members		-		20,000
Net cash generated/(used in) financing activities		9,942,068		(1,161,286)
Net increase in cash and cash equivalents		35,709,745		818,480
Cash and cash equivalents at the beginning of the year		13,566,063		12,747,583
Cash and cash equivalents at the end of the year	17	49,275,808		13,566,063

 

NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2020

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 is 5 Old Bond Street, London, W1S 4PD.

On 25 June 2019, the Company listed its shares on AIM, the London Stock Exchange's market for small and medium size growth companies ("the IPO").

The Company is the ultimate parent company into which the results of all subsidiaries are consolidated. The consolidated financial statements for the years ended 31 March 2020 and 31 March 2019 comprise the financial statements of the Company and its subsidiaries (together, "the Group").

The consolidated financial statements are presented in Pounds Sterling (£), which is the currency of the primary economic environment in which the Group operates.

The financial information set out above does not constitute the company's statutory accounts for 2020 or 2019. Statutory accounts for the years ended 31 March 2020 and 31 March 2019 have been reported on by the Independent Auditor.  The Independent Auditor's Report on the Annual Report and Financial Statements for 2020 and 2019 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 financial statements, which describes the impact of COVID-19 on the Group by way of emphasis. The audit opinion was not modified in respect of this matter.

The statutory accounts for the year ended 31 March 2020 will be delivered to the Registrar of Companies in due course.

2  Adoption of new and revised standards

 

The Group has not prepared consolidated financial statements prior to the IPO and restructure, consequently the financial statements incorporate all applicable standards without the need for transition or adjustment.

No upcoming changes under IFRS are likely to have a material effect on the reported results or financial position. Management continue to monitor upcoming changes.

3  Significant accounting policies

 

The principal accounting policies are summarised below. 

 

3.1                      Basis of preparation

 

The consolidated financial statements have been prepared in accordance with the IFRSs as adopted by the EU and interpretations issued by the IFRS Interpretations Committee (IFRS IC).

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all of the years presented, unless otherwise stated.

The consolidated financial statements have been prepared under the historical cost convention, modified by the measurement at fair value of certain financial assets and liabilities and derivative financial instruments as stated in note 3.6.

3.2                      Going concern

 

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for at least one year from the approval date of the consolidated financial statements. The group's principal trading subsidiary, Argentex LLP, has been profitable since inception in 2011, the Group has no external debt, and the LLP continues to generate sufficient cash to support the activities of the Group. Budgets and cash flow forecasts are prepared to cover a variety of scenarios and are subsequently reviewed by the Directors to ensure they support the Group's continuing ability to operate as a going concern.

 

Sensitivity analysis has been performed in respect of specific scenarios which could negatively impact the future performance of the Group, including lower levels of revenue, compression in profitability margins, extensions to the Group's working capital cycle, and significant increases in volatility requiring further collateral to be placed with the Group's institutional counterparties.

In addition, the Directors have also considered mitigating actions such as lower capital expenditure and other short-term cash management activities within their control (see note 27.3 for further disclosures relating to liquidity risk).

 

COVID-19

 

The Group has successfully triggered business continuity provisions in response to Government directives, ensuring its ability to maintain operations. Currently, all relevant staff are successfully working remotely and have full access to the Group's technology platform that allows them to connect virtually and continue as normal on existing engagements and business development activities. The board of directors and the management team are monitoring the welfare of staff on a daily basis and are providing them with the support they need to operate effectively from remote locations.

The Group has developed a set of financial measures designed to flexibly mitigate the expected near term operational and financial and longer term economic impact of the COVID-19 pandemic on the Group.

Whilst these measures may be extended as events unfold, the board of directors is confident that in context of the Group's  financial requirements they give flexibility and sufficient liquidity to the Group to ensure that the Group can withstand significant shocks, whilst remaining as a going concern for the next twelve months from the date of approval of the Directors' report and financial statements.

For these reasons, the directors adopt the going concern basis of accounting in preparing the financial statements.

 

3.3                      Basis of consolidation

 

The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) prepared to 31 March each year.  Control is achieved where the Company is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration the existence and effect of potential voting rights that currently are exercisable or convertible.

The consolidated financial statements comprise the Company and the results, cash flows and changes in equity of the following subsidiary undertakings:

Name of undertaking	Nature of business	Country of incorporation
Argentex LLP	Foreign exchange broking	England
Argentex Capital Limited	Holding company	England
Argentex Foreign Exchange Limited (formerly Pacific Foreign Exchange Limited)	Holding Company	England

 

All subsidiary undertakings are owned 100% either directly or indirectly.

 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions and balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

 

3.4                      Accounting for merger on formation of the group

 

Immediately prior to the Company's admission to AIM, Argentex Group PLC acquired all equity interests in Argentex LLP. This was effected through the acquisition of equity interests by a newly formed subsidiary, Argentex Capital Limited, and the acquisition of Pacific Foreign Exchange Limited (later renamed Argentex Foreign Exchange Limited). Argentex LLP, Argentex Capital Limited and Argentex Foreign Exchange Limited are now 100% owned (either directly or indirectly) subsidiaries of Argentex Group PLC and consolidated into the financial statements.

In preparing the consolidated interim financial statements, the Company is required to determine whether the transaction falls within the scope of IFRS 3 Business Combinations in order to determine the appropriate basis for disclosure. It is the directors' view that the transaction falls within the scope exclusion of IFRS 3, and as such an alternative accounting policy must be selected. In the opinion of the directors, there is no other IFRS that specifically applies to this transaction.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (paras 10-12) requires the Company to develop and apply an accounting policy suitable to the transaction, in accordance with the particulars laid out in the standard. IAS 8 para 12 also states that "In making the judgement described in paragraph 10, management may also consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards, other accounting literature and accepted industry practices…".

In reviewing the scope of the merger and group formation, the directors have determined the selection of an accounting policy analogous to that of the UK's FRS102 section 19 Business Combinations and Goodwill (merger accounting method) will provide the most relevant, reliable and representative accounting treatment, which reflects the economic substance of the transaction.

In applying merger accounting when preparing the consolidated financial statements, to the extent the carrying value of the assets and liabilities acquired under merger accounting is different to the cost of investment, the difference is recorded in equity within the merger reserve. Under merger accounting the results of the Group entities are combined from the beginning of the comparative period before the merger occurred. Comparatives are restated on a combined basis and adjustments made as necessary to achieve consistency of accounting principles.

 

3.5                      Revenue recognition

 

Revenue represents the difference between the cost and selling price of currency and is recognised after receiving the client's authorisation to undertake a foreign exchange transaction for immediate or forward delivery. Derivative assets and liabilities are initially measured at fair value at the date the derivative contract is entered into and are subsequently remeasured to fair value at each financial period end date. The resulting gain or loss is recognised within Revenue immediately.

The difference between the costs and selling price of currency is recognised as revenue as this reflects the consideration to which the Group expects to be entitled in exchange for those services.

In relation to currency options, the Group recognises the net option premium receivable as revenue on the date that the option is executed. (See note 6).

 

3.6                      Financial instruments

 

The Group operates as a riskless principal deliverable foreign exchange broker therefore financial instruments are significant to its financial position and performance. 

 

3.6.1              Initial recognition

 

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

 

3.6.2              Derivative financial instruments

 

Forward foreign exchange contracts and foreign exchange options are classified as financial assets and liabilities at FVTPL. Derivative assets and liabilities are initially measured at fair value at the date the derivative contract is entered into and are subsequently remeasured to fair value at each financial period end date. The resulting gain or loss is recognised within Revenue immediately. The Group does not apply hedge accounting.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. When there is a legally enforceable right to offset the recognised amounts and an intention to settle the amounts on a net basis (or realise the asset and settle the liability immediately), financial assets and liabilities are offset. The net amount only is then reported in the Consolidated Statement of Financial Position.

The fair value of forward currency contracts is based on their observable bid and offer prices in the foreign exchange marketplace requiring no significant adjustment.

 

3.6.3            Foreign exchange gains and losses on derivative financial asset and liabilities

 

Assets and liabilities are measured at their fair value based on the transaction price agreed with the customer or counterparty and their observable fair value in the foreign exchange market, and any assets or liabilities in a foreign currency are revalued at the balance sheet date. Management consider the potential impact of exchange rate movements on positions held to be immaterial as substantially all of the Group's positions are fully hedged with a number of counterparty banks.

 

3.6.4              Derecognition of Derivative financial asset and liabilities

 

The Group derecognises derivative financial assets and liabilities when they reach maturity and the contractual cashflows are exchanged between the client and the Group or the Group and the institutional counterparty. At this point, the assets and liabilities have expired and the obligations of the Group, the client and the institutional counterparty have been discharged.

 

3.6.5              Amortised cost and effective interest method

 

The effective interest method is a method of calculating the amortised cost of a financial liability or debt instrument and of allocating interest income over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the financial asset or liability.

The Group has not purchased or originated any credit-impaired financial assets.

 

3.6.6              Classification of financial assets

 

Recognised financial assets within the scope of IFRS 9 are required to be classified as subsequently measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) on the basis of both the Group's business model and the contractual cash flow characteristics of the financial assets.

 

3.6.7              Financial assets at FVTPL

 

Forward foreign exchange contracts and foreign exchange options  are measured at FVTPL (see note 27).

Other financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL (see note 1).

Fair value is determined in the manner described in note 1.

 

3.6.8              Other Financial assets

 

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

 

3.6.9              Impairment of financial assets

 

The group recognises impairment on an Expected Credit Loss (ECL) basis, using historical and forward looking information. The only financial assets at amortised cost that this applies to are Other Debtors.

 

3.6.10            Derecognition of other financial assets

 

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

 

3.6.11            Classification of financial liabilities

 

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

 

3.6.12            Financial liabilities at FVTPL

 

Financial liabilities are classified as at FVTPL when the financial liability is designated as at FVTPL. 

Financial liabilities at FVTPL are stated at fair value with any gains or losses arising on changes in fair value recognised in profit or loss to the extent that they are not part of a designated hedging relationship.

Fair value is determined in the manner described in note 1.

3.6.13            Other Financial liabilities

 

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

The Group holds amounts payable to customers at amortised cost. These are short term balances that do not attract interest.

 

3.6.14            Derecognition of other financial liabilities

 

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

 

3.7                      Cash

 

For the purpose of presentation in the Consolidated Statement of Cash Flows, cash and cash equivalents includes cash on hand or deposits held at call with financial institutions.

 

3.8                      Leases

 

At inception of a contract the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.  To assess whether a contract conveys the right to control the use of the identified asset the Group considers whether:

1.    The Group has the right to operate the asset

2.    The Group designed the asset in a way that predetermines how and for what purpose it will be used.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used.  It is remeasured when there is a change in future lease payments arising from a change in rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee or if the Group changes its assessment of whether it will exercise a purchases, extension or termination option.

When the lease liability is remeasured in this way, either a corresponding adjustment is made to the carrying amount of the right to use asset and the revised carrying amount is amortised over the remaining (revised) lease term, or it is recorded in profit and loss if the carrying amount of the right to use assets has been reduced to zero.

Right of use assets are initially measured at the amount of the lease liability.

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if judged to be shorter than the lease term.

The Group presents right to use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'Trade and other payables' in the Consolidated Statement of Financial Position.

 

3.9                      Intangible assets and amortisation

 

Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Group and the cost of the asset can be reliably measured.

Software development costs comprise the Group's bespoke dealing system. Costs that are directly associated with the production of identifiable and unique dealing system controlled by the Group, and are probable of producing future economic benefits, are recognised as intangible assets. Direct costs of software development include employee costs and directly attributable overheads.

Costs are capitalised to the extent that they represent an improvement, enhancement or update to the intangible asset. Maintenance costs are expensed through the Income Statement.

Amortisation is charged to the income statement over the estimated useful live of three years of the dealing system from the date developments are available for use, on a straight-line basis.

The amortisation basis adopted reflects the Group's consumption of the economic benefit from that asset.

 

3.10                    Property, Plant & Equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and any

recognised impairment loss.

 

Depreciation is charged so as to write off the cost of assets to their residual values, over their estimated useful lives, using the straight-line method, on the following bases:

                         Office equipment                      -              Three years

                         Computer equipment              -              Three years

                         Leasehold improvements       -              Over the period of the lease

                         Right-of-use assets                   -              Over the period of the lease

 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

3.11                    Foreign currencies

 

Non-derivative monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.

 

3.12                    Employee benefits

 

(i)            Short term benefits

 

Short term employee benefits including holiday pay and annual bonuses are accrued as services are rendered.

 

(ii)              Defined contribution pension plans

 

The Group operates a defined contribution pension plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the Group in independently administered funds.

 

3.13                    LLP Members' remuneration

 

LLP Members' remuneration is determined by reference to the nature of the participation of rights of Members of Argentex LLP, the Group's main trading subsidiary. It includes both remuneration where there is a contract of employment and any profits that are automatically divided between members by virtue of the members' agreement, to the extent that the Group does not have an unconditional right to avoid payment. To the extent that these profits remain unpaid at the year end, they are shown as liabilities in the Consolidated Statement of Financial Position. Prior to the IPO, corporate and individual members of the LLP participated in the profits of the LLP through both income interests and residual profit sharing arrangements following the allocation of all income interests. After the IPO, no individual member of the LLP has any equity interest or rights to divisions of profits other than their individual income interests, and all equity profit shares are now allocated to the intermediate subsidiaries of the Group in accordance with their equity interests.

 

3.14                    LLP Members' interests

 

LLP equity capital is only repaid to outgoing members in accordance with the provision in the Members' Deed where the Group has both sufficient capital for FCA regulatory requirements, and the capital is replaced by new capital contributions from existing or new members. As such it is accounted for as equity.

Other amounts due to Members classified as a liability relate to undistributed profits and Members' taxation reserves.

 

 

3.15                    Share based payments

 

The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of share options, is recognised as an employee benefit expense in the Consolidated Statement of Profit or Loss. Where the entity settling the share options differs from the entity receiving the benefit of the share options (in the form of employee services), the entity's separate financial statements reflect the substance of the arrangement.

The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value (excluding the effect of non market-based vesting conditions) at the date of grant.

The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value (excluding the effect of non market-based vesting conditions, if present) at the date of grant.  At the end of each reporting period the assumptions underlying the number of awards expected to vest are adjusted for the effects of non market-based vesting conditions to reflect the conditions prevailing at that date.  The impact of any revisions to the original estimates is recognised in the Consolidated Statement of Profit or Loss, with a corresponding adjustment to equity.  Fair value is measured by the use of a Black-Scholes option pricing model. 

When share options are exercised, the company issues new shares.  The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

 

3.16                    Taxation

 

The tax expense represents the sum of the tax currently payable and any deferred tax.

Tax currently payable is based on taxable profit for the year. Taxable profit may differ from net profit as reported in the Consolidated Statement of Profit or Loss as it may excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the date of the Consolidated Statement of Financial Position.

 

4     Critical accounting judgements and key sources of estimation uncertainty 

                                                                                                                             

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

4.1                      Accounting judgements

 

(i)  Capitalisation of costs to intangible assets

 

The extent to which costs should be capitalised to intangible assets. The group capitalise costs as intangible assets if they have a value that will benefit the performance of the Group over future periods. To assist in making this judgement, the group undertake an assessment, at least annually, of the carrying value of the intangible assets.

(ii)    Impairment of non-financial assets

 

Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced.

(iii)   Basis for consolidation and application of IFRS 3 - Business combinations

 

Management's judgement of the most appropriate policy for recognising the merger and group formation and basis for consolidation has been documented in note Error! Reference source not found..

 

4.2                      Key sources of estimation uncertainty

 

(i)     Useful economic life of intangible assets (see note 14)

 

Technology within the financial services sector is in a perpetual state of development and evolution, providing uncertainty over the useful economic life of the Group's bespoke dealing system.

 

(ii)    Expected credit losses (see note 27)

 

         Expected credit losses include forward looking estimates which represent management's best estimate of the future performance of the Group's financial assets.

 

5  Segment reporting

 

The Directors consider that the Group consists of a single operating segment (being Argentex LLP's foreign currency dealing business) and that it operates in a market that is not bound by geographical constraints.

 

There is no reliance on an individual customer and no customer contributed to more than 10 per cent. of revenues in the year ended 31 March 2020 or 31 March 2019.

 

 

6  Revenue

 

	2020		2019
	£		£
An analysis of the Group's revenue is as follows:
Continuing operations
Spot and forward foreign exchange contracts	27,120,119		21,669,277
Option premiums	1,866,325		241,418
	28,986,444		21,910,695

 

7  Operating profit

 

Operating profit for the period is stated after charging/(crediting):	2020 £		2019 £
Depreciation of plant and equipment	363,063		422,136
Amortisation of intangibles	1,046,462		778,710
Staff costs (see note 9)	12,606,175		14,874,461
Net foreign exchange losses/(gains)	66,060		(152,057)

 

8  Auditor's remuneration

 

	2020		2019
	£		£
Fees payable to the Company's auditor and its associates for services to the Group:
·   The audit of financial statements of the company and subsidiaries	82,218		48,900
·   Audit-related assurance services	4,680		4,548
·   Tax compliance services ·   Reporting accountant services	18,000 135,000		- 116,400

 

9  Staff costs

 

The average number of employees employed by the Group, including executive and non-executive directors, was:
	2020			2019
	Number			Number
Directors	8			5
LLP members (excl. executive directors)	6			9
Sales and dealing	28			26
Operations	12			11
	54			51
	£			£
	2020			2019
Staff costs for the above persons were:			,
Wages and salaries	5,118,905			5,060,769
Social security costs	657,861			672,575
Pension costs	45,490			37,898
Share based payments	5,763			-
LLP members' remuneration*	3,976,447			4,616,097
Directors remuneration	2,801,709			4,487,122
	12,606,175			14,874,461
Directors' remuneration
	2020			2019
	£			£
Directors' remuneration comprised:
Salaries and LLP members remuneration	2,801,709			4,487,123
*Excludes Directors of Argentex Group PLC who are/were also members of Argentex LLP. Includes former members of Argentex LLP who are no longer members after IPO. Prior to IPO, profits from Argentex LLP were distributed according to individual equity holdings in the LLP. Following Admission, the self-employed LLP members who are members of the LLP Executive Committee will be remunerated under the Amended and Restated LLP Agreement by a combination of (i) fixed annual remuneration (ii) participation in revenue commission schemes (iii) annual bonuses and (iv) other variable compensation based on the LLPs performance.
Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the Group, or in relation to the Company, the Company.  In the opinion of the Board, the Group and Company's key management are the directors of Argentex Group plc.  Information regarding their compensation is provided in the Remuneration Committee report.

 

10   Dividends

 

	2020		2019
	£		£
Amounts recognised as distributions to equity holders:
Dividends declared under the former ownership structure	448,552		2,867,896

 

Prior to the IPO and change in ownership, the former owners of Argentex Foreign Exchange Limited declared dividends amounting to £448,552 (2019: 2,867,896) which are included in the Consolidated Statement of Changes of Equity.

 

 

11   Finance costs and finance income

 

		2020		2019
		£		£
	Interest on short term loans	133,362		78,998
	Bank interest payable	12,423		-
	Interest on lease arrangements	11,247		28,766
	Finance Costs	157,032		107,764
	Finance Income	105,343		-
	Total interest income for financial assets that are not at fair value through profit or loss is equal to the amount of bank interest receivable disclosed as finance income above.   Total interest expense for financial liabilities that are not at fair value through profit or loss is equal to the amount of interest payable disclosed above.

 

 

12   Taxation

 

		2020		2019
		£		£
	Current tax
	In respect of the current year	2,127,755		-
	Total tax expense for the year	2,127,755		-

 

	Tax has been calculated using an estimated annual effective tax rate of 19% (2019: 19%) on profit before tax.
	The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:

 

		2020		2019
		£		£
	Profit before taxation	10,218,545		2,139,567
	Tax on profit on ordinary activities at standard UK corporation tax rate of 19%	1,941,524		406,518
	Effects of:
	Disallowable management expenses	105,695		-
	Other amounts charged	80,536		-
	Group relief gifted by former group members	-		(406,518)
	Total tax expense for the year	2,127,755		-

 

 

13   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. A tax adjustment is also reflected to include a representative tax figure for profits which would have consequently incurred a corporation tax charge. Comparative figures for weighted average number of ordinary shares represents the number of shares in issue immediately prior to the IPO, as if they had been in issue for the entire comparative period.

 

		2020		2019
		£		£
	Earnings
	Earnings for the purposes of basic and diluted earnings per share
	- basic and diluted	8,090,790		2,139,567
	Adjustments for:
	IPO costs	563,171		-
	LLP equity-based remuneration pre-IPO	1,662,696		7,535,272
	Shared based payments	5,763		-
	Tax impact	(317,007)		(1,838,220)
	- underlying earnings (basic and diluted)	10,005,413		7,836,619

 

	Number of shares
	Weighted average number of ordinary shares for the purposes of basic earnings per share	113,207,547		113,207,547
	Number of dilutive shares under option	226,408		226,408
	Weighted average number of ordinary shares for the purposes of dilutive earnings per share	113,433,955		113,433,955

 

 

	Earnings per share
	Basic	7.1p		2.1p
	Diluted	7.1p		2.1p
	Underlying
	Basic	8.8p		7.8p
	Diluted	8.8p		7.8p

 

The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options. A calculation is performed to determine the number of share options that are potentially dilutive based on the number of shares that could have been acquired at fair value, considering the monetary value of the subscription rights attached to outstanding share options.

 

 

14   Intangible fixed assets

 

		Software
		development
		costs
		£
	Cost
	At 1 April 2018	2,026,993
	Additions	1,417,090
	At 31 March 2019	3,444,083
	Additions	1,083,412
	At 31 March 2020	4,527,495
	Amortisation
	At 1 April 2018	908,938
	Charge for year	778,710
	At 31 March 2019	1,687,648
	Charge for year	1,046,462
	At 31 March 2020	2,734,110
	Net book value
	At 31 March 2020	1,793,385
	At 31 March 2019	1,756,435