TIDMARB
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
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 Three Months Ended March 31, Three Months Ended March 31, Six Months
share 2023 2022 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 - 2,742 -
contingent
consideration
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
Jonny Franklin-Adams
Seamus Fricker
Joint Corporate Broker
Sunila de Silva +44 207 220 0500
------------------------------
Tennyson Securities
------------------------------
Joint Corporate Broker
Peter Krens +44 207 186 9030
------------------------------
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
.
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