REG - Argo Blockchain PLC - Argo 2024 Interim Results
28/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240828:nRSb8895Ba&default-theme=true
RNS Number : 8895B Argo Blockchain PLC 28 August 2024
Press Release
28 August 2024
Argo Blockchain plc
("Argo" or "the Company")
Interim Half Year Results 2024
Argo Blockchain plc, a global leader in cryptocurrency mining (LSE: ARB;
NASDAQ: ARBK), is pleased to announce its results for the six months ended 30
June 2024.
Highlights
● Revenues of $29.3 million for H1 2024 compared to $24.0 million for
H1 2023, an 18% increase, driven primarily by an increase in Bitcoin price.
Revenue in the first half of 2024 compared to 2023 increased despite the
Bitcoin halving and a decrease in the number of Bitcoin mined. The total
number of Bitcoin ("BTC") mined during H1 2024 was 507, a 46% decrease from H1
2023 of 947. This is primarily due to the increase in the global hashrate
and the reduction in the bitcoin denominated hash price.
● Mining margin of $11.5 million or 39% for H1 2024, compared to $10.2
million or 42% for H1 2023.
● On 8 January 2024, Argo raised gross proceeds of $9.9 million
through the issue of 38,064,000 ordinary shares at a price per share of
£0.205 to certain institutional investors.
● On 28 March 2024, the Company closed the sale of its five megawatt
data centre located in Mirabel, Quebec for total consideration of $6.1
million. The Company relocated the mining machines from the Mirabel Facility
to its facility in Baie Comeau, Quebec, and the Company expects this
consolidation to reduce its non-mining operating expenses by $0.7 million per
year.
● Reduced the Galaxy loan by $18.2 million from $23.5 million at 1
January 2024 to $5.3 million at 30 June 2024. In August 2024, the Galaxy loan
was repaid in full.
● Recorded a $22 million impairment on its mining machines reflecting
current mining economics.
● Net loss was $32.7 million for H1 2024, compared to a net loss of
$18.6 million in H1 2023. Adjusted EBITDA was $5.7 million for H1 2024
compared to $2.8 million in H1 2023.
● The Company ended June 2024 with $4.0 million of cash and 11 Bitcoin
equivalent. On 31 July 2024, the Company raised $8.3 million of gross proceeds
from the issuance of 57.8 million shares and 57.8 million warrants through a
private share placement with an institutional investor. The shares were issued
at £0.1125 and the warrants have an exercise price of £0.1125.
Management Commentary
Thomas Chippas, CEO at Argo Blockchain said: "Argo's focus on financial
discipline and operational efficiency enabled us to pay off our $35 million
debt obligation to Galaxy, significantly deleveraging our balance sheet. This
positions us well to explore investing in growth and strategic initiatives
that can drive long-term value for our shareholders."
Non-IFRS Measures
The following table shows a reconciliation of mining margin percentage to gross margin, the most directly comparable IFRS measure, for the six month periods ended 30 June 2024 and 30 June 2023.
Period ended Period ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
$'000 $'000
Gross margin 1,792 (1,371)
Gross margin percentage 6% (6%)
Depreciation of mining equipment 9,667 12,047
Change in fair value of digital currencies 27 (489)
Mining margin 11,486 10,187
Mining margin percentage 39% 42%
The following table shows a reconciliation of Adjusted EBITDA to net (loss) /
income, the most directly comparable IFRS measure, for the six month periods
ended 30 June 2024 and 30 June 2023.
Period ended Period ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
$'000 $'000
Net Loss (32,734) (18,563)
Interest expense 4,296 6,335
Income tax expense 340 -
Depreciation and amortisation 10,114 12,698
Restructuring and transaction related fees 1,118 1,399
Foreign Exchange (292) (1,403)
Share based payment 3,594 1,889
Impairment of property, plant and equipment 22,012
Loss on sale of tangible assets 429
Gain on sale of assets held for sale (3,397) -
Impairment of intangible assets 226 -
Equity accounting loss from associate - 458
Adjusted EBITDA 5,706 2,813
Inside Information and Forward-Looking Statements This announcement contains
inside information and includes forward-looking statements which reflect the
Company's current views, interpretations, beliefs or expectations with respect
to the Company's financial performance, business strategy and plans and
objectives of management for future operations. These statements include
forward-looking statements both with respect to the Company and the sector and
industry in which the Company operates. Statements which include the words
"remains confident", "expects", "intends", "plans", "believes", "projects",
"anticipates", "will", "targets", "aims", "may", "would", "could", "continue",
"estimate", "future", "opportunity", "potential" or, in each case, their
negatives, and similar statements of a future or forward-looking nature
identify forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties because they relate to events
that may or may not occur in the future, the Company may be unable to secure
sufficient additional financing to meet its operating needs, and the Company
may not generate sufficient working capital to fund its operations for the
next twelve months as contemplated in note 3 below. Forward-looking statements
are not guarantees of future performance. Accordingly, there are or will be
important factors that could cause the Company's actual results, prospects and
performance to differ materially from those indicated in these statements. In
addition, even if the Company's actual results, prospects and performance are
consistent with the forward-looking statements contained in this document,
those results may not be indicative of results in subsequent periods. These
forward-looking statements speak only as of the date of this announcement.
Subject to any obligations under the Prospectus Regulation Rules, the Market
Abuse Regulation, the Listing Rules and the Disclosure Guidance and
Transparency Rules and except as required by the United Kingdom Financial
Conduct Authority ("FCA"), the London Stock Exchange, the City Code on
Takeovers and Mergers or applicable law and regulations, the Company
undertakes no obligation publicly to update or review any forward-looking
statement, whether as a result of new information, future developments or
otherwise. For a more complete discussion of factors that could cause our
actual results to differ from those described in this announcement, please
refer to the filings that Company makes from time to time with the United
States Securities and Exchange Commission and the FCA, including the section
entitled "Risk Factors" in the Company's Annual Report on Form 20-F.
For further information please contact:
Argo Blockchain
Investor Relations ir@argoblockchain.com (mailto:ir@argoblockchain.com)
Tennyson Securities
Corporate Broker +44 207 186 9030
Peter Krens
Fortified Securities
Joint Broker +44 74930989014
Guy Wheatley, CFA guy.wheatley@fortifiedsecurities.com
(mailto:guy.wheatley@fortifiedsecurities.com)
Tancredi Intelligent Communication argoblock@tancredigroup.com (mailto:argoblock@tancredigroup.com)
UK & Europe Media Relations
About Argo:
Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain
technology company focused on large-scale cryptocurrency mining. With mining
operations in Quebec and Texas, and offices in the US, Canada, and the UK,
Argo's global, sustainable operations are predominantly powered by renewable
energy. In 2021, Argo became the first climate positive cryptocurrency mining
company, and a signatory to the Crypto Climate Accord. For more information,
visit www.argoblockchain.com (http://www.argoblockchain.com/) .
Interim Management Report
Since the appointment of Thomas Chippas as CEO on 27 November 2023 and Jim
MacCallum earlier as CFO on 5 April 2023, the Company has focused on three key
pillars: financial discipline, operational excellence, and strategic
partnerships for growth.
Financial Discipline
The focus for Argo in 2023 and the first half of 2024 has been to reduce its
debt obligations and strengthen its balance sheet. The $35 million debt owed
to Galaxy began amortising at $1.1 million per month in May 2023. I am pleased
to report that Argo has repaid the full amount of this loan to Galaxy as
announced by the Company on August 12th. This Galaxy debt was repaid over four
months ahead of the current schedule, and nearly 18 months ahead of the
original repayment schedule. The early repayment reflects the Company's focus
on strengthening its balance sheet, reducing its financial liabilities, and
focusing on operational excellence. Repayment was made possible by using
cash flow generated from operations, cash generated from equity raises and
cash generated through the sale of non-core assets without any meaningful
impact to Argo's hash rate. Repaying the Galaxy loan is a significant
milestone for Argo.
Mining economics continue to be challenging for Bitcoin miners and as a result
the Company recorded a $22 million impairment charge on its mining machines
and updated its going concern disclosure in its financial statements to
reflect current conditions.
Operational Excellence
The sale of the Mirabel facility was completed with no meaningful loss to
Argo's hash rate. The significant reduction in operating expenses in the
first half of 2024 compared to 2022 and 2023, and the strong mining margin
percentage despite the Bitcoin halving are indications of Argo's strong
performance.
The Mirabel sale enabled the Company to de-lever the balance sheet with
minimal impact to the Company's hash rate. Following the sale, Argo relocated
the majority of the mining machines at Mirabel to its Baie Comeau facility and
sold certain prior generation machines representing approximately 140 PH/s.
The sale allowed the Company to streamline its operations by locating all
self-mining machines at its Baie Comeau facility. Additionally, the sale of
Mirabel reduces the Company's non-mining operating expenses by $0.7 million
annually.
Argo has taken aggressive action on its cost structure and non-mining
operating expenses. As compared to the second half of fiscal 2022, the Company
has reduced its operating expenses by over 70% to $5.8 million. As compared to
the first half of 2023, the Company has reduced its operating expenses by over
25%.
Despite the Bitcoin halving and the lower hash price realised since then, the
Company has maintained strong mining margins and its mining margin percentage
has remained consistent with the first half of 2023. Lower mining margin and a
lower mining margin percentage are expected for the second half of 2024 as
Bitcoin economics have deteriorated since the Bitcoin halving in April 2024.
Growth and strategic partnerships
The strengthened balance sheet and repayment of the Galaxy debt gives Argo
more flexibility to pursue strategic opportunities moving forward. The Company
continues to explore opportunities where mining can be paired with stranded or
wasted energy. There is tremendous potential for energy generators to utilise
mining as a balancing and optimization tool, particularly in the energy
transition where limitations currently exist in the ability to store renewable
energy. Argo is evaluating several projects with companies across the energy
value chain.
For the remainder of 2024, the Company will continue to focus on its three
pillars - financial discipline, operational excellence and growth and
strategic partnerships. On behalf of the Board, I would like to thank all of
our shareholders and stakeholders. We remain committed to optimising our
capital structure and driving long-term value for our shareholders.
Sincerely,
Matthew Shaw
Chairman of the Board
Responsibility Statement
We confirm that to the best of our knowledge:
● the Interim Report has been prepared in accordance with
International Accounting Standards 34, Interim Financial Reporting;
● gives a true and fair view of the assets, liabilities, financial
position and profit/loss of the Group;
● the Interim Report includes a fair review of the information
required by DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and their impact on the set of interim
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year.
● the Interim Report includes a fair review of the information
required by DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being the information required on related party transactions.
The Interim Report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by:
Matthew Shaw
Chairman of the Board
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
Period ended Period ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
Note $'000 $'000
Revenues 29,255 23,996
Power/Hosting Costs (19,189) (15,093)
Power credits 1,420 1,284
Mining margin 11,486 10,187
Depreciation of mining equipment (9,667) (12,047)
Gain (loss) in fair value of digital currencies 9 (27) 489
Gross margin 1,792 (1,371)
Operating costs and expenses (5,809) (7,863)
Restructuring and transaction related fees (1,118) (1,399)
Foreign exchange gain 292 1,403
Depreciation (448) (651)
Loss on Hedging (397)
Share based payment (3,594) (1,889)
Operating loss (9,282) (11,770)
Gain on sale of assets held for sale 14 3,397 -
Loss on disposal of property, plant and equipment (429) -
Finance cost (4,296) (6,335)
Other Income 453 -
Equity accounted loss from associate - (458)
Impairment of property, plant and equipment 7 (22,012) -
Impairment of Intangible assets 6 (226) -
Loss before taxation (32,394) (18,563)
Tax expense 5 (340) -
Net Loss (32,734) (18,563)
Other comprehensive loss
Items which may be subsequently reclassified to profit or loss:
- Currency translation reserve (641) (1,330)
Total other comprehensive loss, net of tax (641) (1,331)
Total comprehensive loss attributable to the equity holders of the company (33,375) (19,893)
Weighted average shares outstanding 000's 575,721 477,825
Basic/diluted loss per share (0.06) (0.04)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 2024 31 December 2023
(unaudited) (audited)
Note $'000 $'000
ASSETS
Non-current assets
Investments at fair value through income and loss 400 400
Intangible assets 6 521 888
Property, plant and equipment 7 26,171 59,728
Total non-current assets 27,092 61,016
Current assets
Trade and other receivables 8 1,581 2,480
Prepaids 503 1,355
Digital assets 9 170 385
Cash and cash equivalents 3,985 7,443
Assets held for sale - 3,261
Total current assets 6,239 14,924
Total assets 33,331 75,940
EQUITY AND LIABILITIES
Equity
Share capital 10 764 712
Share premium 10 219,635 209,779
Share based payment reserve 13,087 12,166
RSU Reserve 10 2,113
Foreign currency translation reserve (30,771) (30,129)
Accumulated deficit (225,104) (192,370)
Total equity (20,276) 158
Current liabilities
Trade and other payables 11 8,194 11,175
Loans and borrowings 12 5,790 14,320
Corporation tax 5 444 -
Liabilities held for sale - 2,090
Total current liabilities 14,428 27,585
Non - current liabilities
Issued debt - bond 12 38,484 38,170
Loans and borrowings 12 695 10,027
Total liabilities 53,607 75,782
Total equity and liabilities 33,331 75,940
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Currency translation reserve Share based payment reserve Accumulated deficit Total
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2024 712 209,779 (30,129) 12,166 (192,370) 158
Loss for the period - - - - (32,734) (32,734)
Other comprehensive income - - (642) - - (642)
Share capital Issued 48 9,300 - - - 9,348
Stock based compensation charge - - - 3,594 - 3,594
Share RSUs vested 4 556 - (560) - -
Balance at 30 June 2024 764 219,635 (30,771) 15,200 (225,104) (20,276)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Currency translation reserve Share based payment reserve Accumulated surplus/ (deficit) Total
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2023 634 202,103 (29,350) 8,528 (157,337) 24,578
Loss for the period - - - - (18,563) (18,563)
Other comprehensive income - - (1,331) - - (1,331)
Foreign exchange movement - - - (28) - (28)
Stock based compensation charge - - - 1,889 - 1,889
Balance at 30 June 2023 634 202,103 (30,681) 10,389 (175,900) 6,545
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Period ended Period ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
Note $'000 $'000
Cash flows from operating activities
Loss before tax (32,394) (18,563)
Adjustments for:
Depreciation/Amortisation 10,114 12,698
Foreign exchange movements (290) (1,403)
Finance cost 4,296 6,335
Fair value change in digital assets 25 -
Realised gain in digital assets - (489)
Revenue from digital assets (29,255) (23,996)
Proceeds from sale of digital assets 29,443 24,439
Share of loss from associate - 458
Gain on disposal of assets held for sale (3,397) -
Impairment of intangible digital assets 226 -
Impairment of property, plant and equipment 22,012 -
Interest income (273) -
Loss on hedging 397 -
Loss on sale of property, plant and equipment 429 -
Share based payment expense 3,595 1,889
Working capital changes:
Decrease/(increase) in trade and other receivables 8 1,341 (892)
Decrease in trade and other payables 11 (2,782) (973)
Net cash flow (used in)/from operating activities 3,487 (497)
Investing activities
Proceeds from sale of intangibles/assets held for sale 6,119 989
Purchase of property, plant and equipment 7 - (1,301)
Proceeds from sale of property, plant and equipment 894 -
Interest received 273 -
Net cash used in investing activities 7,286 (312)
Financing activities
Proceeds from borrowings 16 - 811
Loan repayments (19,881) (3,381)
Interest paid (3,362) (5,247)
Proceeds from shares issued 9,349 -
Net cash from (used in)/from financing activities (13,894) (7,817)
Net decrease in cash and cash equivalents (3,121) (8,626)
Effect of foreign exchange changes in cash (337) (2,318)
Cash and cash equivalents, beginning of period 7,443 20,092
Cash and cash equivalents, end of period 3,985 9,148
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. COMPANY INFORMATION
Argo Blockchain plc ("the Company") is a public company, limited by shares,
and incorporated in England and Wales. The registered office is Eastcastle
House, 27/28 Eatcastle Street, London, England, W1W 8DH. The Company was
incorporated on 5 December 2017 as GoSun Blockchain Limited.
On 21 December 2017, the Company changed its name to Argo Blockchain Limited
and re-registered as a public company, Argo Blockchain plc.
On 12 January 2018, Argo Blockchain plc acquired a 100% subsidiary, Argo
Innovation Labs Inc. , incorporated in Canada.
On 22 November 2022, the Company formed Argo Holdings US Inc., a 100%
subsidiary incorporated in Delaware, United States, and Argo US Holdings Inc.
formed Argo US Operating LLC, a limited liability company incorporated in
Delaware, United States (together, the "Group")
On 21 December 2022, Argo Innovation Facilities (US) Inc became Galaxy Power
LLC. On 28 December 2022, the Group sold Galaxy Power LLC.
The principal activity of the Group is Bitcoin mining.
The ordinary shares of the Company are listed under the trading symbol ARB on
the London Stock Exchange. The American Depositary Receipts of the Company
are listed under the trading symbol ARBK on Nasdaq. The Company bond is
listed on the Nasdaq Global Select Market under the trading symbol ARBKL.
2. BASIS OF PREPARATION
The condensed consolidated interim financial statements for the six months
ended 30 June 2024 have been prepared in accordance with IAS 34 'Interim
Financial Reporting' and presented in US dollars which is further described in
Note 3. They do not include all the information required in annual financial
statements in accordance with IFRS and should be read in conjunction with the
consolidated financial statements for the year ended 31 December 2023, which
have been prepared in accordance with UK-adopted International Financial
Reporting Standards as issued by the IASB. The report of the auditors on those
financial statements was unqualified.
The financial statements have been prepared under the historical cost
convention, except for the measurement to fair value certain financial and
digital assets and financial instruments.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates. In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty were
the same as those that applied to the financial statements for the year ended
31 December 2023.
3. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
condensed consolidated interim financial statements are consistent with those
of the previous financial year, except the change in presentational currency
from British Pounds to US Dollars and recognition of power credits within
Mining Margin in the Statement of Comprehensive Income. The Group changed
its presentational currency to US Dollars with effect from 1 January 2023 due
to the fact its revenues, direct costs, capital expenditures and debt
obligations are now predominantly denominated in US Dollars.
In order to satisfy the requirements of IAS 8 and IAS 21 with respect to a
change in the presentation currency, the statutory financial information as
previously reported in the Group's Annual Reports have been restated from GBP
into US Dollars using the procedures outlined below:
● Assets and liabilities were translated to US Dollars at the closing
rates of exchange at each respective balance sheet date
● Share capital, share premium and other reserves were translated at
the historic rates prevailing at the dates of transactions
● Income and expenses were translated to US Dollars at an average rate
at each of the respective reporting years on a monthly basis. This has been
deemed to be a reasonable approximation to exchange rates at the date of the
transactions.
● Differences resulting from the retranslation were taken to currency
translation reserve within equity
● All exchange rates used were extracted from the Group's underlying
financial records
Power credits: The Group recognized power credits in relation to selling power
back to the power grid. The hosting facility sells some of the Group's power
back to the power grid when economically feasible.
Going Concern
The preparation of consolidated financial statements requires an assessment on
the validity of the going concern assumption. Mining economics since the
halving in April 2024 have been challenging due to the reduced reward not
being offset by a reduction in overall network hash rate. We have benefited
from lower power prices at Helios which has allowed us to sustain mining
margin percentages, albeit on a lower revenue base. However, based on mining
economics as of the date of this report, our mining margin percentage is
expected to decline in the second half of 2024.
During 2024, the Company has continued to focus on strengthening its balance
sheet. Subsequent to 30 June 2024, the Company issued 57.8 million shares and
raised gross proceeds of $8.3 million. This allowed the Company to repay the
remaining Galaxy debt in August 2024.
Paying off the Galaxy debt is a significant milestone for the Company.
However, material uncertainties exist that may cast significant doubt
regarding the Group's ability to continue as a going concern and meet its
liabilities as they come due. The significant uncertainties are:
1) In addition to the Galaxy debt which was repaid in August 2024, the Company
also has interest payments of approximately $3.5 million annually on its
unsecured bonds which mature in November 2026.
2) The Group's exposure to Bitcoin prices, power prices, and hashprice, each
of which have shown volatility over recent years and have a significant impact
on the Group's future profitability. The Group may have difficulty meeting its
liabilities if there are significant declines to the hashprice assumption or
significant increases to the power price, particularly where there is a
combination of both factors. Current mining economics are challenging for
Bitcoin miners and as a result the Group recorded a $22 million impairment
charge during the period. The Directors' assessment of going concern includes
a forecast drawn up to 31 August 2025 using the Group's estimate of the
forecasted hashprice. These include estimates of a renewed hosting agreement
with Galaxy beginning in January 2025.
3) The Company may not be able to extend its hosting agreement with Galaxy on
terms that are acceptable to the Company. In addition, finding acceptable
alternatives may be challenging given that the miners hosted by Galaxy are an
older fleet and in immersion fluid.
Offsetting these potential risks to the Group's cash flow are the Group's
current cash balance, the Group's ability to generate additional funds by
issuing equity for cash proceeds and selling certain non-core Group assets.
Based on information from Management, the Directors have considered the period
to 31 August 2025, as a reasonable time period given the variable outlook of
cryptocurrencies. Based on the above considerations, the Board believes it is
appropriate to adopt the going concern basis in the preparation of the
Financial Statements. However, the Board notes that the significant debt
service requirements, the volatile economic environment and uncertainty over
the Galaxy renewal at Helios renewal indicate the existence of material
uncertainties that may cast significant doubt regarding the applicability of
the going concern assumption. The auditors also made reference to this in
their audit report on the financial statements for the year ended 31 December
2023.
4. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
The Group has adopted all recognition, measurement and disclosure requirements
of IFRS, including any new and revised standards and Interpretations of IFRS,
in effect for annual periods commencing on or after 1 January 2024. The
adoption of these standards and amendments did not have any material impact on
the financial results or position of the Group.
Standards which are in issue but not yet effective:
At the date of authorisation of these financial statements, the following
Standards and Interpretation, which have not yet been applied in these
financial statements, were in issue but not yet effective.
Standard or Interpretation Description Effective date for annual accounting period beginning on or after
IFRS 18 Presentation and Disclosure in Financial Statements 1 January 2026
The Group has not early adopted any of the above standards and intends to
adopt them when they become effective.
No deferred tax asset has been recognised in respect of tax losses carried
forward on the basis that there is insufficient certainty over the level of
future profits to utilise against this amount.
Income tax expense
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to profits of
the consolidated entities as follows:
5. TAXATION
Period ended Period ended
30 June 2024 (unaudited) 30 June 2023 (unaudited)
$'000 $'000
Taxation charge in the financial statements 340 -
Period ended Period ended
30 June 2024 (unaudited) 30 June 2023 (unaudited)
$'000 $'000
Loss before taxation (32,394) (18,563)
(8,099) (4,641)
Expected tax recovery based on a weighted average of 25% (2023 - 25%) (UK, US
and Canada)
Effect of expenses not deductible in determining taxable profit 5,465 3
Temporary differences 3,433 3,485
Other tax adjustments 191 (52)
Unutilised (utilised) tax losses carried forward (650) 1,205
Taxation charge in the financial statements 340 -
6. INTANGIBLE ASSETS
Group Goodwill Digital assets 2024 Total
$'000 $'000 $'000
Cost
At 1 January 2024 112 5,329 5,441
Foreign exchange movements (29) (29)
Disposals (112) (112)
At 30 June 2024 - 5,300 5,300
Amortisation and impairment
At 1 January - 4,553 4,553
Impairment 226 226
At 30 June 2024 - 4,779 4,779
Balance at 1 January 2024 112 776 888
Balance At 30 June 2024 - 521 521
Intangible digital assets are cryptocurrencies owned but not mined by the
Group. The Intangible digital assets are recorded at cost on the day of
acquisition. Changes in fair value are recorded in the fair value reserve in
other comprehensive income.
The Intangible digital assets held are detailed in the table below:
As at 30 June 2024 Coins/tokens Fair value
Crypto asset name $'000
Polkadot - DOT 16,554 103
Alternative coins 405,248 418
At 30 June 2024 421,802 521
7. PROPERTY, PLANT AND EQUIPMENT
Group Mining and Computer Equipment Data Centres Equipment Total
$'000 $'000 $'000 $'000
Cost
At 1 January 2024 168,149 6,281 4,034 178,464
Foreign exchange movement 16 (53) (21) (58)
Disposals (1,322) - - (1,322)
At 30 June 2024 166,843 6,228 4,012 177,084
Depreciation and impairment
At 1 January 2024 (116,992) (1,537) (206) (118,735)
Foreign exchange movement - (18) (33) (51)
Impairment in asset (22,012) - - (22,012)
Depreciation charged during the period (9,667) (324) (124) (10,115)
At 30 June 2024 (148,671) (1,879) (363) (150,913)
Carrying amount
At 1 January 2024 51,158 4,743 3,827 59,729
At 30 June 2024 18,172 4,349 3,649 26,171
The Group determined that there were indicators of impairment at 30 June 2024.
The reduction in fair market values of mining equipment, which has accelerated
since the Bitcoin halving in April 2024, and the deterioration of mining
economics resulting from the lower hashprice since the Bitcoin halving, are
the primary factors. In assessing value in use of Mining and Computer
Equipment, the estimated future cash flows over the useful life of the mining
machines were discounted using a pre-tax discount rate of 13.97%. As a result
of the analysis, an impairment charge of $22.0 million was recorded.
8. TRADE AND OTHER RECEIVABLES
As at As at 31 December 2023 (audited)
30 June 2024 (unaudited)
$'000 $'000
Trade and other receivables 873 1,131
Other taxation and social security 708 1,349
Total trade and other receivables 1,581 2,480
The directors consider that the carrying amount of trade and other receivables
is equal to their fair value.
9. DIGITAL ASSETS
Group Period ended Year ended
30 June 2024 31 December 2023
(unaudited) (audited)
$'000 $'000
Opening Balance 385 443
Additions
Foreign exchange movement - 24
Crypto assets mined 29,255 50,558
Total additions 29,255 50,582
Disposals
Crypto assets sold (29,497) (51,378)
Total disposals (29,497) (51,378)
Fair value movements
Gain/(loss) on crypto asset sales 27 738
Total fair value movements 27 738
Closing Balance 170 385
The Group mined crypto assets during the period, which are recorded at fair
value on the day of acquisition. Movements in fair value are recorded in
change in fair value of digital currencies on the statement of comprehensive
loss.
10. ORDINARY SHARES
The Group had 578,397,673 Ordinary shares outstanding at 30 June 2024 and
536,963,471 31 December 2023.
Subsequent to June 30, 2024, the Group issued 57,500,000 ordinary shares and
57,500,000 warrants for net proceeds of $7.7M.
The Group has in issue 7,273,585 warrants and options at 30 June 2023 (2022:
10,544,406).
The Group granted 7,273,995 restricted stock units (RSUs) in 2024. The RSUs
vest over 3 years from grant date. The grant price of the RSUs was £0.15.
11. TRADE AND OTHER PAYABLES
As at As at
30 June 2024 (unaudited) 31 December 2023 (audited)
$'000 $'000
Trade payables 820 2,336
Accruals and other payables 5,812 7,153
Other taxation and social security 1,562 1,686
Total trade and other creditors 8,194 11,175
The directors consider that the carrying value of trade and other payables is
equal to their fair value.
12. LOANS AND BORROWINGS
Non-current liabilities As at As at
30 June 2024 (unaudited) 31 December 2023 (audited)
$'000 $'000
Issued debt - bond 38,484 38,170
Long term loan - 9,230
Mortgages 695 797
Total 39,179 48,197
Current liabilities
Loans* 5,351 13,444
Mortgages 439 600
Other loans - 276
Total 5,790 14,320
The mortgage is secured against the building at Baie Comeau and is repayable
over periods of 30 months at an interest rate of lender prime +
0.5%.
*The Galaxy loan was fully repaid subsequent to quarter end.
13. FINANCIAL INSTRUMENTS
As at As at
30 June 2024 (unaudited) 31 December 2023 (audited)
$'000 $'000
Carrying amount of financial assets
Measured at amortised cost
- Trade and other receivables 1,581 1,131
- Cash and cash equivalents 3,985 7,443
Measured at fair value - Digital Assets 170 400
Total carrying amount of financial assets 5,736 8,974
Carrying amount of financial liabilities
Measured at amortised cost
- Trade and other payables 8,193 7,501
- Short term loans - 280
- Long term loans 6,484 25,599
- Issued Debt - bonds
38,484 38,170
Total carrying amount of financial liabilities 53,161 71,550
Fair Value Estimation
Fair value measurements are disclosed according to the following fair value
measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1)
- Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices),
or indirectly (that is, derived from prices) (Level 2)
- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (Level 3). This is the case for
unlisted equity securities.
The following table presents the Group's assets and liabilities that are
measured at fair value at 30 June 2024 and 31 December 2023.
Level 1 Level 2 Level 3 Total
Assets $'000 $'000 $'000 $'000
Financial assets at fair value through profit or loss
Equity holdings - - 400 400
Intangible assets - crypto assets - 521 - 521
Digital assets - 170 - 170
Total at 30 June 2024 - 691 400 1,091
Level 1 Level 2 Level 3 Total
Assets $'000 $'000 $'000 $'000
Financial assets at fair value through profit or loss
Equity holdings - - 400 400
Intangible assets - crypto assets - 888 - 888
Digital assets - 385 - 385
Total at 31 December 2023 - 1,273 400 1,673
All financial assets are in listed/unlisted securities and digital assets.
There were no transfers between levels during the period.
The Group recognises the fair value of financial assets at fair value through
profit or loss relating to unlisted investments at the cost of investment
unless:
- There has been a specific change in the circumstances which, in the
Group's opinion, has permanently impaired the value of the financial asset.
The asset will be written down to the impaired value;
- There has been a significant change in the performance of the
investee compared with budgets, plans or milestones;
- There has been a change in expectation that the investee's technical
product milestones will be achieved or a change in the economic environment in
which the investee operates;
- There has been an equity transaction, subsequent to the Group's
investment, which crystallises a valuation for the financial asset which is
different to the valuation at which the Group invested. The asset's value will
be adjusted to reflect this revised valuation; or
- An independently prepared valuation report exists for the investee
within close proximity to the reporting date.
14. SALE OF SUBSIDIARY
In March 2024, the Group sold 9366-5320 Quebec Inc. for approximately $6.2
million. The gain on the sale was $3.4 million. A tax provision of $443k was
recorded for the capital gain.
15. COMMITMENTS
The Group's material contractual commitments relate to the hosting services
agreement with Galaxy Digital Qualified Opportunity Zone Business LLC, which
provides hosting, power and support services at the Helios facility. This
agreement has a term ending December 28, 2024 and renewal discussions are in
progress. It is impracticable to determine monthly commitments due to large
fluctuations in power usage and as such a commitment over the contract life
has not been determined. The agreement is for services with no identifiable
assets, therefore, there is no right of use asset associated with the
agreement.
As the Company disclosed on February 8, 2023, it is currently subject to a
class action lawsuit. The case, Murphy vs Argo Blockchain plc et al, was filed
in the Eastern District of New York on 26 January 2023. The Company refutes
all of the allegations and believes that this class action lawsuit is without
merit. The Company is vigorously defending itself against the action. We are
not currently subject to any other material pending legal proceedings or
claims.
16. RELATED PARTY TRANSACTIONS
Key management compensation - all amounts in $000's
Key management includes Directors (executive and non-executive) and senior
management. The compensation paid to related parties in respect of key
management for employee services during the period was made only from Argo
Blockchain PLC, amounting to:
● $68k (2023 - $68k) to Webslinger Advisors Inc. in respect of fees of
Matthew Shaw (Non-executive director)
● $63k (2023 - $63k) in respect of fees for Maria Perrella
(Non-executive director)
● $68k (2023 - $71k) in respect of fees for Raghav Chopra
(Non-executive Director)
Total director fees and remuneration, paid directly and indirectly, totalled
$541k (2023: $280k).
17. SUBSEQUENT EVENTS
In July 2024, the Company issued 57,500,000 ordinary shares and 57,500,000
warrants for net proceeds of $7.7 million.
In August 2024, the Company repaid the $5.4 million remaining on the Galaxy
loan balance.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFVDTRIDFISRecent news on Argo Blockchain
See all newsREG - Argo Blockchain PLC - Financial Update and Listing Suspension Request
AnnouncementREG - Argo Blockchain PLC - Argo Provides Financing Update
AnnouncementREG - Argo Blockchain PLC - Argo Enters into Term Sheets with Gem Mining
AnnouncementREG - Argo Blockchain PLC - Appointment of Chief Executive Officer
AnnouncementREG - Argo Blockchain PLC - Hosting Update
Announcement