TIDMARB

RNS Number : 9297H

Argo Blockchain PLC

09 August 2021

Press release

09 August 2021

Argo Blockchain PLC

("Argo" or "the Company")

Interim Half Year Results 2021

Update on Mining Infrastructure

Argo Blockchain, a global leader in cryptocurrency mining (LSE: ARB), is pleased to announce its results for the six months to 30 June 2021.

Financial highlights

-- Revenues increase by 180% to GBP31.1m reflecting increase in production coupled with an increase in Bitcoin prices (H1 2020: GBP11.1m)

-- EBITDA* increased by 332% to GBP16.0m (H1 2020: GBP3.7m) despite a GBP6.2m downward revaluation of digital assets and a GBP1.6m share based payment charge

   --    M ining margin of 81% (H1 2020: 39%) 
   --    Pre-tax profit of GBP10.7m (H1 2020: GBP0.5m) 

-- To tal number of Bitcoin and Bitcoin Equivalent mined during H1 2020 was 883 BTC (2020: 1,669). The change from the previous period was mainly due to the halving of May 2020

-- To tal number of Bitcoin and Bitcoin Equivalent held as at 30 June 2021 were 1,268 BTC, an increase from 127 Bitcoin and Bitcoin Equivalent as at 30 June 2020

*Earnings before interest, tax, depreciation and amortisation

Operating highlights

-- Mining capacity increased from 685 petahash as at 31 December 2020 to 1,075 petahash as at 30 June 2021

Post period end

   --      Broken ground at the Texas facility 

-- In late June and July, significant changes in mining difficulty led to a substantial decrease in the global hashrate, resulting in an increase in the number of Bitcoin Argo mines with the same hashpower

   --      New board appointments 

Commenting on the results, Peter Wall, chief executive and interim chairman, said: " We have capitalised on a change in market conditions in the first half of 2021 to deliver strong growth in both revenues and profits, demonstrating that our smart growth strategy is delivering value to shareholders."

Update on Mining Infrastructure

The Company announces an update to its 22 February 2021 announcement relating to the expansion of the Company's mining capacity in Q4 2021 and 2022. As previously announced, Argo committed to an initial purchase of US$8 million of mining rigs from ePIC Blockchain Technologies ("ePIC"), with delivery expected to begin in Q4 2021. However, based on limitations of technology, Argo and ePIC have agreed to amend the agreement. Under the amended agreement, the initial purchase order was cancelled and, at Argo's option, $5 million deposited with ePIC, in whole or in part, can be applied to the purchase of ePIC mining machines or ePIC common stock or repaid in full.

This announcement contains inside information.

For further information please contact:

 
 Argo Blockchain 
 Peter Wall                            via Tancredi +44 203 434 2334 
  Chief Executive 
                                      ------------------------------ 
 finnCap Ltd 
                                      ------------------------------ 
 Corporate Finance 
  Jonny Franklin-Adams 
  Tim Harper 
 
  Joint Corporate Broker 
  Sunila de Silva                      +44 207 220 0500 
                                      ------------------------------ 
 Tennyson Securities 
                                      ------------------------------ 
 Joint Corporate Broker 
  Peter Krens                          +44 207 186 9030 
                                      ------------------------------ 
 OTC Markets 
                                      ------------------------------ 
 Jonathan Dickson                      +44 204 526 4581 
  jonathan@otcmarkets.com               +44 7731 815 896 
                                      ------------------------------ 
 Tancredi Intelligent Communication 
  UK & Europe Media Relations 
                                      ------------------------------ 
 Emma Valgimigli 
  Emma Hodges                          +44 7727 180 873 
  Salamander Davoudi                    +44 7861 995 628 
  argoblock@tancredigroup.com           +44 7957 549 906 
                                      ------------------------------ 
 

About Argo:

Argo Blockchain plc is a global leader in cryptocurrency mining with one of the largest and most efficient operations powered by clean energy. The Company is headquartered in London, UK and its shares are listed on the Main Market of the London Stock Exchange under the ticker: ARB and on the OTCQX Best Market in the United States under the ticker: ARBKF.

Interim Management Report

Argo entered 2021 with a clear business strategy of "smart growth" and its mining operations continue to gain momentum as new production capacity was brought onstream. The Group's mining margin has remained strong during the first half of 2021, averaging 81 per cent over the period.

In the first quarter, the Group conducted two fundraisings which together generated GBP49.2m in new equity. These fundraisings enabled the Group to invest in new machines and fund working capital requirements as well as a strategic investment in Pluto Digital PLC ("Pluto") and an acquisition of DPN LLC to acquire the Helios project and land in West Texas, as described below. The Group has been able to grow its crypto holding to 1,268 Bitcoin and equivalents at the end of June 2021 as a result of the cash generated from these placements and the monies collected from options and warrants exercises, which helped to fund working capital.

In March, the Group acquired the Helios project - 160 acres of land in West Texas primed for the development of a cryptocurrency data centre - through the acquisition of DPN LLC. The land has access to up to 800 megawatts (MW) of power, primarily from renewable sources. Post period end, the Group has broken ground at this facility and expects the first stage of this development, a 200MW Facility, to be completed in the first half of 2022.

The Group is mindful of its carbon footprint and has previously committed to announce its climate action plan to achieve the Group's goal of becoming a net zero greenhouse gas (GHG) company. Alongside this plan, in March the Group announced "Terra Pool", a Bitcoin mining pool powered by clean energy, with the aim of expediting the shift from conventional power to clean energy and reducing the impact of Bitcoin mining on the environment. The mining pool will provide a platform for cryptocurrency miners to produce Bitcoin and other cryptocurrencies in a sustainable way.

In two separate investment rounds completed in early 2021 Argo invested a total of GBP8.4m in Pluto. Pluto is a crypto technology company that is exploring solutions to connect Web 3.0 technologies to the global economy. Pluto is investing in, incubating and advising digital asset projects based on decentralised technologies (DeTech), decentralised finance (DeFi) and networks such as Ethereum and Polkadot. Pluto also plans to support the operation of proof-of-stake networks by staking and operating validator nodes.

Having successfully completed a major expansion, the Group's strategic focus is to optimise operations by further increasing efficiency and reducing operating costs and executing the build out of Argo's Texas facility in line with the timeline the Group set out in the first quarter of 2021.

Outlook

I am delighted to report that the shift to profitability we reported in 2020 has continued into 2021 with the Group recording a record profit.

The Group increased EBITDA from GBP3.7m in H1 2020 to GBP16.0m in H1 2021. Profit before tax amounted to GBP10.7m against GBP0.5m in the comparable period while earnings attributable to shareholders amounted to GBP7.21m, up from GBP523,000 in 2020.

The results also reflect Argo's strategy to pursue "smart growth", which entailed considered investment in its mining infrastructure when hardware prices were competitive, while enhancing mining efficiency through optimisation of machine performance and energy costs. These factors enabled the Group to manage its cash resources through a highly volatile pricing environment for Bitcoin, which impacted mining margins and difficulty rates across the sector for much of the period. As we move to an owned and operated model, we expect hosting costs to reduce and provide the potential to enhance margins further.

We believe the gains that began late last year mark an important milestone in the cryptocurrency and blockchain industry due to a series of positive developments that point to increasing acceptance of cryptocurrencies, in particular Bitcoin, as a new asset class, a means of exchange and store of value by corporate and institutional investors as well as consumers.

During the period, the cryptocurrency mining sector has also experienced a significant shock due to a change in the regulation of mining in China, leading to an unprecedented drop in global hashrate and mining difficulty. We believe Argo is well positioned to capitalise on the emerging trends in the market through its large and highly efficient mining infrastructure and experience. The Group will also continue to manage growth through the expansion of the size and quality of its mining infrastructure, as well as strategic opportunities that leverage its leading market position.

In March 2021, we acquired 160 acres of land in west Texas, where we are building a new hosting facility with up to 200MW of clean energy at low prices, which will give us the capacity to establish our flagship mining centre in the United States by the first quarter of 2022 and access to up to a further 600MW of power for future development.

Our strategic priority in 2021 remains to focus on continued "smart growth", to further expand our mining capacity and our facilities whilst investigating new and innovative opportunities in emerging cryptocurrencies and addressing our environmental responsibilities. We will focus on increasing returns from our installed base by optimising hardware performance to reduce power consumption from clean power, improve machine uptime and maintain among the best mining margins in the sector.

On behalf of the Board, I would like to thank all shareholders for their support and take this opportunity to welcome those from North America who have become Argo investors following our hugely successful commencement of trading on the OTC market in early 2021.

Post the period end, we announced the board appointments of Colleen Sullivan, Maria Parella and Sarah Gow as independent non-executive directors, and of Alex Appleton as an executive director. We also announced the resignation of executive chairman, Ian Macleod, and non-executive directors, James Savage and Marco D'Attanasio. I would like to thank them for their contribution during the period and look forward to welcoming Argo's new board members for the period ahead. Their experience within the cryptocurrency, technology and finance sectors will be invaluable as Argo continues to progress as a global leader in cryptocurrency mining.

Peter Wall

CEO & Interim Executive Chairman

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, as adopted by the EU; and

-- gives a true and fair view of the assets, liabilities, financial position and profit/loss of the Group; and

-- the Interim Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure 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 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:

Peter Wall

CEO & Interim Executive Chairman

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                                                    Period ended   Period ended 
                                                         30 June        30 June 
                                                            2021           2020 
                                                     (unaudited)    (unaudited) 
                                             Note            GBP            GBP 
------------------------------------------  -----  -------------  ------------- 
 
 Revenues                                     5       31,085,716     11,124,455 
 Direct costs                                 11    (10,364,842)    (9,697,116) 
 Crypto asset fair value movement             14     (6,188,438)      (244,827) 
 
 Gross profit                                         14,532,436      1,182,512 
------------------------------------------  -----  -------------  ------------- 
 
 Operating costs and expenses 
 Consulting fees                                       (304,379)      (177,328) 
 Professional fees                                     (415,066)      (171,514) 
 General and administrative                          (1,136,755)      (183,708) 
 Share based payment                                 (1,567,608)              - 
 
 Operating profit                                     11,108,628        649,962 
------------------------------------------  -----  -------------  ------------- 
 
 
 Interest expense                                      (410,804)      (126,914) 
 Interest income                                               -             26 
 
 Profit before taxation                               10,697,824        523,074 
------------------------------------------  -----  -------------  ------------- 
 
 Income tax expense                           7      (3,483,827)              - 
 
 Profit after taxation                                 7,213,997        523,074 
------------------------------------------  -----  -------------  ------------- 
 
   Other comprehensive income 
 Items which may be subsequently 
  reclassified to profit or loss: 
 
        *    Currency translation reserve              (361,029)      (431,746) 
 
 Total other comprehensive income, 
  net of tax                                           (361,029)      (431,746) 
------------------------------------------  -----  -------------  ------------- 
 
 Total comprehensive income attributable 
  to the equity holders of the 
  Company                                              6,852,968         91,328 
------------------------------------------  -----  -------------  ------------- 
 
 Earnings per share attributable 
  to equity owners (pence) 
 Basic earnings per share                     6             1.9p           0.2p 
 Diluted earnings per share                   6             1.8p           0.2p 
 

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

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 
                                                             As at         As at 
                                                           30 June   31 December 
                                                              2021          2020 
                                                       (unaudited)     (audited) 
                                         Note                  GBP           GBP 
--------------------------------------  -----------  -------------  ------------ 
 
 ASSETS 
 Non-current assets 
 Investments at fair value through 
  profit or loss                             0             219,360     1,393,303 
 Investments accounted for using the 
  equity method                              9           8,444,820             - 
 Intangible fixed assets                                   291,270       367,768 
 Property, plant and equipment               11         35,795,266    10,524,232 
 Right of use assets                         11          6,355,192     7,379,387 
 Other receivables                           12                  -     4,114,726 
 Total non-current assets                               51,105,908    23,779,416 
--------------------------------------  -----------  -------------  ------------ 
 
 Current assets 
 Investments at fair value through 
  profit or loss                             0           1,411,376             - 
 Trade and other receivables                 13         39,246,333     2,175,319 
 Digital assets                              14         31,896,437     4,637,438 
 Cash and cash equivalents                              16,047,609     2,050,761 
 Total current assets                                   88,601,755     8,863,518 
--------------------------------------  -----------  -------------  ------------ 
 
 Total assets                                          139,707,663    32,642,934 
--------------------------------------  -----------  -------------  ------------ 
 
 LIABILITIES STOCKHOLDERS EQUITY 
 Equity 
                                           Error! 
                                          Reference 
                                           source 
                                             not 
 Share capital                             found.          381,832       303,436 
                                           Error! 
                                          Reference 
                                           source 
                                             not 
 Share premium                             found.       55,317,447     1,540,497 
 Share based payment reserve                 16            992,324        75,233 
 Foreign currency translation reserve        16             81,823       442,852 
 Accumulated surplus                         16         29,178,867    21,964,870 
--------------------------------------  -----------  -------------  ------------ 
 Total equity                                           85,952,293    24,326,888 
--------------------------------------  -----------  -------------  ------------ 
 
 Current liabilities 
 Trade and other payables                    17         25,210,780       936,659 
 Loans and borrowings                        18         15,383,111             - 
 Income tax                                              3,483,827             - 
 Lease liability                                         3,990,370     3,469,672 
--------------------------------------  -----------  -------------  ------------ 
 Total current liabilities                              48,068,088     4,406,331 
--------------------------------------  -----------  -------------  ------------ 
 
   Non-current liabilities 
 Lease liability                                         1,654,918     3,909,715 
 Loans and borrowings                        18          4,032,364             - 
 Total liabilities                                      53,755,370     8,316,046 
--------------------------------------  -----------  -------------  ------------ 
 
 Total equity and liabilities                          139,707,663    32,642,934 
--------------------------------------  -----------  -------------  ------------ 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                           Share   Share premium   Foreign currency   Accumulated        Total 
                         capital                        translation      surplus/ 
                                                            reserve     (deficit) 
                             GBP             GBP                GBP           GBP          GBP 
---------------------  ---------  --------------  -----------------  ------------  ----------- 
 Balance at 
  1 January 
  2020                   293,750      25,252,288            178,240   (4,986,336)   20,737,942 
 Total comprehensive 
  profit for 
  the period: 
 Profit for 
  the period                   -               -                  -       523,074      523,074 
 Other comprehensive 
  income                       -               -          (431,746)             -    (431,746) 
---------------------  ---------  --------------  -----------------  ------------  ----------- 
 Total comprehensive 
  income for 
  the period                   -               -          (431,746)       523,074       91,328 
---------------------  ---------  --------------  -----------------  ------------  ----------- 
 Transactions 
  with equity 
  owners: 
 Issue of share                -               -                  -             -            - 
  capital net 
  of issue costs 
---------------------  ---------  --------------  -----------------  ------------  ----------- 
 Balance at 
  30 June 2020           293,750      25,252,288          (253,506)   (4,463,262)   20,829,270 
---------------------  ---------  --------------  -----------------  ------------  ----------- 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                           Share   Share premium   Foreign currency   Share based   Accumulated        Total 
                         capital                        translation       payment      surplus/ 
                                                            reserve       reserve     (deficit) 
                             GBP             GBP                GBP           GBP           GBP          GBP 
---------------------  ---------  --------------  -----------------  ------------  ------------  ----------- 
 Balance at 
  1 January 2021         303,436       1,540,497            442,852        75,233    21,964,870   24,326,888 
 Total comprehensive 
  income for 
  the period: 
 Profit for 
  the period                   -               -                  -             -     7,213,997    7,213,997 
 Other comprehensive 
  income                       -               -          (361,029)             -             -    (361,029) 
---------------------  ---------  --------------  -----------------  ------------  ------------  ----------- 
 Total comprehensive 
  income for 
  the period                   -               -          (361,029)             -     7,213,997    6,852,968 
---------------------  ---------  --------------  -----------------  ------------  ------------  ----------- 
 Transactions 
  with equity 
  owners: 
 Common stock 
  to be issued*               71          11,296                  -             -             -       11,367 
 Issue of common 
  stock net of 
  issue costs             78,235      53,765,654                  -             -             -   53,843,889 
 Stock based 
  compensation 
  charge                       -               -                  -     1,567,608             -    1,567,608 
 Common stock 
  options/warrants 
  exercised                    -               -                  -     (567,523)       567,523            - 
 Common stock 
  options/warrants 
  lapsed/expired               -               -                  -      (82,994)        82,994            - 
---------------------  ---------  --------------  -----------------  ------------  ------------  ----------- 
 Total transactions 
  with equity 
  owners                  78,306      53,776,950                  -       917,091       650,517   55,422,864 
---------------------  ---------  --------------  -----------------  ------------  ------------  ----------- 
 
 Balance at 
  30 June 2021           381,832      55,317,447             81,823       992,324    29,178,867   85,952,293 
---------------------  ---------  --------------  -----------------  ------------  ------------  ----------- 
 

*Shares to be issued relate to share options exercised and paid up pre period end, however the shares were formally issued post period end.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 
                                                      Period ended   Period ended 
                                                           30 June        30 June 
                                                              2021           2020 
                                                       (unaudited)    (unaudited) 
                                               Note            GBP            GBP 
--------------------------------------------  -----  -------------  ------------- 
 Cash flows from operating activities 
 Operating profit                                       11,108,628        649,962 
 Adjustments for: 
 Depreciation/Amortisation                               4,869,638      3,012,462 
 Foreign exchange movements                                 25,087      (431,746) 
 Share based payment expense                             1,567,608              - 
 Working capital changes: 
 (Increase)/decrease in trade and other 
  receivables                                   13     (2,092,532)        534,947 
 Increase/(decrease) in trade and other 
  payables                                      17      15,245,263      (167,503) 
 (Increase)/decrease in digital assets          14    (34,758,295)        203,045 
 Fair value change in digital assets            14       6,407,446      (104,781) 
--------------------------------------------  -----  -------------  ------------- 
 Net cash flow from operating activities                 2,372,843      3,696,386 
--------------------------------------------  -----  -------------  ------------- 
 
 Investing activities 
 Acquisition of subsidiaries, net of cash                (271,732)              - 
  acquired 
 Investment in associate                        9      (7,352,970)              - 
 Other investments                              8        (219,361)              - 
 Purchase of tangible fixed assets              11     (6,883,195)    (1,617,024) 
 Mining equipment prepayments                   13    (35,471,499)              - 
 Interest received                                               -             27 
--------------------------------------------  -----  -------------  ------------- 
 Net cash used in investing activities                (50,198,757)    (1,619,997) 
--------------------------------------------  -----  -------------  ------------- 
 
 Financing activities 
 Increase/(decrease) in loans                   8       14,375,021      (797,455) 
 Lease payments                                        (1,734,098)              - 
 Interest paid                                           (410,803)      (126,914) 
 Proceeds from shares issued                            49,592,641              - 
--------------------------------------------  -----  -------------  ------------- 
 Net cash generated from/used in) financing 
  activities                                            61,822,761      (924,369) 
--------------------------------------------  -----  -------------  ------------- 
 
 Net increase in cash and cash equivalents              13,996,847      1,155,020 
--------------------------------------------  -----  -------------  ------------- 
 Cash and cash equivalents at beginning 
  of period                                              2,050,761        161,342 
 Cash and cash equivalents at end of period             16,047,608      1,316,362 
--------------------------------------------  -----  -------------  ------------- 
 
 
 

Material non-cash movements:

-- During the period, the Company assumed the mortgages on two properties from GPUone with a value of GBP5,040,454. Consideration of the acquisition was made from a forgiveness of prepayments made totalling GBP4,664,113. Additionally, the Company used common stock as payment to acquire DPN LLC, part of which was issued during the period amounting to GBP3,261,990, and a further GBP9,025,857 which is due to be paid in common stock and included within liabilities.

-- During the period, the Company paid a total of 75,000 Polkadot, which had a value of GBP1,091,850, in respect of the acquisition of shares in Pluto Digital PLC.

NOTES TO THE CONDENSED 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 Room 4, 1st Floor 50 Jermyn Street, London, United Kingdom, SW1Y 6LX.

On 4 March 2021 the Group acquired 100% of the share capital of DPN LLC Inc.

On 11 May 2021 the Group acquired 100% of the share capital of 9377-2556 Quebec Inc and 9366-5230 Quebec Inc.

The principal activity of the group is that of crypto asset mining.

   2.             BASIS OF PREPARATION 

The condensed consolidated interim financial statements for the six months ended 30 June 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and presented in sterling. They do not include all of 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 2020, which have been prepared in accordance with International Financial Reporting Standards endorsed by the European Union 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 2020.

The Group has reclassified the 2020 comparative for the fair value movement in digital assets. This is now included in the calculation of gross profit, whereas previously in 2020 this was included in operating profit/(loss). The reclassification into gross profit in 2021 more accurately reflects the nature and management of these assets as inventory for commodity broker-traders.

   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 as set out below.

Associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The Group's investment in associates includes goodwill identified on acquisition.

The Group's share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. Dilution gains and losses arising in investments in associates are recognised in the income statement.

Business Combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds and the redemption value is recognised in the income statement over the period of the borrowings, using the effective interest method. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of a liability for at least 12 months after the end of the reporting period.

Revenue recognition - Management fees

The Group recognised management fees on the services provided to third parties to management mining machines on their behalf, ensuring the machines are optimised and mining as efficiently as possible. The performance obligation is identified to be the as the services are performed, and thus revenue is recorded over time.

Segmental reporting

The directors consider that the Group has only one significant reporting segment being crypto mining which is fully earned by a Canadian subsidiary.

Tangible fixed assets

Depreciation on the land and buildings is recognised so as to write off the cost or valuation of assets less their residual values over their estimated useful lives of 25 years on a straight line basis. Depreciation is recorded in the Income Statement within general administrative expenses once the asset is brought into use.

Management assesses the useful lives based on historical experience with similar assets as well as anticipation of future events which may impact their useful life.

   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 2021. The adoption of these standards and amendments did not have any material impact on the financial result of 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            Description                                   Effective date for annual 
 or Interpretation                                                 accounting period beginning 
                                                                   on or after 
------------------  --------------------------------------------  ---------------------------- 
IAS 1               Amendments - Presentation and Classification                1 January 2023 
                     of Liabilities as Current or Non-current 
IAS 16              Amendments - Property, Plant and Equipment                  1 January 2022 
IAS 37              Provisions, Contingent Liabilities                          1 January 2022 
                     and Contingent Assets 
IAS 8               Amendments - Definition of Accounting                       1 January 2023 
                     Estimates 
IAS 1               Amendments - Disclosure of Accounting                       1 January 2013 
                     Policies 
IFRS 3              Amendments - Business Combinations                          1 January 2022 
                     - Conceptual Framework 
IFRS                Annual Improvements to IFRS Standards                       1 January 2022 
                     2018-2020 
------------------  --------------------------------------------  ---------------------------- 
 

The Group has not early adopted any of the above standards and intends to adopt them when they become effective.

   5.             REVENUES 
 
                                                   Period ended        Period ended 
                                                        30 June             30 June 
                                               2021 (unaudited)    2020 (unaudited) 
                                                            GBP                 GBP 
------------------------------------------   ------------------  ------------------ 
 Crypto currency mining - worldwide                  29,937,270          11,124,455 
 Crypto currency management fees - United             1,148,446                   - 
  States 
 Total revenue                                       31,085,716          11,124,455 
-------------------------------------------  ------------------  ------------------ 
 
 

Due to the nature of Crypto currency mining, it is not possible to provide a geographical split of the revenue stream.

Crypto currency mining revenues are recognised at a point in time.

Crypto currency management fees are services recognised over time.

   6.             EARNINGS PER SHARE 

The basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of shares in issue.

 
                                                              Period ended   Period ended 
                                                                   30 June        30 June 
                                                          2021 (unaudited)           2020 
                                                                              (unaudited) 
 Net profit for the period attributable to 
  ordinary equity holders from continuing operations 
  (GBP)                                                          7,213,997        523,074 
 Weighted average number of ordinary shares 
  in issue                                                     381,832,335    293,750,000 
 Basic earnings per share for continuing operations 
  (pence)                                                              1.9            0.2 
-----------------------------------------------------  -------------------  ------------- 
 
 Net profit for the period attributable to 
  ordinary equity holders for continuing operations 
  (GBP)                                                          7,213,997        523,074 
 Diluted number of ordinary shares in issue                    393,091,232    350,098,603 
-----------------------------------------------------  -------------------  ------------- 
 Diluted earnings per share for continuing 
  operations (pence)                                                   1.8            0.2 
-----------------------------------------------------  -------------------  ------------- 
 
   The Group has in issue 11,258,897 warrants and options at 30 June 
   2021 (2020: 51,462,453). 
 
   7. TAXATION 
 
                                                       Period ended   Period ended 
                                                       30 June 2021        30 June 
                                                        (unaudited)           2020 
                                                                       (unaudited) 
                                                                GBP            GBP 
   --------------------------------------------      --------------  ------------- 
    Income tax expense - foreign tax                      3,483,827              - 
    Deferred tax expense                                          -              - 
   --------------------------------------------      --------------  ------------- 
    Taxation charge in the financial statements           3,483,827              - 
   --------------------------------------------      --------------  ------------- 
 

No deferred tax asset has been recognised in respect of UK tax losses carried forward on the basis that there is insufficient certainty over the level of future profits to utilise against this amount.

   8.             INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS 
 
 
 Non-current                                 As at 30 June   As at 31 December 
                                                      2021                2020 
                                               (unaudited)           (audited) 
------------------------------------------  --------------  ------------------ 
 
 At 1 January 2021 and 1 January 2020            1,393,303              58,140 
 Additions                                         219,360           1,335,676 
 Foreign exchange movement                          18,073               (513) 
 Transferred to current investments            (1,411,376)                   - 
------------------------------------------  --------------  ------------------ 
 At 30 June 2021 and 31 December 2020              219,360           1,393,303 
------------------------------------------  --------------  ------------------ 
 
   Current 
------------------------------------------  --------------  ------------------ 
 At 1 January 2021 and 1 January 2020                    -                   - 
 Transferred from non-current investments        1,411,376                   - 
------------------------------------------  --------------  ------------------ 
 At 30 June 2021 and 31 December 2020            1,411,376                   - 
------------------------------------------  --------------  ------------------ 
 
 

Non-current investments include:

Luxor Technology Corporation

On 7 December 2020 the Group entered into an agreement to acquire GBP73,427 (USD$100,000) of shares in Luxor Technology Corporation. On 7 May 2021, following a second round of funding which the Group did not participate in, this prepayment became an investment representing less than 1% of the Series A-1 Preferred Stock and voting rights.

WonderFi Technologies Inc.

On 3 June 2021 the Group invested GBP145,933 (CDN$250,000) of WonderFi Technologies Inc. (formerly DeFi Ventures Inc.) an investment representing less than 1% of the Ordinary shares and voting rights.

Current investments include:

GPUone Holding Inc investment in Class A shares. This investment represents an interest of approximately 10% of GPUone Holding Inc. as at 30 June 2021.

   9.             INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD 
 
                                      As at 30          As at 31 
                                     June 2021          December 
                                   (unaudited)    2020 (audited) 
 
                                           GBP               GBP 
---------------------------      -------------  ---------------- 
 Opening balance                             -                 - 
 Acquired during the period          8,444,820                 - 
 Total Associates                    8,444,820                 - 
---------------------------      -------------  ---------------- 
 

Set out below are the associates of the Group as at 30 June 2021, which, in the opinion of the Directors, significant influence is held. The associate as listed below has share capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is also their principal place of business.

Nature of investment in associates 2021 and 2020:

 
 Name of entity   Address of the        % of ownership   Nature of relationship   Measurement 
                   registered office     interest                                  method 
 Pluto Digital    Hill Dickinson        24.65%           Refer below              Equity 
  PLC              LLP, 8th Floor 
                   The Broadgate 
                   Tower, 20 Primrose 
                   Street, London, 
                   United Kingdom, 
                   EC2A 2EW 
 

On 3 February 2021 Argo invested in Pluto Digital PLC ("Pluto"), a crypto venture capital and technology company. The investment was satisfied with 75,000 Polkadot with a fair value at that date of GBP1,091,850. Further to this in a second round of funding the Group invested an additional GBP7,352,970 on 8 March 2021.

Argo owns 24.65% of the total share capital and voting rights of the business and is entitled to nominate one director to the Pluto Board of Directors..

Pluto is a crypto technology company that is exploring solutions to connect Web 3.0 technologies to the global economy. Pluto plans to invest in, incubate and advise digital asset projects based on decentralised technologies (DeTech), decentralised finance (DeFi) and networks such as Ethereum and Polkadot. Pluto also plans to support the operation of proof-of-stake networks by staking and operating validator nodes. Pluto represents a strategic partnership for the Group as it diversifies its activities in the crypto space.

Pluto Digital PLC is a private company and there is no quoted market price available for its shares.

There are no contingent liabilities relating to the Group's interest in the associates.

No summarised financial information for the period ended 30 June 2021 has been made available by Pluto to the Group and therefore no share of the profit or loss of the associate has been recognised. The directors do not believe their share of profit or loss for the period would be material to the Group.

   10.          BUSINESS COMBINATION 

GPUone subsidiaries acquired from GPUone Holding Inc.

On 11 May 2021, the Group acquired 100% of the share capital of GPUone 9377-2556 and GPUone 9366-5230 from its shareholder GPUone Holding Inc. for a fair value of GBP4,955,980 consisting of GBP291,867 being satisfied in cash and the balance satisfied by the cancellation of certain prepayments and deposits previously paid by Argo to the vendor. Each of these acquired entities owned and operated a data centre within which Argo was the lead tenant.

The acquisition was performed to enable the Group to obtain control of its hosting facility and power costs across its facilities in Canada. From acquisition on 11 May 2021 to 30 June 2021 the GPUone subsidiaries loss amounted to GBP494,508 which is fully consolidated . No revenue has been generated from these entities since acquisition. Both GPUone entities were dormant up until the date of acquisition, when the relevant assets and liabilities acquired were transferred by GPUone Holding Inc. to these entities immediately prior to acquisition. There is no difference between the amount consolidated within profit and loss and the amount which would have been consolidated if the acquisition happened on 1 January 2021.

The consideration was negotiated on an arm's length basis and primarily on the basis of the valuation of the land and buildings being acquired. The directors attribute the consideration as fair value of the land and buildings with no goodwill being recognised as currently Argo does not anticipate hosting any third parties at these sites in the medium term.

The fair values of the acquisition date assets and liabilities, together with any separately identifiable intangible assets, have been provisionally determined at 30 June 2021 because the acquisition was completed late in the period. The Group is currently obtaining the information necessary to finalise its valuation.

On a GBP1 for GBP1 basis certain deposits and other receivables totalling GBP666,845 were acquired. The directors consider these amounts fully recoverable and as such these receivables have not been impaired.

The following table summarises the consideration paid for the GPUone subsidiaries and the fair value of assets acquired and liabilities assumed at the acquisition date:

Consideration at 11 May 2021

 
                                                  GBP 
 Cash                                         291,867 
 Payment for deposits                         666,845 
 Cancellation of prepayment and deposits    4,664,113 
                                           ---------- 
 Total consideration                        5,622,825 
                                           ---------- 
 

Recognised amounts of identifiable assets acquired, and liabilities assumed

 
                                                    GBP 
 Cash and cash equivalents                       20,135 
 Property, plant and equipment (Note 11)     10,159,851 
 Trade and other receivables                    483,294 
 Property mortgages                         (5,040,455) 
                                           ------------ 
 Total                                        5,622,825 
                                           ------------ 
 

If new information obtained within one year from the acquisition date about the facts and circumstances that existed at the acquisition date identifies adjustment to the above amounts, or any additional provisions identified that existed at the acquisition date, then the acquisition accounting will be revised.

Acquisition of DPN LLC

The acquisition of DPN LLC, effectively comprising the land acquisition in west Texas, has been treated as an asset acquisition in these condensed consolidated financial statements.

   11.          TANGIBLE FIXED ASSETS 
 
 Group                         Right          Mining   Land & buildings      Improvement         Total 
                              of use    and Computer                       to Datacentre 
                              Assets       Equipment 
                                 GBP             GBP                GBP              GBP           GBP 
-----------------------  -----------  --------------  -----------------  ---------------  ------------ 
 Cost 
 At 1 January 2021         7,379,387      17,864,347                  -           84,927    25,328,661 
 
 Foreign exchange 
  movement                         -       (132,458)                  -                -     (132,457) 
 Acquisition through 
  business combination             -         163,416          9,996,435                     10,159,851 
 Additions                         -               -      19,012,587                   -    19,012,587 
 At 30 June 2021           7,379,387      17,895,305         29,009,022           84,927    54,368,642 
-----------------------  -----------  --------------  -----------------  ---------------  ------------ 
 
 Depreciation and 
  impairment 
 At 1 January 2021                 -       7,377,050                  -           47,992     7,425,042 
 Depreciation charged 
  during the period        1,024,915       3,723,527             35,155            9,544     4,793,141 
 At 30 June 2021           1,024,195      11,101,297             35,155           57,536    12,218,183 
-----------------------  -----------  --------------  -----------------  ---------------  ------------ 
 
 Carrying amount 
-----------------------  -----------  --------------  -----------------  ---------------  ------------ 
 At 1 January 2021         7,379,387      10,487,297                  -           36,935    17,903,619 
-----------------------  -----------  --------------  -----------------  ---------------  ------------ 
 At 30 June 2021           6,355,192       6,794,008         28,973,867           27,391    42,150,459 
-----------------------  -----------  --------------  -----------------  ---------------  ------------ 
 
 

No depreciation has been charged on the Texas land and buildings additions as they are yet to come into use.

   12.          OTHER RECEIVABLES (NON-CURRENT) 
 
                                         As at 30   As at 31 December 
                                        June 2021      2020 (audited) 
                                      (unaudited) 
 
                                              GBP                 GBP 
--------------------------------    -------------  ------------------ 
 Deposits 
 Brought forward                        4,114,726           4,151,400 
 Exchange movement                              -            (36,674) 
 Cancelled on acquisition of          (4,114,726)                   - 
  GPUone subsidiaries 
--------------------------------    -------------  ------------------ 
 Total carrying amount of other 
  receivables                                   -           4,114,726 
----------------------------------  -------------  ------------------ 
 

This deposit was used as part of the acquisition of the GPUone Holding Inc subsidiaries detailed in note 10.

   13.          TRADE AND OTHER RECEIVABLES 
 
                                            As at 30          As at 31 
                                           June 2021          December 
                                         (unaudited)    2020 (audited) 
 
                                                 GBP               GBP 
-----------------------------------    -------------  ---------------- 
 Mining equipment prepayments             35,471,499                 - 
 Prepayments and other receivables         1,957,977           811,684 
 Other taxation and social 
  security                                 1,816,857         1,363,635 
 Total trade and other receivables        39,246,333        23,227,957 
-------------------------------------  -------------  ---------------- 
 

Mining equipment prepayments consist of payments made and due on mining equipment due to arrive in Q3 and Q4 2021. Payments to ePIC ASIC Asia Limited comprise GBP3,429,826 and the balance of GBP32,041,673 was paid to Core Scientific Inc in advance of machine purchases to be received after the period end.

In February 2021, the Group entered into an agreement with ePIC (a designer and manufacturer of mining machines), which gives us priority access to next generation mining machines on a non-exclusive basis. As part of the agreement, the Group will assist in the development and testing of future products and will provide space and capacity at our Mirabel facility for ePIC's research and innovation engineering teams to assist in the development of future mining machines. In August 2021, based on limitations of technology, the Group and ePIC agreed to amend their agreement. Under the amended agreement, the initial purchase order was cancelled and, at the Group's option, $5million deposited with ePIC, in whole or part, can be applied to the purchase of ePIC mining machines or ePIC common stock or repaid in full.

Other taxation and social security consist of purchase tax recoverable in the UK and Canada. GST and QST debtors are greater than 90 days as at 30 June 2021.

The directors consider that the carrying amount of trade and other receivables is equal to their fair value.

   14.          DIGITAL ASSETS 
 
 Group                                               Period ended     Year ended 
                                                     30 June 2021    31 December 
                                                                            2020 
                                                      (unaudited)      (audited) 
                                                                             GBP 
                                                              GBP 
-------------------------------------  ----  ----  --------------  ------------- 
 At 1 January 2021 and 2020                             4,637,438      1,040,964 
 
 Additions 
 Crypto assets mined                                   29,937,270     18,947,908 
 Crypto asset purchased and received                    4,383,010      9,896,641 
-------------------------------------------------  --------------  ------------- 
 Total additions                                       34,320,280     28,844,549 
 
 Disposals 
 Crypto assets sold                                   (1,091,850)   (27,318,471) 
-------------------------------------------------  --------------  ------------- 
 Total disposals                                      (1,091,850)   (27,318,471) 
 
 Fair value movements 
 Loss on futures                                                -      (258,326) 
 Movements on crypto asset sales                          219,008       (13,816) 
 Movements on crypto assets held 
  at the period end                                   (6,407,446)      2,342,538 
-------------------------------------------------  --------------  ------------- 
 Total fair value movements                           (6,188,439)      2,070,396 
 
 At 30 June 2021 & 31 December 
  2020                                                 31,896,437      4,637,438 
-------------------------------------------------  --------------  ------------- 
 
 

The Group mined crypto assets during the period, which are recorded at fair value on the day of acquisition. Movements in fair value between acquisition (date mined) and disposal (date sold), and the movement in fair value in crypto assets held at the year end, are recorded in profit or loss. The Group has used 795 Bitcoin as collateral for a loan see note 18. Post period end a further 86 Bitcoin were used as collateral for this loan.

At the period end, the Group held crypto assets representing a fair value of GBP31,896,437. The breakdown of which can be seen below:

 
 As at 30 June 2021 (unaudited) 
 Crypto asset name                  Coins/tokens   Fair value 
                                                          GBP 
--------------------------------   -------------  ----------- 
 Bitcoin - Bitcoin                           471   11,700,276 
 Bitcoin - held as collateral                795   19,748,876 
 Ethereum - ETH                              254      394,963 
 Alternative coins                                     52,322 
 At 30 June 2021                                   31,896,437 
---------------------------------  -------------  ----------- 
 
 
 As at 31 December 2020 (audited) 
 Crypto asset name                           Coins/tokens   Fair value 
                                                                   GBP 
-----------------------------------------   -------------  ----------- 
 Bitcoin - Bitcoin                                    183    3,937,344 
 Polkadot - DOT                                    75,000      515,176 
 Ethereum - ETH                                       254      138,257 
 Binance Coin - BNB                                 1,243       34,260 
 USDT,USDC & Tether (stable coin - fixed 
  to USD)                                          26,509       19,553 
 Alternative coins                                      -          496 
 At 31 December 2020                                         4,637,438 
------------------------------------------  -------------  ----------- 
 
   15.          ORDINARY SHARES 
 
                                                     As at 30          As at 31 
                                                    June 2021          December 
                                                  (unaudited)    2020 (audited) 
                                                          GBP               GBP 
--------------------------------------------   --------------  ---------------- 
 Ordinary share capital 
 Issued and fully paid 
 303,435,997 Ordinary Shares of GBP0.001 
  each                                                303,436           293,750 
 Issued in the period 
 78,325,292 Ordinary Shares of GBP0.001                78,325                 - 
  each 
 Fully paid not yet issued 
 71,046 Ordinary Shares of GBP0.001 each                   71             9,686 
 381,832,335 Ordinary Shares of GBP0.001 
  each                                                381,832           303,436 
---------------------------------------------  --------------  ---------------- 
 
 Share premium 
--------------------------------------------   --------------  ---------------- 
 At beginning of the period                         1,540,497        25,252,288 
 Cancelled during the period                                -      (25,252,288) 
 Issued in the period                              53,765,654                 - 
 Fully paid not yet issued                             11,296         1,540,497 
---------------------------------------------  --------------  ---------------- 
 At the end of period                              55,317,447         1,540,597 
---------------------------------------------  --------------  ---------------- 
 
 
   On 23 November 2020 the High Court of England and Wales confirmed 
   the reduction to the Company's equity through cancellation of the 
   share premium account. This was transferred into retained earnings. 
 
 
   16.          RESERVES 

The following describes the nature and purpose of each reserve:

 
 Reserve                Description 
---------------------  ------------------------------------------------------- 
 Ordinary shares        Represents the nominal value of equity shares 
 Share premium          Amount subscribed for share capital in excess 
                         of nominal value 
 Share based payment    Represents the fair value of options and warrants 
  reserve                granted less amounts transferred on exercise, 
                         lapse or expiry 
 Foreign currency       Cumulative effects of translation of opening 
  translation reserve    balances on non-monetary assets between subsidiary 
                         functional currency (Canadian dollars) and Group 
                         functional and presentational currency (Sterling). 
 Accumulated surplus    Cumulative net gains and losses and other transactions 
                         with equity holders not recognised elsewhere. 
 
 
 
   17.          TRADE AND OTHER PAYABLES 
 
                                            As at 30          As at 31 
                                           June 2021          December 
                                         (unaudited)    2020 (audited) 
                                                 GBP               GBP 
-----------------------------------    -------------  ---------------- 
 Trade payables                           15,233,372           548,293 
 Accruals and other payables                 949,976           271,471 
 Short term loans                                  -           115,924 
 Deferred contingent consideration         9,025,857                 - 
 Other taxation and social 
  security                                     1,575               972 
 Total trade and other payables           25,210,780           936,660 
-------------------------------------  -------------  ---------------- 
 

Within trade payables is GBP10,844,312 (2020: GBPnil) for amounts due for mining equipment not yet received.

The directors consider that the carrying value of trade and other payables is equal to their fair value.

Deferred contingent consideration relates to the acquisition of DPN LLC of which up to a further US$12.5m in shares at a predetermined price being payable if certain contractual milestones related to the facility are fulfilled.

   18.          LOANS AND BORROWINGS 
 
 
 Non-current liabilities                 AS at 30 June         31 December 
                                      2021 (unaudited)      2020 (audited) 
--------------------------------  --------------------  ------------------ 
 
 Assumed mortgage on acquisition             4,032,364                   - 
 Total                                       4,032,364                   - 
--------------------------------  --------------------  ------------------ 
 
   Current liabilities 
--------------------------------  --------------------  ------------------ 
 Short term loan                            14,375,021                   - 
 Assumed mortgage on acquisition             1,008,090                   - 
--------------------------------  --------------------  ------------------ 
 Total                                      15,383,111                   - 
--------------------------------  --------------------  ------------------ 
 
 

The mortgage is secured against the two buildings at Mirabal and Baie-Comeau is repayable over 60 months at an interest rate of 5% per annum.

On 29 June 2021 the Group entered into a loan agreement with Galaxy Digital LP for a facility of US$20 million. The proceeds of the loan will be used, in conjunction with funds raised previously, to continue the build-out the West Texas data centre. The short-term loan is a Bitcoin collateralised loan against 795 Bitcoin initially with a further 86 Bitcoin transferred after the period end. It has a 6-month term and attracts an interest rate of 12.5% per annum.

   19.          FINANCIAL INSTRUMENTS 
 
                                                  As at 30          As at 31 
                                                 June 2021          December 
                                               (unaudited)    2020 (audited) 
                                                       GBP               GBP 
-----------------------------------------    -------------  ---------------- 
 Carrying amount of financial 
  assets 
 Measured at amortised cost 
 
        *    Trade and other receivables           209,498           144,607 
 
        *    Cash and cash equivalents          16,047,608         2,050,761 
 Measured at fair value through 
  profit or loss                                 1,630,736         1,393,303 
 Total carrying amount of financial 
  assets                                        17,887,842         3,588,671 
-------------------------------------------  -------------  ---------------- 
 
 Carrying amount of financial 
  liabilities 
 Measured at amortised cost 
 
        *    Trade and other payables           16,105,765           548,293 
 
        *    Short term loans                   15,383,111           115,924 
                                                 4,032,364                 - 
        *    Long term loans 
 
        *    Lease liabilities                   5,645,239         7,409,387 
 Measured at fair value through                  9,025,857                 - 
  profit or loss 
 Total carrying amount of financial 
  liabilities                                   50,192,336         8,073,604 
-------------------------------------------  -------------  ---------------- 
 

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 2021 and 31 December 2020.

 
                                                    Level      Level 2     Level 3        Total 
                                                        1 
 Assets                                               GBP          GBP         GBP          GBP 
-----------------------------------------------   -------  -----------  ----------  ----------- 
 Financial assets 
  at fair value through 
  profit or loss 
 
        *    Equity holdings                            -            -   1,630,736    1,630,736 
 
        *    Digital assets                             -   31,896,437           -   31,896,437 
 Total at 30 June 
  2021                                                  -   31,896,437   1,630,736   33,527,173 
------------------------------------------------   ------  -----------  ----------  ----------- 
 
 Liabilities 
-----------------------------------------------   -------  -----------  ----------  ----------- 
 Financial liabilities 
  at fair value through 
  profit or loss 
 
        *    Deferred contingent consideration          -            -   9,025,857    9,025,857 
 Total at 30 June 
  2021                                                  -            -   9,025,857    9,025,857 
------------------------------------------------   ------  -----------  ----------  ----------- 
 
 
                             Level     Level 2     Level 3        Total 
                                 1 
 Assets                        GBP         GBP         GBP          GBP 
------------------------   -------  ----------  ----------  ----------- 
 Financial assets 
  at fair value through 
  profit or loss 
 Equity holdings                 -           -   1,393,303    1,393,303 
 Digital assets                  -   4,637,438           -    4,637,438 
 Total at 30 December 
  2020                           -   4,637,438   1,393,303   6,030,741- 
-------------------------   ------  ----------  ----------  ----------- 
 

All financial assets are in 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.

   20.          COMMITMENTS 

The Group's material contractual commitments relate to the master services agreement with Core Scientific, which provides hosting, power and support services. Whilst management do not envisage terminating agreements in the immediate future, it is impracticable to determine monthly commitments due to large fluctuations in power usage and variations on foreign exchange rates, and as such a commitment over the contract life has not been determined.

   21.          RELATED PARTY TRANSACTIONS 

Key management compensation

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 Innovation Labs Inc, amounting to: GBP18,250 paid to POMA Enterprises Limited in respect of fees of Matthew Shaw (Non-executive director); GBP105,600 paid to Vernon Blockchain Inc in respect of fees of Peter Wall (CEO); GBP67,649 paid to Tenuous Holdings Ltd in respect of fees of Ian MacLeod (Executive chairman). During the period, James Savage (NED) was remunerated a gross salary of GBP15,000, Marco D'Attanasio was remunerated gross fees of GBP15,000 and Alex Appleton through Appleton Business Advisors Limited was paid GBP60,000 during the period.

Total director fees and remuneration, paid directly and indirectly, totalled GBP221,499 (2020: GBP250,148).

Pluto Digital PLC

On 3 February 2021 Argo invested in Pluto Digital PLC, a crypto venture capital and technology company. The investment was satisfied with 75,000 Polkadot with a fair value at the time of GBP1,091,850. Further to this in a second round of funding Argo invested a further GBP7,352,970 on 8 March 2021. There have been no transactions with this associate during the period.

Argo owns 24.65% of the total share capital and voting rights of the business and is entitled to nominate one director to the Pluto Board of Directors. In accordance with IAS28 the Group considers the Pluto Digital PLC investment as an associate.

   22.          CONTROLLING PARTY 

There is no controlling party of the Group.

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