Foreign exchange broker Argentex (ARGX:AIM) said it was seeing an unleashing of pent-up demand with September revenues up 57% compared with August. The shares fell 3.8% to 115p.
PENT-UP DEMAND
The first half to 30 September saw revenues decline by 14.7% to £11.8 million as previously announced, leading to a 43% fall in underlying operating profit to £3.7 million which was significantly better than the £2.5 million expected by house broker Numis.
Recent trading has shown increasing signs of trading returning to more ‘normal’ levels of activity. The company explained that its clients had a commercial need to remove or manage foreign exchange risk and therefore it’s more a question of ‘when’ rather than ‘if’ activity regains pre-pandemic levels.
‘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.’
BUILDING FOR FUTURE GROWTH
Despite the Covid-related shutdown postponing client activity, the company continued to invest for growth with a 62% increase in the sales team to 35 people and 23 new hires across the business.
A new 12,000 square-foot London office opened in September at 25 Argyll Street providing a Covid-secure efficient operating environment.
Meanwhile international plans are moving forward with the Netherlands office now open and contributing revenues. The firm is in early stage planning to open an office in Sydney, Australia.
MARGIN POTENTIAL
The reduction in revenues and increased cost base lowered the operating margin to 31.6% but over the medium term the company expects them to return towards 35%-to-40% and over 40% in the long-term as newer staff reach their full revenue generating potential.
Co-chief executives Carl Jani and Harry Adams told Shares that it takes between two and three years for new recruits to reach their full potential.
