Notes to the Company Financial Statements of argenx SE
1 Accounting Information and Policies
1.1 Basis of Preparation
The company financial statements of argenx SE (hereafter: the company) have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In accordance with article 362 sub8, Book 2 of the Dutch Civil Code, the company’s financial statements are prepared based on the accounting principles of recognition, measurement and determination of profit, as applied in the consolidated IFRS financial statements.
1.2 Summary of Significant Accounting Policies
In case no other policies are mentioned, refer to the accounting policies as described in the summary of significant accounting policies in the consolidated IFRS financial statements. For an appropriate interpretation, the company financial statements of argenx SE should be read in conjunction with the consolidated IFRS financial statements.
Participating Interests in Group Companies
Participating interests in group companies are valued using the equity method, applying the IFRS accounting policies endorsed by the European Union. Following the adoption of IFRS 9 by the group, and our interpretation of the Dutch Accounting Standard 100.108, the company shall, upon identification of a credit loss on an intercompany loan and/or receivable, eliminate the carrying amount of the intercompany loan and/or receivable for the value of the identified credit loss.
Result of Participating Interests
The share in the result of participating interests consists of the share of the Company in the result of these participating interests. In so far as gains or losses on transactions involving the transfer of assets and liabilities between the Company and its participating interests or between participating interests themselves can be considered unrealized, they have not been recognized.
All amounts are presented in thousands of USD, unless stated otherwise. The balance sheet and income statement references have been included. These refer to the notes.
1.3 Change in Functional and Presentation Currency as of January 1, 2021
As of January 1, 2021, the Company changed its functional and presentation currency from EUR to USD. The change in functional currency was made to reflect that USD has become the predominant currency in the Company, representing a significant part of the Company’s cash flows and financing. The change has been implemented with prospective effect.
The change in presentation currency, effective January 1, 2021, from EUR to USD is retroactively applied on comparative figures according to IAS 8 and IAS 21, as if USD had always been the presentation currency of the consolidated financial statements. The change was made to better reflect the economic footprint of the Company’s business going forward. The Company believes that the presentation currency change will give investors and other stakeholders a clearer understanding of the Company’s performance over time.
2 Financial Fixed Assets
The Company has two Belgian subsidiaries, argenx BV and argenx Benelux BV, which carry out the research and development activities of the Group. Argenx Benelux BV was incorporated through a partial demerger of argenx BV in 2020. On December 27, 2022, argenx Benelux BV transferred certain pipeline activities to argenx BV through a transfer of assets, (hereafter referred to as “asset deal”), for a total amount of $449 million. As a result of the asset deal, argenx Benelux BV realized a capital gain. argenx Benelux BV has distributed an interim dividend of EUR 325 million to argenx SE, which in turn has increased the share capital of argenx BV for $345 million.
Argenx BV has nine subsidiaries, argenx US, Inc., argenx Japan KK, argenx Switzerland SA, argenx Germany GmbH, argenx France SAS, argenx Canada, Inc., argenx Netherlands Services BV, argenx UK Ltd and argenx Italy SRL. The financial fixed assets consist of the 100% participations in argenx BV and argenx Benelux BV, both registered at Industriepark 7, Zwijnaarde, Belgium.
The movement in financial fixed assets is as follows:
|
|
At December 31, |
||||||
(in thousands of $) |
|
2022 |
|
2021 1) |
||||
Investments in Group companies |
|
|
|
|
||||
Opening Balance |
|
2,386,238 |
|
1,544,024 |
||||
Share of loss of Investments |
|
(1,038,746) |
|
(437,968) |
||||
Share-based payment expenses of investments |
|
153,169 |
|
167,965 |
||||
Changes booked directly in equity at subsidiary level |
|
(22,580) |
|
(34,470) |
||||
Fair Value gain on Financial Assets at FVTPL |
|
1,105,678 |
|
1,146,687 |
||||
Closing balance |
|
2,583,759 |
|
2,386,238 |
||||
|
|
|
|
|
||||
Receivable/(payable) on Group companies |
|
– |
|
999 |
||||
|
|
|
|
|
||||
Investments in Group companies |
|
2,583,759 |
|
2,387,237 |
||||
|
|
|
|
|
||||
Other financial assets |
|
|
|
|
||||
Opening Balance |
|
1 |
|
1 |
||||
Balance as at year-end |
|
1 |
|
1 |
||||
|
|
|
|
|
||||
Total financial fixed assets |
|
2,583,760 |
|
2,387,238 |
||||
|
||||||||
3 Receivables
|
|
At December 31, |
||
(in thousands of $) |
|
2022 |
|
2021 |
Interest receivable |
|
323 |
|
– |
Other receivables |
|
138,918 |
|
949 |
Prepaid expenses |
|
943 |
|
1,044 |
Total receivables |
|
140,185 |
|
1,993 |
Receivables fall due in less than one year. The fair value of the receivables approximates the nominal value, due to their short-term character.
4 Financial Assets
|
|
At December 31, |
||
(in thousands of $) |
|
2022 |
|
2021 |
Money market funds |
|
– |
|
4,985 |
Total financial assets |
|
– |
|
4,985 |
5 Cash and Cash Equivalents
|
|
At December 31, |
||
(in thousands of $) |
|
2022 |
|
2021 |
Money market funds |
|
91,002 |
|
47,365 |
Current bank accounts |
|
1,094 |
|
95,488 |
Total cash in banks |
|
92,096 |
|
142,853 |
6 Equity
(in thousands of $) |
|
Share capital |
|
Share premium |
|
Accumulated losses |
|
Share based payment reserves |
|
Other reserves |
|
Translation reserves |
|
Total equity |
||||
Equity |
|
6,233 |
|
3,462,775 |
|
(1,400,197) |
|
356,875 |
|
(23,146) |
|
131,684 |
|
2,534,224 |
||||
Result of the year |
|
– |
|
– |
|
(709,594) |
|
– |
|
– |
|
– |
|
(709,594) |
||||
SBP expense |
|
– |
|
– |
|
– |
|
158,282 |
|
– |
|
– |
|
158,282 |
||||
Capital increase |
|
294 |
|
759,878 |
|
– |
|
– |
|
– |
|
– |
|
760,172 |
||||
Exercised stock options |
|
113 |
|
93,082 |
|
– |
|
– |
|
– |
|
– |
|
93,195 |
||||
Changes booked directly in equity at subsidiary level |
|
– |
|
(5,855) |
|
– |
|
– |
|
(14,321) |
|
(2,404) |
|
(22,580) |
||||
Equity |
|
6,640 |
|
4,309,880 |
|
(2,109,791) |
|
515,158 |
|
(37,467) |
|
129,280 |
|
2,813,699 |
||||
|
||||||||||||||||||
For the details on Sharebased payments we refer to note 13 of the consolidated IFRS financial statements. The company holds no legal reserves as part of the equity.
7 Current Liabilities
|
|
At December 31, |
||
(in thousands of $) |
|
2022 |
|
2021 |
Accounts payable |
|
20 |
|
70 |
Intercompany payables |
|
1,130 |
|
1,232 |
Taxes payable |
|
155 |
|
95 |
Accrued expenses |
|
474 |
|
620 |
Other payables |
|
563 |
|
827 |
Total current liabilities |
|
2,342 |
|
2,845 |
All current liabilities fall due in less than one year. The fair value of the current liabilities approximates the nominal value, due to their short-term character.
8 Financial Result and Exchange Gains/(Losses)
|
|
At December 31, |
||
(in thousands of $) |
|
2022 |
|
2021 |
Interest income on bank deposits |
|
2 |
|
– |
Net gains on investments at FVTPL |
|
1,151 |
|
– |
Fees collected from ADS holders |
|
466 |
|
484 |
Interest on I/C current account |
|
321 |
|
– |
Dividend income |
|
345,784 |
|
– |
Financial income |
|
347,724 |
|
484 |
|
|
|
|
|
Net losses on investments at FVTPL |
|
– |
|
(364) |
Interest expense |
|
(199) |
|
(116) |
Other financial expenses |
|
(143) |
|
(44) |
Financial expenses |
|
(342) |
|
(524) |
|
|
|
|
|
Exchange gains/(losses) |
|
(2,686) |
|
(5,191) |
|
|
|
|
|
Financial income and expense |
|
344,696 |
|
(5,231) |
9 Share in Result of Subsidiaries
The Company has two Belgian subsidiaries, argenx BV and argenx Benelux BV, which jointly carry out the research and development activities of the Group.
|
|
Year ended December 31, |
||
(in thousands of $) |
|
2022 |
|
2021 |
argenx BV |
|
(562,594) |
|
(421,774) |
argenx Benelux BV |
|
(476,152) |
|
(16,195) |
|
|
(1,038,746) |
|
(437,968) |
10 Other Disclosures
Contingent Liabilities
The contingent liabilities of the Company consist of a rental agreement for office space in Amsterdam for an amount of KEUR 7 per annum. The lease contract has a duration of two years.
Related-Party Transactions
All legal entities that can be controlled, jointly controlled or significantly influenced are considered as a related party. Also, entities which can control the company are considered a related party. In addition, directors, other key management of argenx SE and close relatives are regarded as related parties. Other than the intercompany cross-charges, there were no related party transactions.
Remuneration
Remuneration of executive director for 2022 and 2021 is as follows:
|
|
Compensation |
||
(in $) |
|
2022 |
|
2021 |
Base salary |
|
638,901 |
|
651,986 |
Short term incentive |
|
766,682 |
|
586,787 |
Option awards |
|
4,174,684 |
|
3,895,370 |
Restricted stock units |
|
2,159,689 |
|
2,084,509 |
Pension contributions |
|
23,384 |
|
26,894 |
Social security costs |
|
– |
|
3,456 |
Other |
|
14,958 |
|
14,827 |
Total current liabilities |
|
7,778,298 |
|
7,263,829 |
Part of the remuneration of the executive director is being paid by subsidiaries of argenx SE.
See note 27 of the notes to the consolidated IFRS financial statements for the remuneration of non-executive Board of directors.
Information Relating to Employees
During the year 2022, the Company had an average of 0.2 FTE (2021: 0.2 FTE).
Auditor’s Fees
See note 30 of the notes to the consolidated IFRS financial statements.
Proposal for Appropriation of the Result
The Company reported a net loss of $709.6 million for the year ended on December 31, 2022. The Board of Directors proposes to carry forward the net loss of the year 2022 to the accumulated losses. Anticipating the approval of the financial statements by the shareholders at the annual general meeting of shareholders, this proposal has already been reflected in the 2022 financial statements.
Events After the Balance Sheet Date
For the events after balance sheet date, we refer to note 32 of the consolidated IFRS financial statements.
Amsterdam, March 16, 2023
The Director
Tim Van Hauwermeiren, CEO