UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 6-K
_____________________
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2024
Commission File Number: 001-40816
_____________________
Argo Blockchain plc
(Translation of registrant’s name into English)
_____________________
Eastcastle House
27/28 Eastcastle Street
London W1W 8DH
England
(Address of principal executive office)
_____________________
Indicate
by check mark whether the registrant files or will file annual
reports under cover of
Form
20-F or Form 40-F.
Form
20-F ☒ Form 40-F
☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by
Regulation S-T Rule
101(b)(1): ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by
Regulation
S-T Rule 101(b)(7): ☐
EXHIBIT INDEX
|
Exhibit
No.
1
|
Description
Argo
2024 Interim Results dated 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
|
|
Tennyson Securities
|
|
|
Corporate
Broker
Peter Krens
|
+44 207 186 9030
|
|
Fortified Securities
|
|
|
Joint
Broker
Guy Wheatley, CFA
|
+44 74930989014
guy.wheatley@fortifiedsecurities.com
|
|
Tancredi Intelligent Communication
UK &
Europe Media Relations
|
argoblock@tancredigroup.com
|
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.
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
30 June 2024 (unaudited)
|
Period ended
30 June 2023 (unaudited)
|
|
|
$'000
|
$'000
|
|
Taxation charge in the financial
statements
|
340
|
-
|
|
|
|
Period ended
30 June 2024 (unaudited)
|
Period ended
30 June 2023 (unaudited)
|
|
|
|
$'000
|
$'000
|
|
|
|
|
|
|
Loss
before taxation
|
|
(32,394)
|
(18,563)
|
|
Expected tax recovery based on a weighted average of 25%
(2023 - 25%) (UK, US and
Canada)
|
|
(8,099)
|
(4,641)
|
|
|
|
|
|
|
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
30 June 2024 (unaudited)
|
As
at
31 December 2023
(audited)
|
|
|
$'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
30 June 2024
(unaudited)
$'000
|
Year ended
31 December 2023
(audited)
$'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
30 June 2024 (unaudited)
|
As at
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
30 June 2024 (unaudited)
$'000
|
As at
31 December 2023 (audited)
$'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
30 June 2024 (unaudited)
$'000
|
As at
31 December 2023 (audited)
$'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
- Issued
Debt - bonds
|
6,484
|
25,599
|
|
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.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
Date:
28 August, 2024
|
ARGO BLOCKCHAIN PLC
By:
/s/ Jim
MacCallum
Name:
Jim MacCallum
Title:
Chief Financial Officer
|
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