REG - Argo Blockchain PLC - Q1 2023 Results

Argo BlockchainAnnouncement

06/06/2023 07:00

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RNS Number : 7245B  Argo Blockchain PLC  06 June 2023

Press Release

6 June 2023

Argo Blockchain plc

("Argo" or "the Company")

 

Q1 2023 Results (Unaudited)

Argo Blockchain plc (LSE: ARB; NASDAQ: ARBK), a global leader in
cryptocurrency mining, is pleased to announce its unaudited financial results
for the quarter ended 31 March 2023. All $ amounts are in United States
Dollars ("USD") unless otherwise stated.

 

Q1 2023 Financial Results

 

●    The Company ended the quarter with $14.2 million of cash on its
balance sheet, along with 85 Bitcoin or Bitcoin Equivalent (together, "BTC")
in its HODL

●     Revenue of $11.4 million, an increase of 15% compared to Q4 2022

●     Net loss of $8.7 million

●     Adjusted EBITDA of $1.6 million

●     Total BTC mined in the quarter was 491, or 5.3 BTC per day

●     Mining margin percentage for the quarter was 49%, an increase from
a 35% mining margin percentage in Q4 2022

●     Reduced operating costs and expenses by 70% compared to the
quarterly average in the second half of 2022

●     Reduced finance costs by 63% compared to the quarterly average in
the second half of 2022

Management Commentary

Seif El-Bakly, Interim Chief Executive Officer of Argo, said: "The Argo team
is moving ahead with a focus on financial discipline, operational excellence,
and growth and strategic partnerships. To support these initiatives, we
recently strengthened our finance team and appointed Jim MacCallum, CPA, CFA
as Chief Financial Officer."

 

"In terms of financial discipline, we are taking a much more critical view of
all operating expenses, and we've implemented a robust internal process aimed
at reducing non-mining operating expenses. Compared to 2022, we've reduced our
expenses by 70%. We are also evaluating options to strengthen our balance
sheet."

 

During the first quarter, Argo successfully transitioned the Helios facility
to Galaxy Digital.  In addition, the average all-in price of power and
hosting was lower than the previous guidance of $0.05 - $0.055 per
kilowatt-hour for the quarter.

 

Moving forward, Argo expects to receive and install "BlockMiner" machines
later this year at its Quebec facilities. This is expected to increase the
Company's total hashrate to approximately 2.8 EH/s.

 

Earnings Conference Call

 

Argo will host a conference call to discuss its results at 10:00 ET / 15:00
BST today, Tuesday 6 June 2023. The live webcast of the call can be accessed
via the Investor Meet Company platform.

 

Investors can sign up to Investor Meet Company and add Argo Blockchain via the
following link:
https://www.investormeetcompany.com/argo-blockchain-plc/register-investor
(https://www.investormeetcompany.com/argo-blockchain-plc/register-investor)

 

Investors already following Argo Blockchain on the Investor Meet Company
platform will be invited automatically.

 

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, including the risk that the Company may receive the benefits
contemplated by its transactions with Galaxy, 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. 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 and Transparency Rules
and except as required by the FCA, the London Stock Exchange, the City Code
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 United Kingdom Financial Conduct Authority,
including the section entitled "Risk Factors" in the Company's Annual Report
on Form 20-F.

Non-IFRS Measures

 

Bitcoin and Bitcoin Equivalent Mining Margin and Adjusted EBITDA are financial
measures not defined by IFRS. We believe Bitcoin and Bitcoin Equivalent Mining
Margin and Adjusted EBITDA have limitations as analytical tools. In
particular, Bitcoin and Bitcoin Equivalent Mining Margin excludes the
depreciation of mining equipment and so does not reflect the full cost of our
mining operations, and it also excludes the effects of fluctuations in the
value of digital currencies and realized losses on the sale of digital assets,
which affect our IFRS gross profit. Further, Adjusted EBITDA removes such
effects of our capital structure, asset base and tax consequences, but
additionally excludes any unrealized foreign exchange gains or losses,
stock-based compensation charges and other one-time impairments and costs that
are not expected to be repeated in order to provide greater insight into the
cash flow being produced from our operating business, without the influence of
extraneous events. These measures should not be considered as an alternative
to gross margin or net income/(loss), as applicable, determined in accordance
with IFRS, or other IFRS measures. These measures are not necessarily
comparable to similarly titled measures used by other companies. As a result,
you should not consider these measures in isolation from, or as a substitute
analysis for, our gross margin or net income/(loss), as applicable, as
determined in accordance with IFRS.

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

 

  Figures in '000 except per share                                           Three Months Ended March 31, 2023  Three Months Ended March 31, 2022  Six Months Ended December 31, 2022
                                                                             $                                  $                                  $

 Revenues                                                                    11,438                             19,515                             24,979
 Direct costs                                                                (5,799)                            (4,596)                            (16,647)
 Mining margin                                                               5,639                              14,919                             8,332
 Depreciation of mining equipment                                            (6,116)                            (6,961)                            (6,887)
 Change in fair value of digital currencies                                  (79)                               (6,039)                            (1,502)
 Gross profit (loss)                                                         (556)                              1,919                              (57)

 Operating costs and expenses                                                (4,054)                            (4,173)                            (21,300)
 Restructuring                                                               (806)                              -                                  (11,593)
 Foreign exchange                                                            1,300                              5,705                              8,444
 Depreciation/amortisation                                                   (323)                              (205)                              (7,295)
 Share based compensation                                                    (958)                              (1,423)                            (2,553)
 Operating profit (loss)                                                     (5,397)                            1,823                              (34,354)

 Fair value gain/(loss) of investments                                       -                                  (174)                              (53)
 Fair value revaluation of contingent consideration                          -                                  2,742                              -
 Loss on sale of subsidiary and investment                                   -                                  -                                  (54,325)
 Loss on disposal of fixed assets                                            -                                  -                                  (22,702)
 Finance costs                                                               (3,313)                            (2,442)                            (17,945)
 Other income                                                                -                                  -                                  3,641
 Impairment of tangible fixed assets                                         -                                  -                                  (54,574)
 Impairment of intangible assets                                             -                                  -                                  (5,038)
 Equity accounted loss from associate                                        -                                  -                                  (5,298)
 Profit/(loss) before taxation                                               (8,710)                            1,949                              (190,648)

 Tax credit / (expense)                                                      -                                  117                                (7,284)

 Profit/(loss) after taxation                                                (8,710)                            2,066                              (197,932)

 Other comprehensive income
 Items which may be subsequently reclassified to profit or loss:
       Currency translation reserve                                          -                                  (17,170)                           9,544
 Total other comprehensive income (loss), net of tax                         -                                  (17,170)                           9,544

 Total comprehensive loss attributable to the equity holders of the Company  (8,710)                            (15,104)                           (188,387)

 Earnings per share attributable to equity owners
 Basic earnings/(loss) per share                                             $(0.018)                           $0.004                             $(0.414)
 Diluted earnings/(loss) per share                                           $(0.018)                           $0.004                             $(0.414)

The income statement has been prepared on the basis that all operations are
continuing operations.

 

GROUP STATEMENT OF FINANCIAL POSITION

As at

                                                    March 31,      December 31, 2022

                                                    2023
 Figures in '000                                    $              $

 ASSETS
 Non-current assets
 Investments at fair value through profit or loss   417            414
 Investments accounted for using the equity method  2,933          2,863
 Intangible fixed assets                            2,106          2,103
 Property, plant and equipment                      71,106         76,991
 Right of use assets                                525            525
 Total non-current assets                           77,087         82,896

 Current assets
 Cash and cash equivalents                          14,244         20,092
 Trade and other receivables                        7,652          6,802
 Digital assets                                     20             443
 Total current assets                               21,916         27,337

 Total assets                                       99,003         110,233

 EQUITY AND LIABILITIES
 Equity
 Share Capital                                      590            576
 Share Premium                                      177,541        173,334
 Share based payment reserve                        9,358          8,201
 Currency translation reserve                       1,339          2,132
 Accumulated surplus / (deficit)                    (183,344)      (170,495)
 Total equity                                       5,484          13,748

 Current liabilities
 Trade and other payables                           7,504          10,021
 Loans and borrowings                               12,499         11,605
 Deferred tax                                       2,165          2,647
 Lease liability                                    5              5
 Total current liabilities                          22,173         24,278

 Non-current liabilities
 Deferred tax                                       8,134          7,942
 Issued debt - bond                                 37,824         37,809
 Loans                                              24,848         25,916
 Lease liability                                    540            540
 Total liabilities                                  93,519         96,485

 Total equity and liabilities                       99,003         110,233

 

GROUP STATEMENT OF CASH FLOWS

For the three months ended 31 March

 

                                                                     2023
 Figures in '000                                                     $
 Cash flows from operating activities
 Loss before tax                                                     (8,710)
 Adjustments for:
 Depreciation/Amortisation                                           6,439
 Foreign exchange                                                    (1,301)
 Finance costs                                                       3,313
 Fair value change in digital assets through profit or loss          79
 Share based payment expense                                         958
 Cash flow from operating activities before working capital changes  778

 Working capital changes:
 Increase in trade and other receivables                             (685)
 Decrease in trade and other payables                                (3,345)
 Decrease in digital assets                                          356
 Net cash used in operating activities                               (2,895)

 Investing activities
 Purchase of tangible fixed assets                                   (329)
 Net cash used in investing activities                               (329)

 Financing activities
 Loan repayments                                                     (364)
 Interest paid                                                       (2,728)
 Net cash generated used in financing activities                     (3,092)

 Net decrease in cash and cash equivalents                           (6,316)
 Effect of foreign exchange on cash                                  468

 Cash and cash equivalents at beginning of period                    20,092
 Cash and cash equivalents at end of period                          14,244

 

 

The table below reconciles Adjusted EBITDA to net income/(loss), the most
directly comparable IFRS measure, for the three months ended 31 March 2023 and
three months ended 31 March 2022.

 

 

                                             2023     2022
 Figures in '000                             $        $

 Net income/(loss)                           (8,710)  2,066

 Interest expense                            3,313    2,442
 Depreciation / amortisation                 6,439    7,168
 Income tax (credit) / expense               -        (117)
 EBITDA                                      1,042    11,559
 Change in fair value of digital currencies  79       6,039
 Impairment of intangible assets             -        703
 One-time restructuring costs                806      -
 Foreign exchange gain                       (1,300)  (5,705)
 Share based payment charge                  958      1,423
 Adjusted EBITDA                             1,585    14,019

 

For further information please contact:

 Argo Blockchain
 Investor Relations                  ir@argoblockchain.com
 finnCap Ltd
 Corporate Finance                   +44 207 220 0500

 Jonny Franklin-Adams

 Seamus Fricker

 Joint Corporate Broker

 Sunila de Silva
 Tennyson Securities
 Joint Corporate Broker              +44 207 186 9030

 Peter Krens
 Tancredi Intelligent Communication

 UK & Europe Media Relations
 Salamander Davoudi                   argoblock@tancredigroup.com

 Emma Valgimigli

 Fabio Galloni-Roversi Monaco

 Nasser Al-Sayed

 

About Argo:

Argo Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain
technology company focused on large-scale cryptocurrency mining. With mining
facilities in Quebec, mining operations in 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/) .

 

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