TIDMARB
RNS Number : 8357L
Argo Blockchain PLC
18 May 2022
Press Release
18 May 2022
Argo Blockchain PLC
("Argo" or "the Company")
Q1 2022 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 2022. All $
amounts are in United States Dollars ("USD") and all GBP amounts
are in British Pounds ("GBP"), unless otherwise stated.
-- Revenue of $19.5 million (GBP14.9 million) (+9% Y/Y)
-- Produced net income of $2.1 million (GBP1.6 million) and
$19.1 million of Adj. EBITDA (GBP14.5 million of Adj. EBITDA) (+24%
Y/Y)
-- Mined 470 Bitcoin and Bitcoin Equivalents in Q1 2022 (+21% Y/Y)
-- "HODL" of 2,700 Bitcoin and Bitcoin Equivalents as of 31 March 2022
Peter Wall, Chief Executive of Argo, said: "During the first
quarter, our team has focused on working towards the completion of
Helios Phase 1, while continuing to deliver strong performance from
our existing fleet. To be a successful miner you need three
components - power, miners, and capital. We already have a strong
foundation for growth at Helios with our access to 800 MW of power
capacity. This quarter, we improved our access to capital by
establishing a financing relationship with NYDIG and strengthened
our access to miners through our supply agreement with Intel for
their new Blockscale ASIC chips. This will allow us to build
custom-designed mining machines specifically to Argo's
specifications and built for use in immersion-cooling
technology.
"As mining operations begin this month at Helios, we are excited
to be delivering on our commitment to shareholders to build a
best-in-class Bitcoin mining facility."
Q1 2022 Financial Performance
-- The Company generated $19.5 million (GBP14.9 million) of
revenue in the quarter, a 9% increase over the same period in 2021.
This increase was primarily driven by Argo's growth in hash rate
throughout 2021 and partially offset by lower Bitcoin prices in Q1
2022.
-- The Company produced net income of $2.1 million (GBP1.6 million).
-- Argo achieved Adj. EBITDA of $19.1 million (GBP14.5 million),
an increase of 24% over the same period in 2021.
-- Total Bitcoin mined in the quarter increased by 21% to 470
Bitcoin and Bitcoin Equivalents (together, "BTC"), compared to 387
BTC mined in the same period in 2021.
-- The Company's mining margin for the first quarter was 76%,
with an average direct cost per BTC mined of $9,779 (GBP7,448).
-- The Company ended the quarter with 2,700 BTC in its HODL;
this, combined with a cash balance of $11.9 million (GBP9.1
million), provides the Company with ample liquidity.
Q1 2022 and Recent Operational Highlights
-- The Helios facility was energized and commenced Bitcoin
mining activities on 5 May 2022. The Company held a grand opening
ceremony to commemorate the event with elected officials, partners,
suppliers, and members of the local community in attendance.
-- The Company still expects to increase its hashrate to 5.5
EH/s by the end of 2022, subject to machine deliveries.
-- In March 2022, the Company signed an agreement to swap
approximately 10,000 S19 mining machines currently hosted at Core
Scientific facilities for new S19J Pro mining machines to be
delivered to the Helios facility. To mitigate any temporary loss of
hashrate for Argo, the swap of miners will occur in stages as the
machines are delivered, which has already commenced and will
continue through July 2022. Upon completion of this mining machine
swap, Argo will no longer have any hosted machines and will have
completed its strategic pivot away from hosting to a fully
vertically-integrated model.
-- In January 2022, the Company formally launched Argo Labs, its
in-house innovation arm established to identify opportunities
within the disruptive and innovative sectors of the cryptocurrency
ecosystem while supporting the decentralization of various
blockchain protocols. Argo Labs is primarily focused on two key
areas: network participation and strategic diversification through
the efficient deployment of a portion of the Company's crypto
treasury assets. Argo has allocated approximately 10% of the
Company's crypto assets in its "HODL" to Argo Labs, which gives the
Company the opportunity to integrate cryptocurrencies into existing
financial infrastructure and gain exposure to the wider digital
asset ecosystem.
Q1 2022 and Recent Financing Highlights
-- Argo entered into two significant non-dilutive debt financing
arrangements with New York Digital Investment Group LLC
("NYDIG").
-- In March 2022, Argo signed loan agreements to borrow $26.7
million (GBP20.2 million at the 3 March 2022 exchange rate), with
the proceeds to be used for the continued build out of Helios Phase
1. Under these loan agreements, the borrowings are secured against
certain electrical infrastructure at Helios.
-- In May 2022, Argo signed additional loan agreements to borrow
up to $70.6 million (GBP56.3 million at the 3 May 2022 exchange
rate), subject to customary drawdown conditions, with the proceeds
to be used for the continued build out of Helios Phase 1. Under
these loan agreements, the borrowings are secured against certain
Bitcoin mining machines installed at Helios.
Q1 2022 and Recent Personnel Updates
-- The Company strengthened its executive team by appointing
Seif El-Bakly as Chief Operating Officer and Alana Marks as Vice
President of People and Culture.
-- Justin Nolan, who previously held the role of Vice President
of Business Development, was promoted to the role of Chief Growth
Officer.
-- The Company appointed Raghav Chopra, a seasoned finance and
investing professional, as a non-executive director.
Earnings Conference Call
Argo will host a conference call to discuss its results at 08:00
ET/12:00 BST tomorrow, Wednesday 18 May 2022. 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 or, as
appropriate, the Directors' 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 "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. 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 excludes interest income (expense), taxes,
depreciation and amortization, change in fair value of digital
currencies, and share based payments, which are important
components of our IFRS net income/(loss). 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.
Statement of Income Three Months Ended Three Months Ended 31
31 March, 2022 March, 2021
Figures in '000 except per share $ GBP $ GBP
and BTC mined
------------------------------------------ ---------- --------- ----------- -----------
Revenues 19,515 14,862 17,836 13,583
Direct costs (4,596) (3,500) (2,562) (1,951)
Depreciation of mining equipment (6,961) (5,301) (2,869) (2,185)
Change in fair value of digital
currencies (6,080) (4,630) 13,248 10,090
Realized gain on sale of digital
currencies 41 30 1,472 1,121
------------------------------------------ ---------- --------- ----------- -----------
Gross profit 1,919 1,461 27,125 20,657
------------------------------------------ ---------- --------- ----------- -----------
Consulting fees (208) (159) (467) (356)
Professional fees (1,262) (961) (259) (197)
General and administrative (2,908) (2,215) (633) (482)
Share based payment charge (1,423) (1,084) (123) (94)
Foreign exchange 5,705 4,346 (54) (41)
Operating profit 1,823 1,388 25,589 19,488
------------------------------------------ ---------- --------- ----------- -----------
Fair value gain (loss) of investments (174) (132) - -
Fair value revaluation of contingent
consideration 2,742 2,088 - -
Finance costs (2,442) (1,860) (289) (221)
Profit before taxation 1,949 1,484 25,300 19,267
------------------------------------------ ---------- --------- ----------- -----------
Tax credit 117 89 - -
Profit after taxation 2,066 1,573 25,300 19,268
------------------------------------------ ---------- --------- ----------- -----------
Other comprehensive loss
Items which may be subsequently
reclassified to profit or loss:
* Currency translation reserve (17,170) (13,076) - -
Total other comprehensive (loss),
net of tax (17,170) (13,076) - -
------------------------------------------ ---------- --------- ----------- -----------
Total comprehensive (loss) income
attributable to the equity holders
of the Company (15,104) (11,503) 25,300 19,268
------------------------------------------ ---------- --------- ----------- -----------
Earnings per share attributable
to equity owners (pence)
Basic earnings (loss) per share $0.004c 0.003p $0.080c 0.060p
Diluted earnings per share $0.004c 0.003p $0.070c 0.050p
Balance Sheet As at 31 As at 31
March 2022 December 2021
Figures in '000 $ GBP $ GBP
----------------------------------------------------------- --------- --------- -------- --------
ASSETS
Non-current assets
Investments at fair value through profit or loss 355 271 529 403
Investments accounted for using the equity method 18,143 13,817 18,143 13,817
Intangible fixed assets 11,655 8,876 7,359 5,604
Property, plant and equipment 156,765 119,386 146,546 111,604
Right of use assets 484 368 460 350
Total non-current assets 187,402 142,718 173,037 131,778
----------------------------------------------------------- --------- --------- -------- --------
Current assets
Trade and other receivables 111,500 84,914 83,196 63,359
Digital assets 104,835 79,839 106,044 80,759
Cash and cash equivalents 11,904 9,066 15,498 11,803
Total current assets 228,239 173,819 204,738 155,921
----------------------------------------------------------- --------- --------- -------- --------
Total assets 415,641 316,537 377,775 287,699
----------------------------------------------------------- --------- --------- -------- --------
EQUITY AND LIABILITIES
Equity
Share Capital 614 468 614 468
Share Premium 183,282 139,581 183,282 139,581
Share based payment reserve 3,925 2,989 2,501 1,905
Fair value reserve 545 414 545 414
Currency translation reserve (16,588) (12,633) 44 33
Other comprehensive income of equity accounted associates 8,628 6,571 8,628 6,571
Accumulated surplus 80,075 60,982 69,381 52,838
----------------------------------------------------------- --------- --------- -------- --------
Total equity 260,481 198,372 264,995 201,810
----------------------------------------------------------- --------- --------- -------- --------
Current liabilities
Trade and other payables 18,122 13,803 20,018 15,245
Contingent consideration 7,856 5,983 10,598 8,071
Loans and borrowings 58,618 44,641 30,715 23,391
Income tax 10,568 8,048 10,083 7,679
Deferred tax 259 197 375 286
Lease liability 10 7 9 7
----------------------------------------------------------- --------- --------- -------- --------
Total current liabilities 95,433 72,679 71,798 54,679
----------------------------------------------------------- --------- --------- -------- --------
Non-current liabilities
Deferred tax 710 541 710 541
Issued debt - bond 35,322 26,900 35,333 26,908
Loans 23,188 17,659 4,453 3,391
Lease liability 507 386 486 370
Total liabilities 155,160 118,165 112,780 85,889
----------------------------------------------------------- --------- --------- -------- --------
Total equity and liabilities 415,641 316,537 377,775 287,699
----------------------------------------------------------- --------- --------- -------- --------
The following table shows a reconciliation of Bitcoin and
Bitcoin Equivalent Mining Margin to gross margin, the most directly
comparable IFRS measure, for the three months ended 31 March 2022
and the three months ended 31 March 2021.
2022 2021
---------------- --------------------
Figures in '000 $ GBP $ GBP
-------------------------------------------- ------- ------- --------- ---------
Gross profit 1,919 1,461 27,125 20,658
-------------------------------------------- ------- ------- --------- ---------
Depreciation of mining equipment 6,961 5,301 2,869 2,185
Change in fair value of digital currencies 6,080 4,630 (13,248) (10,090)
Realized gain (loss) on sale of digital
currencies (41) (30) (1,472) (1,121)
Cryptocurrency management fees - - (434) (330)
Mining profit 14,919 11,362 14,840 11,302
-------------------------------------------- ------- ------- --------- ---------
Bitcoin and Bitcoin Equivalent Mining
Margin 76% 76% 83% 83%
The following table shows a reconciliation of Adjusted EBITDA to
net income, the most directly comparable IFRS measure, for the
three months ended 31 March 2022 and the three months ended 31
March 2021.
2022 2021
---------------- --------------------
Figures in '000 $ GBP $ GBP
--------------------------------- ------- ------- --------- ---------
Net income 2,066 1,573 25,300 19,267
--------------------------------- ------- ------- --------- ---------
Depreciation/amortization 7,166 5,457 2,914 2,219
Interest expense 2,442 1,860 289 220
Income tax credit (117) (89) - -
Share based payment 1,423 1,084 123 94
Change in fair value of digital
currencies 6,080 4,630 (13,248) (10,090)
Adjusted EBITDA 19,060 14,515 15,378 11,710
--------------------------------- ------- ------- --------- ---------
Adjusted EBITDA Margin 98% 98% 86% 86%
*Dollar values translated from pound sterling into U.S. dollars
at the rate of GBP1.00 to $1.31 unless otherwise specified.
For further information please contact:
Argo Blockchain
Peter Wall via Tancredi +44 203 434
Chief Executive 2334
--------------------------
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
Fabio Galloni-Roversi Monaco +44 7727 180 873
Nasser Al-Sayed +44 7888 672 701
argoblock@tancredigroup.com +44 7915 033 739
--------------------------
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 Nasdaq Global Select Market in the
United States under the ticker: ARBK.
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