UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 6-K
_____________________
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2024
Commission File Number: 001-40816
_____________________
Argo Blockchain plc
(Translation of registrant’s name into English)
_____________________
Eastcastle House
27/28 Eastcastle Street
London W1W 8DH
England
(Address of principal executive office)
_____________________
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒ Form 40-F
☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): ☐
EXHIBIT INDEX
Exhibit
No.
1
|
Description
Argo
2023 Annual Financial Report dated 25 April 2024
|
Press
Release
25
April 2024
Argo Blockchain plc
("Argo"
or "the Company")
2023 Full Year Results
Argo
Blockchain plc, a global leader in cryptocurrency mining (LSE: ARB;
NASDAQ: ARBK), is pleased
to announce its audited results for the year ended 31 December
2023.
Highlights
●
Total
number of Bitcoin mined during 2023 was 1,760, or 4.8 Bitcoin per
day.
●
Revenues
of $50.6 million, a decrease of 14% from 2022, driven
primarily by a significant increase in the global hashrate and
associated network difficulty level.
●
Increased hashrate by approximately 0.3
EH/s with the deployment of ePIC
BlockMiners at the Company’s Quebec
facilities.
●
Reduced
non-mining operating costs by 58% in 2023 compared to the prior
year.
●
Generated
$7.2 million of power credits through economic curtailment at
Helios.
●
Mining
margin of 43%, down from 54% in 2022. Similar to revenue, this
decrease was largely attributable to the increase in network
difficulty.
●
Adjusted EBITDA of $8.3 million, compared to negative Adjusted EBITDA of
$(46.7) million in 2022.
●
Net loss of $35.0 million, compared to a net
loss of $229.0
million in 2022.
●
Reduced
interest expense by 49%, driven by a strong focus on debt
reduction.
●
Reduced
debt owed to Galaxy Digital from $35.0 million at 31 December 2022
to $23.5 million at 31 December 2023; total debt outstanding at the
end of 2023 was $66.2 million.
●
As
at 31 December 2023, the Company had $7.4 million of cash; it
also held 9 Bitcoin on its balance sheet and other digital assets
worth the equivalent of 18 Bitcoin.
Post-period highlights
●
In
January 2024, the Company raised $9.9 million of gross proceeds
through a share placing with institutional investors.
●
In
March 2024, the Company sold its data center located in Mirabel,
Quebec for total consideration of $6.1 million. Net proceeds from
the sale were used to repay the Mirabel facility’s existing
mortgage and to repay debt owed to Galaxy.
Q1 2024 Update (Preliminary and Unaudited)
●
Total
number of Bitcoin mined during Q1 2024 was 319, or 3.5 Bitcoin per
day.
●
Generated
revenues of approximately $17 million.
●
Average
direct cost per Bitcoin mined was approximately
$31,000.
●
As at 31 March
2024, the Galaxy debt balance was $12.8 million (down from original
balance of $35.0 million), and the total debt balance was $54.0
million.
●
As at 31 March
2024, the Company’s cash balance was $12.4
million.
Commenting on the results, Thomas Chippas, Argo
Blockchain CEO, said, “Despite a turbulent market, we
have worked hard to strengthen our balance sheet and reduce
Argo’s debt burden. We have reduced the debt owed to Galaxy
by $22 million, or 63%, and we have also improved our cash position
over the last several quarters. Operationally, Argo’s
hashrate increased by 0.3 EH/s during the year with the deployment
of ePIC BlockMiners at our Quebec facilities, and we reduced our
non-mining operating costs by 58%. We exited the Bitcoin halving
with a stronger balance sheet and leaner operations, and we are
optimistic about the ongoing growth and development of Argo with a
clear objective of delivering shareholder
value.”
*The
tables below reconcile Bitcoin and Bitcoin Equivalent Mining
Margin to gross margin, the most directly comparable IFRS
measure, and Adjusted EBITDA to net income/(loss), the most
directly comparable IFRS measure:
|
Year ended
|
Year ended
|
31 December
|
31 December
|
2023
|
2022
|
$’000
|
$’000
|
|
|
|
Gross profit/(loss)
|
3,839
|
(42,623)
|
Depreciation
of mining equipment
|
18,656
|
20,469
|
Change
in fair value of digital currencies
|
(738)
|
53,978
|
Other
revenue
|
—
|
(119)
|
Mining profit
|
21,757
|
31,705
|
Bitcoin and Bitcoin Equivalent Mining Margin
|
43%
|
54%
|
The following table shows a reconciliation of Adjusted EBITDA to
net income/(loss), the most directly comparable IFRS measure, for
the years ended December 31, 2023 and December 31,
2022.
|
Year ended
|
Year ended
|
31 December
|
31 December
|
2023
|
2022
|
$’000
|
$’000
|
|
|
|
Net income/(loss)
|
(35,033)
|
(228,961)
|
Interest
expense
|
11,556
|
22,661
|
Depreciation
/ amortisation
|
20,129
|
29,003
|
Income
tax (credit) / expense
|
—
|
(11,731)
|
EBITDA
|
(3,348)
|
(189,028)
|
Impairment
of assets
|
855
|
55,838
|
Impairment
of intangible assets
|
1,082
|
5,155
|
Loss/(gain) on
disposal of intangible fixed assets
|
(428)
|
—
|
Loss/(gain)
on sale of subsidiary and investments
|
(36)
|
55,418
|
Loss
on sale of fixed assets
|
—
|
23,228
|
Foreign
exchange
|
(1,597)
|
(21,337)
|
Restructuring
and transaction-related fees
|
4,969
|
11,862
|
Share
based payment charge
|
3,892
|
6,096
|
Equity
accounted loss from associate
|
716
|
6,027
|
Write
off of investment
|
2,236
|
—
|
Adjusted EBITDA
|
8,341
|
(46,741)
|
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.
For further information please contact:
Argo
Blockchain
|
|
Investor
Relations
|
ir@argoblockchain.com
|
Tennyson
Securities
|
|
Corporate
Broker
Peter
Krens
|
+44
207 186 9030
|
Fortified
Securities
|
|
Joint
Broker
Guy
Wheatley, CFA
|
+44
7493 989014
guy.wheatley@fortifiedsecurities.com
|
Tancredi
Intelligent Communication
UK
& Europe Media Relations
|
argoblock@tancredigroup.com
|
About Argo:
Argo
Blockchain plc is a dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain
technology company focused on large-scale cryptocurrency mining.
With mining operations in Quebec and Texas, and offices in the US,
Canada, and the UK, Argo's global, sustainable operations are
predominantly powered by renewable energy. In 2021, Argo became the
first climate positive cryptocurrency mining company, and a
signatory to the Crypto Climate Accord. For more information,
visit www.argoblockchain.com.
Chairman’s Statement
We
began 2023 on the heels of a transformational and strategic pivot
in our operations. In December 2022 we sold the Helios facility,
which we designed, constructed, and energized over the course of
2021 and 2022. The transaction strengthened our balance sheet
through $41 million of debt reduction and through a refinance of
our remaining machine-backed loans with a new asset-backed loan
from Galaxy Digital Holdings Ltd.
(“Galaxy”).
Argo
maintained ownership of its entire fleet of mining machines,
including roughly 23,600 Bitmain S19J Pro machines that were
operating at Helios prior to the sale. Those miners remained
in situ and continued to
operate pursuant to a hosting agreement with Galaxy. Currently,
approximately 2.4 EH/s of total hashrate capacity is deployed at
Helios, and the machines continue to perform very well in the
custom-designed immersion-cooled facility.
The
hosting agreement with Galaxy allows Argo to share in the proceeds
from economic curtailment, which occurs when Helios monetizes its
fixed-price PPA during periods of high power prices. During the
year, Argo generated approximately $7.2 million in power credits,
with $3.8 million generated in the month of August during a
state-wide heat wave. Not only does the ability to curtail
operations benefit Argo economically, but it greatly enhances the
stability of the Texas grid.
Throughout
the year, the Company focused on three key pillars: financial
discipline, operational excellence, and strategic partnerships for
growth.
Financial discipline
After
the sale of the Helios facility, the Company was able to
significantly reduce its operating expenses. During the first
quarter alone, Argo reduced its non-mining operating expenses by
68% compared to the run rate in the second half of 2022. The
Company has been able to sustain these cost reductions, achieving a
58% reduction in non-mining operating expenses for the full year
2023 compared to the prior year.
The
Company has also made progress in strengthening its balance sheet
by reducing debt. For the full year 2023, the company reduced its
debt by $13 million to $66 million. Most of the debt reduction was
focused on the asset-backed loans with Galaxy through monthly
amortization, supplemented by additional prepayments throughout the
year. The prepayments were funded with proceeds of non-core asset
sales and a portion of the proceeds from an equity raise completed
in July 2023.
In
addition, subsequent to year end, the Company paid down an
additional $12 million using a portion of proceeds raised through
an equity raise in January 2024, the proceeds of the sale of
non-core assets, including the Mirabel facility, and $3 million
through monthly amortization payments. As of March 31, 2024, the
debt balance owed to Galaxy was $13 million, and total debt was $54
million.
Operational excellence
After
selling the Mirabel facility in March 2024, Argo continues to own
and operate its data center in Baie Comeau, Quebec. The Baie Comeau
site is over 40,000 square feet and has 15 MW of 99% renewable
power capacity sourced from the nearby Baie Comeau hydroelectric
dam.
During
the third quarter of 2023, the Company deployed approximately 2,750
BlockMiner machines from ePIC Blockchain Technologies, representing
approximately 300 PH/s, at its Quebec facilities. This deployment
increased the Company’s total hashrate capacity by
approximately 300 PH/s. As of 31 March 2024, taking into account
the sale of certain prior generation machines that occurred in
conjunction with the sale of the Mirabel facility, the
Company’s total hashrate capacity is 2.7 EH/s.
Additionally,
the Company has the ability to expand its capacity at Baie Comeau
from 15 MW to 23 MW. The local municipality has approved the
expansion, and the Company is in the evaluation phase of this
project.
Growth and strategic partnerships
The
Company continues to explore opportunities where mining can be
paired with stranded or wasted energy. There is tremendous
potential for energy generators to utilize mining as a balancing
and optimization tool, particularly in the energy transition where
limitations currently exist in the ability to store renewable
energy. Argo is evaluating several projects with companies across
the energy value chain.
Financial results
Revenue
in 2023 was $50.6 million, compared to $58.6 million in 2022.
Non-mining operating expenses were $18.8 million, a significant
decrease from $34.1 million in 2022. Adjusted EBITDA was $8.3
million, compared to $(46.7) million in 2022. Loss attributable to
shareholders totaled $35.0 million. In 2023, total capital
expenditures were $5.2 million. Our cash balance at December 31,
2023 was $7.4 million.
Operating results
With
the deployment of the BlockMiners at its Quebec facilities, the
Group’s total hashrate capacity increased by 12% from 2.5
EH/s in June 2023 to 2.8 EH/s by September 2023. Argo’s
mining margin averaged 44% for the full year 2023, which is lower
than the 54% mining margin achieved in 2022. The decrease in mining
margin from 2022 was driven primarily by the 71% increase in
average network difficulty in 2023.
Bitcoin macro environment
While
2022 was a challenging year for Bitcoin with several macroeconomic
headwinds, 2023 provided a bit of a reprieve for miners. After
starting the year at $16,616, the Bitcoin price experienced a rapid
increase in March 2023 amidst a period of distress in the regional
banking sector, climbing 21% during the month. Additionally, the
price saw a steady increase during the second half of the year as
speculation intensified about the impending January 2024 deadline
for the approval of Bitcoin Spot ETFs by the US Securities and
Exchange Commission (post the period end, the ETFs were approved by
the SEC on 10 January 2024). By the end of 2023, the price of
Bitcoin had increased to $42,208, a 154% increase for the
year.
Another
tailwind for Bitcoin miners was the growth of transaction fees from
the introduction of ordinals and inscriptions. Transaction fees on
the Bitcoin network more than quadrupled in 2023 compared to the
prior year. There was a large but temporary spike in transaction
fees in May, along with longer periods of elevated fees in November
and December from increased ordinal and inscription
activity.
The
increase in Bitcoin price, combined with growth in transaction
fees, enabled hashprice to climb from $60 per petahash per day at
the end of 2022 to $98 per petahash per day at the end of 2023,
which is a 64% increase during the year. The growth in hashprice
was not as dramatic as the increase in Bitcoin price or transaction
fees because it takes into account the network difficulty, which
increased by 104% during the year to account for significant growth
in the global hashrate.
Commitment to sustainability
Since
inception, Argo has always maintained a strong focus on
environmental sustainability. This is why we located our mining
operations in Quebec, where they are powered by hydroelectricity,
and the Texas Panhandle, where more than 85% of the installed
generation capacity comes from renewable sources.
To our
knowledge, we are the first publicly traded cryptocurrency mining
company to publish a report in accordance with the Task Force on
Climate-related Financial Disclosures (“TCFD”)
Recommendations and Recommended Disclosures (see page
32).
Leadership changes
On 30 January 2023, Chief Financial Officer and Executive Director
Alex Appleton resigned from his positions at Argo to pursue other
opportunities. After a formal recruitment process led by an
executive search firm, the Board appointed Jim MacCallum as Chief
Financial Officer effective 5 April 2023.
On 9 February 2023, Chief Executive Officer and Interim Chairman
Peter Wall resigned from his positions at Argo to pursue other
opportunities. Matthew Shaw became Chairman of the Board, and the
Board appointed Chief Operating Officer Seif El-Bakly to serve as
Interim CEO.
On 27
November 2023, after a formal recruitment process led by an
executive search firm, the Board of Directors appointed Thomas
Chippas as Chief Executive Officer and Executive Director. Seif
El-Bakly returned to his role as Chief Operating
Officer.
On 5
January 2024, Seif El-Bakly resigned from his position to pursue
other opportunities.
Strategic focus in 2024
With
the Bitcoin halving occurring in April 2024, the Company’s
priorities in the first quarter of 2024 continued to involve a
strong focus on financial discipline, operational excellence, and
modest growth in operations. We believe that our efficient fleet,
stable and competitive power prices, and strengthened balance sheet
make us well-positioned for a post-halving
environment.
On
behalf of the Board, I would like to thank all of our shareholders
and stakeholders. I am excited for Argo to continue in its mission
of powering the world’s most innovative and sustainable
blockchain infrastructure.
Matthew Shaw
Chairman of the Board
Independent Auditor’s Report
We
have audited the financial statements of Argo Blockchain plc (the
‘parent company’) and its subsidiaries (the
“group”) for the year ended 31 December 2023 which
comprise the Group Statement of Comprehensive Income, the Group and
Parent Company Statements of Financial Position, the Group and
Parent Company Statements of Changes in Equity, the Group and
Parent Company Statements of Cash Flows and notes to the financial
statements, including significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In
our opinion:
●
the
financial statements give a true and fair view of the state of the
group’s and of the parent company’s affairs as at 31
December 2023 and of the group’s loss for the year then
ended;
●
the
group financial statements have been properly prepared in
accordance with UK-adopted international accounting
standards;
●
the
parent company financial statements have been properly prepared in
accordance with UK-adopted international accounting standards and
as applied in accordance with the provisions of the Companies Act
2006; and
●
the
financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
I.
DIRECTORS’
RESPONSIBILITIES STATEMENT
The
directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and
regulations. Company law requires the directors to prepare
financial statements for each financial year. Under that law the
directors have prepared the Group and parent company financial
statements in accordance with UK-adopted international accounting
standards. Under company law the directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company
and of the profit and loss of the Group and Company for that
period.
In preparing these financial statements, the directors are required
to:
●
Select
suitable accounting policies and then apply them
consistently;
●
Make
judgements and accounting estimates that are reasonable and
prudent;
●
State
whether applicable UK-adopted international accounting standards
have been followed, subject to any material departures disclosed
and explained in the financial statements; and
●
Prepare
the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and Company will continue
in business.
The
directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Company and
enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The
directors are also responsible for ensuring that the Annual Report
and financial statements taken as a whole, is fair, balanced and
understandable and provides the information necessary for the
shareholders to assess the Group’s and Company’s
position and performance, business model and strategy.
Website publication
The
directors are responsible for ensuring the Annual Report and the
financial statements are made available on a website. Financial
statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and
integrity of the Group and Company’s website is the
responsibility of the directors. The directors’
responsibility also extends to the on-going integrity of the
financial statements contained therein.
Directors’ responsibilities pursuant to DTR4 (Disclosure and
Transparency Rules)
The directors confirm to the best of their knowledge:
●
The
Group and Company financial statements have been prepared in
accordance with UK-adopted international financial reporting
standards and give a true and fair view of the assets, liabilities,
financial position and profit or and give a true and fair view of
the assets, liabilities, financial position and profit and loss of
the Group and Company; and
●
The
Annual Report includes a fair review of the development and
performance of the business and financial position of the Group and
Company together with a description of the principal risks and
uncertainties that it faces.
II.
GROUP STATEMENT OF
COMPREHENSIVE INCOME
|
|
Year
ended
December
2023
|
Year
ended
December
2022
(Restated,
Note 2)
|
Continuing
operations
|
Note
|
$’000
|
$’000
|
|
|
|
|
Revenues
|
7
|
50,558
|
58,583
|
|
|
|
|
Power
and hosting costs
|
|
(35,964)
|
(26,759)
|
Power
Credits
|
7
|
7,163
|
-
|
Crypto
asset fair value movement
|
17,
20
|
738
|
(53,978)
|
Depreciation
– mining hardware
|
18
|
(18,656)
|
(20,469)
|
Gross
profit (loss)
|
3,839
|
(42,623)
|
Operating
expenses
|
8
|
(19,345)
|
(34,057)
|
Gain
on hedging
|
|
-
|
2,097
|
Share
based payment charge
|
21
|
(3,892)
|
(6,096)
|
Operating
loss
|
(19,398)
|
(80,679)
|
Gain
on sale of investments
|
|
36
|
-
|
Loss on
sale of subsidiary
|
14
|
-
|
(55,418)
|
Write
off of investment
|
16
|
(2,236)
|
-
|
Loss on
disposal of fixed assets
|
|
-
|
(23,228)
|
Investment
fair value movement
|
15
|
-
|
(406)
|
Finance
costs
|
8
|
(11,556)
|
(22,661)
|
Other
income
|
|
346
|
3,726
|
Impairment of
tangible fixed assets
|
18
|
(855)
|
(55,838)
|
Gan on
disposal of intangible assets
|
17
|
428
|
-
|
Impairment of
intangible assets
|
17
|
(1,082)
|
(5,155)
|
Equity
accounted loss from associate
|
16
|
(716)
|
(6,027)
|
Revaluation of
contingent consideration
|
|
-
|
4,994
|
Loss
before taxation
|
(35,033)
|
(240,692)
|
Tax Credit
|
13
|
-
|
11,731
|
Loss
after taxation
|
(35,033)
|
(228,961)
|
Other
comprehensive income
|
|
|
|
Currency
translation reserve
|
|
(779)
|
(20,639)
|
Equity
accounted OCI from associate
|
16
|
-
|
(8,744)
|
Fair
value reserve
|
|
-
|
(551)
|
Total
other comprehensive loss
|
(779)
|
(29,934)
|
|
|
|
Total
comprehensive loss attributable
to
the equity holders of the Company
|
(35,812)
|
(258,895)
|
Loss
per share attributable to equity owners (cents)
|
|
|
|
Basic
and diluted loss per share
|
12
|
(0.07)
|
(0.48)
|
III.
GROUP STATEMENT OF FINANCIAL
POSITION
|
|
As at 31
December
2023
|
As at 31
December
2022
(Restated,
Note 2)
|
As at 1
January
2022
|
|
Note
|
$’000
|
$’000
|
$’000
|
ASSETS
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Investments at fair
value through profit or loss
|
15
|
400
|
414
|
543
|
Investments
accounted for using the equity method
|
16
|
-
|
2,863
|
18,642
|
Intangible fixed
assets
|
17
|
888
|
2,103
|
7,560
|
Property, plant and
equipment
|
18
|
59,728
|
76,991
|
150,571
|
Right
of use assets
|
18
|
-
|
525
|
472
|
Total
non-current assets
|
61,016
|
82,896
|
177,788
|
Current
assets
|
|
|
|
|
Trade
and other receivables
|
19
|
2,480
|
823
|
10,072
|
Prepaids
|
19
|
1,355
|
5,979
|
75,409
|
Digital
assets
|
20
|
385
|
443
|
108,956
|
Cash
and cash equivalents
|
26
|
7,443
|
20,092
|
15,923
|
|
|
11,663
|
27,337
|
210,360
|
Assets
held for sale
|
14
|
3,261
|
-
|
-
|
Total
current assets
|
14,924
|
27,337
|
210,360
|
|
|
|
Total
assets
|
75,940
|
110,233
|
388,148
|
EQUITY
AND LIABILITIES
|
|
|
|
|
Equity
|
|
|
|
|
Share
Capital
|
22
|
712
|
634
|
622
|
Share
Premium
|
22
|
209,779
|
202,103
|
196,911
|
Share
based payment reserve
|
23
|
12,166
|
8,528
|
2,531
|
Currency
translation reserve
|
23
|
(30,129)
|
(29,350)
|
(8,711)
|
Fair
value reserve
|
|
-
|
-
|
551
|
Other
comprehensive income of equity accounted associates
|
|
-
|
-
|
8,744
|
Accumulated
income (deficit)
|
23
|
(192,370)
|
(157,337)
|
71,624
|
Total
equity
|
158
|
24,578
|
272,272
|
Current
liabilities
|
|
|
|
|
Trade
and other payables
|
24
|
11,175
|
9,780
|
20,566
|
Corporation
Tax
|
|
-
|
-
|
10,360
|
Deferred
Tax
|
13
|
-
|
-
|
386
|
Contingent consideration
|
|
-
|
-
|
10,889
|
Loan
and Borrowings
|
25
|
14,320
|
11,605
|
31,558
|
Lease
liability
|
25
|
-
|
5
|
10
|
|
|
25,495
|
21,390
|
73,769
|
Liabilities
held for sale
|
14
|
2,090
|
-
|
-
|
Total
current liabilities
|
27,585
|
21,390
|
73,769
|
Non-current
liabilities
|
|
|
|
|
Deferred
tax
|
13
|
-
|
-
|
730
|
Issued
debt - bond
|
4
|
38,170
|
37,809
|
36,303
|
Loans
|
25
|
10,027
|
25,916
|
4,575
|
Lease
liability
|
25
|
-
|
540
|
499
|
Total
liabilities
|
75,782
|
85,655
|
115,876
|
|
|
|
Total
equity and liabilities
|
75,940
|
110,233
|
388,148
|
The
Group financial statements were approved by the Board of Directors
on 24 April 2024 and authorised for issue and they are signed on
its behalf by:
Thomas
Chippas
Chief Executive Officer
The
accounting policies and notes on pages 58 to 85 form part of the
financial statements. Registered number: 11097258
IV.
GROUP STATEMENT OF
CHANGES IN EQUITY
|
Share
Capital
|
Share
Premium
|
Currency
translation
reserve
|
Share
based
payment
reserve
|
Accumulated
surplus/
(deficit)
|
Total
|
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
Balance
at 1 January 2023
|
634
|
202,103
|
(29,350)
|
8,528
|
(157,337)
|
24,578
|
Total
comprehensive loss for
the
period:
|
|
|
|
|
|
|
Loss
for the period
|
-
|
-
|
-
|
-
|
(35,033)
|
(35,033)
|
Other
comprehensive loss
|
-
|
-
|
(779)
|
-
|
-
|
(779)
|
Total
comprehensive loss for the
period
|
-
|
-
|
(779)
|
-
|
(35,033)
|
(35,812)
|
Transactions
with equity owners:
|
|
|
|
|
|
|
Share
capital issued
|
78
|
7,676
|
-
|
-
|
-
|
7,754
|
Share
based payment charge
|
-
|
-
|
-
|
3,892
|
-
|
3,892
|
Share
RSUs vested
|
-
|
-
|
-
|
(254)
|
-
|
(254)
|
Total
transactions with equity
owners
|
78
|
7,676
|
-
|
3,638
|
-
|
11,392
|
|
Balance
at 31 December 2023
|
712
|
209,779
|
(30,129)
|
12,166
|
(192,370)
|
158
|
|
Share
Capital
|
Share
Premium
|
Currency
t
ranslation
reserve
|
Share
based
payment
reserve
|
Fair
Revaluation
Reserve
|
Other
comprehensive
income
of
associates
|
Accumulated
surplus/
(deficit)
|
Total
|
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
Balance
at 1 January 2022
|
622
|
196,911
|
(8,711)
|
2,531
|
551
|
8,744
|
71,624
|
272,272
|
Total
comprehensive loss for
the
period:
|
|
|
|
|
|
|
|
|
Loss
for the period
|
-
|
-
|
-
|
-
|
|
-
|
(228,961)
|
(228,961)
|
Other
comprehensive loss
|
-
|
-
|
(20,639)
|
-
|
(551)
|
(8,744)
|
-
|
(29,934)
|
Total
comprehensive loss for the
period
|
-
|
-
|
(20,639)
|
-
|
(551)
|
(8,744)
|
(228,961)
|
(258,895)
|
Transactions
with equity owners:
|
|
|
|
|
|
|
|
|
Share
capital issued
|
12
|
5,192
|
-
|
-
|
-
|
-
|
-
|
5,204
|
Share
based payment charge
|
-
|
-
|
-
|
6,096
|
-
|
-
|
-
|
6,096
|
Share
options/warrants exercised
|
-
|
-
|
-
|
(99)
|
-
|
-
|
-
|
(99)
|
Total
transactions with equity owners
|
12
|
5,192
|
-
|
5,997
|
-
|
-
|
-
|
11,201
|
|
Balance
at 31 December 2022
|
634
|
202,103
|
(29,350)
|
8,528
|
-
|
-
|
(157,337)
|
24,578
|
V.
GROUP STATEMENT OF
CASHFLOWS
Note
|
Year
ended
December
2023
|
Year
ended
December
2022
(Restated,
Note 2)
|
$’000
|
$’000
|
Cash
flows from operating activities
|
|
|
|
Loss
before tax
|
|
(35,033)
|
(240,692)
|
Adjustments
for:
|
|
|
|
Depreciation and
amortisation
|
17, 18
|
20,129
|
29,003
|
Foreign
exchange movements
|
|
(1,597)
|
(21,337)
|
Loss on
disposal of tangible assets
|
|
-
|
23,228
|
Finance
cost
|
8
|
11,556
|
22,662
|
Loss on
sale of subsidiary and investment
|
|
-
|
55,418
|
Fair
value change in digital assets through profit or loss
|
20
|
(738)
|
55,555
|
Revenue
from digital assets
|
20
|
(50,558)
|
(60,172)
|
Impairment of
intangible digital assets
|
17
|
654
|
5,548
|
Impairment of
property, plant and equipment
|
18
|
855
|
55,838
|
Investment fair
value movement
|
16
|
-
|
406
|
Write
off of investment
|
16
|
2,236
|
-
|
Share
of loss from associate
|
|
716
|
6,027
|
Gain on
sale of investment
|
|
(36)
|
-
|
Revaluation of
contingent consideration
|
|
-
|
(4,994)
|
Hedging
gain
|
|
-
|
(2,097)
|
Proceeds from sale
of digital assets
|
20
|
51,866
|
114,646
|
Share
based payment expense
|
10
|
3,892
|
6,096
|
Working
capital changes:
|
|
|
|
(Increase)/decrease
in trade and other receivables
|
19
|
(1,152)
|
(26,150)
|
Increase/(decrease)
in trade and other payables
|
24
|
1,041
|
(5,576)
|
Net
cash generated from operating activities
|
3,831
|
13,409
|
Investing
activities
|
|
|
|
Cash
transferred on disposal of subsidiary
|
|
-
|
(1,678)
|
Proceeds from sale
of investment
|
15
|
50
|
-
|
Purchase of
tangible fixed assets
|
18
|
(1,112)
|
(108,047)
|
Proceeds from
disposal of tangible fixed assets
|
|
-
|
12,404
|
Net
cash used in investing activities
|
(1,062)
|
(97,321)
|
Financing
activities
|
|
|
|
Increase in
loans
|
25
|
1,429
|
96,995
|
Lease
payments
|
26
|
|
(93)
|
Loan
repayments
|
25
|
(14,064)
|
-
|
Interest
paid
|
|
(10,661)
|
(22,661)
|
Proceeds from issue
of loan in conjunction with the disposal of subsidiary
|
|
-
|
9,936
|
Proceeds from
shares issued – net of issue costs
|
23
|
7,518
|
-
|
Net
cash (used in) generated from financing activities
|
(15,778)
|
84,177
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
(13,009)
|
265
|
Effect
of foreign exchange on cash and cash equivalents
|
360
|
3,904
|
Cash
and cash equivalents at beginning of period
|
20,092
|
15,923
|
Cash
and cash equivalents at end of period
|
7,443
|
20,092
|
Material
non-cash movements:
●
The Group sold its
Helios facility in December 2022, in exchange for paying down
existing debt and obtaining new debt. See Note 19 for additional
details.
●
In
March 2022, the Group entered into an agreement to exchange mining
machines and terminate a hosting agreement. See Note 19 for
additional details.
●
During
the period, the Group utilised “Prepayments for mining
machines” amounting to $4,118,000, included within
receivables, in order to acquire mining machines within property
plant and equipment additions.
Group
- net debt reconciliation
|
Year
ended 31 December
2023
|
Year
ended 31 December
2022
|
|
|
$’000
|
$’000
|
Current
loans and borrowings
|
26
|
(14,320)
|
(11,605)
|
Non-current issued
debt – bonds
|
26
|
(38,170)
|
(37,809)
|
Non-current loans
and borrowings
|
26
|
(10,027)
|
(25,916)
|
Lease
liability
|
|
-
|
(545)
|
Cash
and cash equivalents
|
|
7,443
|
20,092
|
Total
net debt
|
|
(55,074)
|
(55,783)
|
NOTES TO THE FINANCIAL STATEMENTS
Argo
Blockchain PLC (“the company”) is a public company,
limited by shares, and incorporated in England and Wales. The
registered office is Eastcastle House, 27-28 Eastcastle Street,
London, W1W 8DH. The company was incorporated on 5 December 2017 as
GoSun Blockchain Limited and changed its name to Argo Blockchain
Limited on 21 December 2017. Also on 21 December 2017, the company
re-registered as a public company, Argo Blockchain plc. Argo
Blockchain plc acquired a 100% subsidiary, Argo Innovation Labs
Inc. (together “the Group”), incorporated in Canada, on
12 January 2018.
On 4
March 2022 the Group acquired 100% of the share capital of DPN LLC
and was merged into new US entity Argo Innovation Facilities (US)
Inc (also 100% owned by Argo Blockchain plc).
On 11
May 2022 the Group acquired 100% of the share capital of 9377-2556
Quebec Inc and 9366-5230 Quebec Inc. These are held by Argo
Innovation Labs Inc. (Canada).
On 22
November 2022, the Group formed Argo Operating US LLC and Argo
Holdings US Inc.
On 21
December 2022, Argo Innovation Facilities (US) Inc became Galaxy
Power LLC. On 28 December 2022, the Group sold Galaxy Power
LLC.
The
principal activity of the group is that of Bitcoin
mining.
The
common shares of the Group are listed under the trading symbol ARB
on the London Stock Exchange. The American Depositary Receipt of
the Group are listed under the trading symbol ARBK on Nasdaq. The
Group bond is listed on the Nasdaq Global Select Market under the
trading symbol ARBKL.
The
financial statements cover the year ended 31 December
2023.
The
financial statements have been prepared in accordance with
UK-adopted international accounting standards and with the
requirements of the Companies Act 2006. 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 as described in the accounting policies
below.
During
2023, the Group changed its reporting currency to US dollars as
further described in Note 3. Monetary amounts in these financial
statements are rounded to the nearest thousand US dollars. Argo
Blockchain PLC’s functional currency is GBP. Argo Innovations
Labs Inc., 9377-2556 Quebec Inc, and 9366-5230 Quebec Inc.’s
functional currency is Canadian Dollars; Argo Operating US LLC and
Argo Holdings US Inc.’s functional currency is United States
Dollars; all entries from these entities are presented in the
Group’s presentational currency of US dollars. This change in
accounting policy, added retrospectively requires a third balance
sheet as at the beginning of the preceding comparative period to be
reported. Where the subsidiary's functional currency is different
from the parent, the assets and liabilities presented are
translated at the closing rate as at the Statement of Financial
Position date. Income and expenses are translated at average
exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the rate on the dates of the
transactions).
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. The significant judgements
made by management in applying the Group’s accounting
policies and the key sources of estimation uncertainty are
disclosed in Note 6.
Prior
year restatement
The
2022 income tax accounting was completed based on preliminary
information at the time of the financial statement completion. When
updating the income taxes for 2023 it was determined that the 2022
estimates were inaccurate and have been restated.
The
impact on the 2022 financial statements are as
follows:
Income
tax recovery increased by $11,285,000 from $446,000 to
$11,731,000.
Cumulative
translation adjustment increased by $455,000 from $20,184,000 to
$20,639,000
Net
loss decreased by $11,285,000 from a loss of $240,246,000 to a loss
of $228,961,000.
Deferred tax
liability decreased by $10,589,000 from $10,589,000 to
$nil.
Statement
of Cashflows reclassification
Proceeds from the
sale of digital assets were reclassified from investing cashflows
to operating cashflows in the 2022 Statements of Cashflows, amongst
other presentational changes in 2022 in order to ensure
comparability with the presentation and classification in the
current year.
The
principal accounting policies applied in the preparation of these
consolidated financial statements are below.
Change in Presentation Currency
The
Group changed its presentational currency to US Dollars during 2023
due to the fact its revenues, direct costs, capital expenditures
and debt obligations are predominantly denominated in US Dollars.
In order to satisfy the requirements of IAS 21 with respect to a
change in the presentation currency, the financial information as
previously reported in the Group’s Annual Reports have been
restated from GBP into US Dollars using the procedures outlined
below:
●
Assets and
liabilities were translated to US Dollars at the closing rates of
exchange at each respective balance sheet date
●
Share capital,
share premium and other reserves were translated at the historic
rates prevailing at the dates of transactions
●
Income and expenses
were translated to US Dollars at an average rate at each of the
respective reporting years
●
Differences
resulting from the retranslation were taken to
reserves
●
All exchange rates
used were extracted from the Group’s underlying financial
records
Going Concern
The
preparation of consolidated financial statements requires an
assessment on the validity of the going concern
assumption.
On 28
December 2022, the Group announced a series of transactions with
Galaxy Digital Holdings, Ltd. (“Galaxy”) that improved
the Group’s liquidity position and enabled the Group to
continue its mining operations. As part of the transactions, Argo
sold the Helios facility and real property in Dickens County, Texas
to Galaxy for $65 million and refinanced existing asset-backed
loans via a new $35 million, three-year asset-backed loan with
Galaxy. The transactions reduced total indebtedness by $41 million
and allowed Argo to simplify its operating structure. During 2023
and through March 31, 2024, the Group has repaid a significant
portion of the Galaxy debt by making its scheduled amortization
payments, sweeps on equity raises, and through the sale of non-core
assets. In addition, an equity raise completed in January 2024
provided the Group with additional cash resources. This has
strengthened the Group’s balance sheet and liquidity
position. However, material uncertainties exist that may cast
significant doubt regarding the Group’s ability to continue
as a going concern and meet its liabilities as they come due. The
significant uncertainties are:
1.
The Group’s
debt service obligations as of reporting date are approximately $18
million (Galaxy principal and interest on Galaxy and the bonds)
from 31 March 2024 to 30 June 2025.
2.
The Group’s
exposure to Bitcoin prices, power prices, and hashprice, each of
which have shown volatility over recent years and have a
significant impact on the Group’s future profitability. The
Group may have difficulty meeting its liabilities if there are
significant declines to the hashprice assumption or significant
increases to the power price, particularly where there is a
combination of both factors. The recent April 2024 Bitcoin halving
has created pressure on the hashprice. The Directors’
assessment of going concern includes forecasted scenarios drawn up
to 30 June 2025 using the Group’s estimate of potential
hashprices and power costs.
Offsetting these
potential risks to the Group’s cash flow are the
Group’s current cash balance, cash generated from operations
and the Group’s ability to generate additional funds by
issuing equity for cash proceeds.
Based
on information from Management, as well as independent advisors,
the Directors have considered the period to 30 June 2025, as a
reasonable time period given the variable outlook of
cryptocurrencies and the Bitcoin halving in April 2024. Based on
the above considerations, the Board believes it is appropriate to
adopt the going concern basis in the preparation of the Financial
Statements. However, the Board notes that the significant debt
service requirements and the volatile economic environment,
indicate the existence of material uncertainties that may cast
significant doubt regarding the applicability of the going concern
assumption and the auditors have made reference to this in their
audit report.
Revenue
and Other Income Recognition
Mining
Revenue
The
provision of hash calculation services is an output of our ordinary
activities from the Company’s mining equipment. The Company
has entered into arrangements with a Mining pool and has undertaken
the performance obligation of providing computing power used for
hashing calculations to the Mining pool in exchange for noncash
consideration in the form of cryptocurrency, which is variable
consideration. Providing our computing power is at the
Company’s discretion and our enforceable right to
compensation begins when, and continues for as long as, services
are provided. The cryptocurrency earnings are calculated based on a
formula which, in turn, is based on the hashrate contributed by the
Company's provided computing power used for hashing calculations
allocated to the Mining pool, assessed over a 24-hour period, and
distributed daily based on the Full Pay Per Share
(“FPPS”) methodology. The Company assesses the
estimated amount of the variable non-cash consideration to which it
expects to be entitled for providing computational power used for
hashing calculations at contract inception and subsequently
measures if it is highly probable that a significant reversal in
the amount of cumulative revenue recognized will not occur. The
uncertainties regarding the daily variable consideration to which
the Company is entitled for providing its computational power used
for hashing calculations are no longer constrained at 23:59:59 UTC
regardless of the timing of the BTC received. The amount earned is
calculated based on the Company's computing power used for hashing
calculations provided to the Mining pool and the estimated (i)
block subsidies and (ii) daily average transaction fees which the
Mining Pool expects to earn, less (iii) a Mining pool
discount.
1.
Block subsidies
refers to the block reward that are expected to be generated on the
BTC network as a whole. The fee earned by the Company is first
calculated by dividing (a) the total amount of hashrate the Company
provides to the Mining pool operator, by (b) the total BTC
network’s implied hashrate (as determined by the BTC network
difficulty), multiplied by (c) the total amount of block subsidies
that are expected to be generated on the BTC network as a
whole.
2.
Transaction fees
refer to the total fees paid by users of the network to execute
transactions. The fee paid out by the Mining pool operator to the
Company is further calculated by dividing (a) the total amount of
transaction fees that are actually generated on the BTC network as
a whole less the 3 largest and 3 smallest transactions per block,
by (b) the total amount of block subsidies that are actually
generated on the BTC network as a whole, multiplied by (c) the
Company’s fee earned as calculated in (i) above. The Company
is entitled to its relative share of consideration even if a block
is not successfully added to the blockchain by the mining
pool.
3.
Mining pool
discount refers to the discount applied to the total FPPS payout
otherwise attributed to computing power service providers for their
sale of computing power used for hashing calculations as defined in
the rate schedule of the agreement with the Mining pool
operator.
The
Company is entitled to the fee from the Mining Pool as calculated
above regardless of the actual performance of the Mining Pool
operator. Therefore, even if the Mining Pool does not successfully
add any block to the blockchain in a given contract period, the fee
remains payable by the Mining Pool to the Company. Accordingly, the
Company is not sharing in the earnings of the Mining pool
operator.
The
Company’s agreements with the Mining pool operator provide
the Mining pool operator and the Company with the enforceable right
to terminate the contract at any time without substantively
compensating the other party for the termination. Upon termination,
the Mining pool operator is required to pay the Company the amount
due related to previously satisfied performance obligations. As a
result, the Company has determined that the duration of the
contract is less than 24 hours and the contract is continuously
renewed throughout the day. The Company has also determined that
the Mining pool operator’s renewal right is not a material
right as the terms, conditions, and compensation amounts are at
then-current market rates.
The
cryptocurrency earned is received in full and can be paid in
fractions of cryptocurrency. Revenues from providing cryptocurrency
computational power used for hashing calculations are recognized
upon delivery of the service over a 24-hour period, which generally
coincides with the receipt of crypto assets in exchange for the
provision of computational power used for hashing calculations and
the contract inception date. The Company updates the estimated
transaction price of the non-cash consideration received at its
fair market value. Management estimates fair value daily based on
the quantity of cryptocurrency received multiplied by the price
quoted from Coingecko on the day it was received. Management
considers the prices quoted on Coingecko to be a level 1 input
under IFRS 13, Fair Value Measurement.
Power
Credits - Power credits are credits we receive in Texas when we
curtail our mining production and sell the power back to the grid.
The hosting agreement with Galaxy allows Argo to share in the
proceeds from these curtailments, which occurs when the Helios
facility monetizes its fixed-price PPA during periods of high power
prices. The Company records power credits in the period they are
earned provided they are estimable and recoverable.
Management fees: In
2022, the Group recognised management fees on the services provided
to third parties for management of mining machines on their behalf,
ensuring the machines are optimised and mining as efficiently as
possible. The performance obligation is identified as the services
are performed, and thus revenue is recorded over time.
Other
Income: The Group receives credits and or coupons for the purchase
and use of "Application-Specific Integrated Circuits ("ASICs") on a
periodic basis for Bitcoin Mining. These credits are provided to
the Group after it purchases ASICs based on the variance between
the price paid by the Group versus the reduction in ASIC prices.
The credits are transferable. The Group elects to sell the credits
at the market rate to willing buyers upon receipt of the credits.
Other income is recognised at the date the sale is
completed.
Derivative
Contracts – Hedging: In 2022, the Group used derivatives
contracts in connection with some of its lending activities and its
treasury management. Derivative contracts are susceptible to
additional risks that can result in a loss of all or part of the
investment. The Group’s derivative activities and exposure to
derivative contracts are subject to interest rate risk, credit
risk, foreign exchange risk, and macroeconomic risks. In addition,
Argo is also subject to additional counterparty risks due to the
potential inability of its counterparties to meet the terms of
their contracts. There were no hedging contracts in
2023.
Basis of consolidation
Subsidiaries are
all entities (including structured entities) over which the Group
has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The
Group assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the
three elements of control. Assets, liabilities, income and expenses
of a subsidiary acquired or disposed of during the year are
included in the consolidated financial statements from the date the
Group gains control until the date the Group ceases to control the
subsidiary.
The
group consists of Argo Blockchain plc and its wholly owned
subsidiaries Argo Innovation Labs Inc, Argo Operating US LLC and
Argo Holdings US Inc., 9366-5230 and 9377-2556 and Argo Innovation
Labs Ltd. Argo Innovation Labs Ltd has been dormant since
incorporation.
In the
parent company financial statements, investments in subsidiaries,
joint ventures and associates are accounted for at cost less
impairment.
The
consolidated financial statements incorporate those of Argo
Blockchain plc and all of its subsidiaries (i.e., entities that the
group controls through its power to govern the financial and
operating policies so as to obtain economic benefits). Subsidiaries
acquired during the year are consolidated using the purchase
method. Their results are incorporated from the date that control
passes.
All
intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation.
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 acquisition and
the equity interests issued by the group. The consideration
transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable
assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair
values at the acquisition date. The group recognises any
non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net
assets.
Acquisition-related
costs are expensed as incurred.
Associates
Associates are all
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.
If the
ownership interest in an associate is reduced but significant
influence is retained, only a proportionate share of the amounts
previously recognised in other comprehensive income is reclassified
to profit or loss where appropriate.
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. When the Group’s share
of losses in an associate equal or exceeds its interest in the
associate, including any other unsecured receivables, the Group
does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the
associate.
The
Group determines at each reporting date whether there is any
objective evidence that the investment in the associate is
impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the
associate and its carrying value and recognises the amount adjacent
to ‘share of profit/(loss) of associates in the income
statement.
Segmented reporting
Operating segments
are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and
assessing the performance of the operating segments, has been
identified as the CEO or equivalent. The directors consider that
the Group has only one significant reporting segment being crypto
mining which is fully earned by a Canadian and USA subsidiary for
the financial year ended 31 December 2023.
Loans and issued debt
Loans
and issued debt are recognised initially at fair value, net of
transaction costs incurred. Loans and issued debt 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.
Loans and issued debt are removed from the statement of financial
position when the obligation specified in the contract is
discharged, cancelled or expired. Loans and borrowings and issued
debt 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.
Intangible assets
Intangible fixed
assets comprise of the Group’s website and digital assets
that were not mined by the Group and are held by Argo Labs (our
internal team) as investments. The Group’s website is
recognised at cost and is amortised over its useful life.
Amortisation is recorded within administration expenses. Digital
assets recorded under IAS 38 have an indefinite useful life
initially measured at cost, and subsequently measured at fair
value.
Argo’s
primary business is focused on cryptocurrency mining. Argo Labs is
an in-house innovation arm focused on identifying opportunities
within the disruptive and innovative sectors of the broader
cryptocurrency ecosystem. Argo Labs uses a portion of Argo’s
crypto assets to deploy into various blockchain
projects.
Increases in the
carrying amount arising on revaluation of digital assets are
credited to other comprehensive income and shown as other reserves
in shareholders’ equity. Decreases that offset previous
increases of the same asset are charged in other comprehensive
income and debited against the fair value reserve directly in
equity; all other decreases are charged to the income
statement.
The
fair value of intangible cryptocurrencies on hand at the end of the
reporting period is calculated as the quantity of cryptocurrencies
on hand multiplied by price quoted on www.coingecko.com,
one of the leading crypto websites, as at the reporting
date.
Goodwill is
initially measured at cost (being the excess of the consideration
transferred and the amount recognised for non-controlling interests
and any previous interest held of the net identifiable assets
acquired and liabilities assumed). If the fair value of the net
assets acquired is in excess of the aggregate consideration
transferred, the difference is recognised in profit or
loss.
Tangible fixed assets
Tangible fixed
assets are comprised of right of use assets, office equipment,
mining and computer equipment, data centres, leasehold
improvements, and electrical equipment.
Right
of use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of the right of use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right of use
assets are depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the
assets.
Office
equipment assets are measured at cost, less any accumulated
depreciation and impairment losses. Office equipment is depreciated
over 3 years on a straight-line basis.
Mining
and computer equipment and leasehold improvements: Depreciation is
recognised so as to write off the cost or valuation of assets less
their residual values over their estimated useful lives. It is 3 to
4 years in the case of mining and computer equipment and 5 years in
the case of the leasehold improvements, on a straight-line
basis.
Data
centres: Depreciation on the data centres 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 from when they are brought into use.
Depreciation is recorded in the Income Statement within general
administrative expenses once the asset is brought into use. Any
land component is not depreciated.
Electrical
equipment: Depreciation is recognised on a straight-line basis to
write off the cost less their residual values over their estimated
useful lives of 7 years.
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.
Assets
Held for Resale
An
asset is classified as held for sale if its carrying amount will be
recovered principally through sale rather than through continuing
use, which is when the sale is highly probable, and it is available
for immediate sale in its present condition subject only to terms
that are usual and customary for sales of such assets. Assets
classified as held for sale are measured at the lower of the
carrying amount upon classification and the fair value less costs
to sell. Assets classified as held for sale and the associated
liabilities are presented separately from other assets and
liabilities in the Consolidated Balance Sheet. Once assets are
classified as held for sale, property, plant and equipment and
intangible assets are no longer subject to depreciation or
amortisation.
Impairment of non-financial assets
At each
reporting period end date, the Group reviews the carrying amounts
of its non-financial assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group and Company estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Digital assets
Digital
assets consist of mined bitcoin, and do not qualify for recognition
as cash and cash equivalents or financial assets and have an active
market which provides pricing information on an ongoing
basis.
The
Group has assessed that the most appropriate accounting for its
digital assets is IAS 2, Inventories, in characterising its holding
of Digital assets as inventory. If assets held by the Group are
principally acquired for the purpose of selling in the near future
and generating a profit from fluctuations in price, such assets are
accounted for as inventory, and changes in fair value (less costs
to sell) are recognised in profit or loss. Digital assets are
initially measured at fair value. Subsequently, digital assets are
measured at fair value with gains and losses recognised directly in
profit or loss.
Digital
assets are included in current assets as management intends to
dispose of them within 12 months of the end of the reporting
period. Digital assets are cryptocurrencies mined by the Group.
Cryptocurrencies not mined by the Group are recorded as Intangible
Assets (see note 17).
Cash and cash equivalents
Cash
and cash equivalents are comprised of cash held at banks with high
credit ratings. The Group considers the credit risk on cash and
cash equivalents to be limited because the counterparties are banks
with high credit ratings assigned by international credit rating
agencies.
Financial instruments
Financial assets:
Financial assets are recognised in the Statement of Financial
Position when the Group becomes party to the contractual provisions
of the instrument. Financial assets are classified into specified
categories. The classification depends on the nature and purpose of
the financial assets and is determined at the time of recognition.
Financial assets are subsequently measured at amortised cost, fair
value through OCI, or fair value through profit and
loss.
The
classification of financial assets at initial recognition that are
debt instruments depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for
managing them. The Group initially
measures a
financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction
costs.
In
order for a financial asset to be classified and measured at
amortised cost, it needs to give rise to cash flows that are
‘solely payments of principal and interest (SPPI)’ on
the principal amount outstanding. This assessment is referred to as
the SPPI test and is performed at an instrument level.
The
Group’s business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
Subsequent
measurement: For purposes of subsequent measurement, financial
assets are classified in four categories:
●
Financial assets at
amortised cost
●
Financial assets at
fair value through OCI with recycling of cumulative gains and
losses (debt instruments)
●
Financial assets
designated at fair value through OCI with no recycling of
cumulative gains and losses upon derecognition (equity
instruments)
●
Financial assets at
fair value through profit or loss
Equity
Instruments: The Group subsequently measures all equity investments
at fair value. Dividends from such investments continue to be
recognised in profit or loss as other income when the Group’s
right to receive payments is established. Changes in the fair value
of financial assets at FVPL are recognised in other gains/(losses)
in the statement of profit or loss as applicable.
Financial assets at
amortised cost (debt instruments): This category is the most
relevant to the Group. The Group measures financial assets at
amortised cost if both of the following conditions are
met:
●
The financial asset
is held within a business model with the objective to hold
financial assets in order to collect contractual cash flows;
and
●
The contractual
terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at
amortised cost are subsequently measured using the effective
interest rate (EIR) method and are subject to impairment. Interest
received is recognised as part of finance income in the statement
of profit or loss and other comprehensive income. Gains and losses
are recognised in profit or loss when the asset is derecognised,
modified or impaired. The Group’s financial assets at
amortised cost include other receivables and cash and cash
equivalents.
Derecognition: A
financial asset (or, where applicable, a part of a financial asset
or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group’s consolidated
Balance sheet) when:
●
The rights to
receive cash flows from the asset have expired; or
●
The Group has
transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full
without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group
has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset
When
the Group has transferred its rights to receive cash flows from an
asset or has entered into a pass-through arrangement, it evaluates
if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing involvement.
In that case, the Group also recognises an associated liability.
The transferred asset and the associated liability are measured on
a basis that reflects the rights and obligations that the Group has
retained.
Impairment of
financial assets: The Group recognises an allowance for expected
credit losses (ECLs) for all debt instruments not held at fair
value through profit or loss. ECLs are based on the difference
between the contractual
cash
flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation
of the original EIR. The expected cash flows will include cash
flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
The
Group considers a financial asset in default when contractual
payments are 90 days past due. However, in certain cases, the Group
may also consider a financial asset to be in default when internal
or external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full before taking
into account any credit enhancements held by the Group. A financial
asset is written off when there is no reasonable expectation of
recovering the contractual cash flows and usually occurs when past
due for more than one year and not subject to enforcement
activity.
At each
reporting date, the Group assesses whether financial assets carried
at amortised cost are credit impaired. A financial asset is
credit-impaired when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset
have occurred. The Company has an Intercompany loan due from its
100% Canadian subsidiary for which there is no formal agreement
including payment date and therefore it cannot be considered to be
in breach of an agreement and accordingly the loan is not subject
to adjustments and is maintained at its book value in the financial
statements.
Financial
liabilities: Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective hedge, as
appropriate. All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs. The Group’s
financial liabilities include trade and other payables and
loans.
Subsequent
measurement: The measurement of financial liabilities depends on
their classification, as described below:
Loans
and trade and other payables: After initial recognition,
interest-bearing loans and borrowings and trade and other payables
are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in the statement of profit or loss
and other comprehensive income when the liabilities are
derecognised, as well as through the EIR amortisation
process.
Amortised cost is
calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included as finance costs in the statement
of profit or loss and other comprehensive income. This category
generally applies to trade and other payables.
Derecognition: A
financial liability is derecognised when the associated obligation
is discharged or cancelled or expires.
When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss or
other comprehensive income.
Equity
instruments: Equity instruments issued by the group are recorded at
the proceeds received, net of transaction costs. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the
proceeds.
Leases
At
inception of a contract, the Group assesses whether a contract is,
or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an
identified asset, the Group uses the definition of a lease in IFRS
16.
The
Group recognises a right-of-use asset and a lease liability at the
lease commencement date. The right-of use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The
right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The
lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discount rate.
The
Group determines its incremental borrowing rate by obtaining
interest rates from various external financing sources and makes
certain adjustments to reflect the terms of the lease and type of
the asset leased. The lease liability is measured at amortised cost
using the effective interest method. It is remeasured when there is
a change in future lease payments.
When
the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset
or is recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
Taxation
The tax
expense or recovery represents the sum of tax currently payable or
receivable and deferred tax.
Current
tax: The tax currently payable or receivable is based on taxable
profit or loss for the year. Taxable profit or loss differs from
net profit or loss as reported in the income statement because it
excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible. The group’s liability for current tax is
calculated using tax rates that have been enacted or substantively
enacted by the reporting end date.
Deferred tax:
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Deferred income
tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries, associates and joint
arrangements only to the extent that it is probable the temporary
difference will reverse in the future and there is sufficient
taxable profit available against which the temporary difference can
be utilised.
The
carrying amount of deferred tax assets is reviewed at each
reporting end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised.
Deferred tax is charged or credited to the income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity. Deferred
tax assets and liabilities are offset when the company has a
legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority.
Employee benefits
The
costs of short-term employee benefits are recognised as a liability
and an expense.
Termination
benefits are recognised immediately as an expense when the company
is demonstrably committed to terminate the employment of an
employee or to provide termination benefits.
The
group does not have any pension schemes.
Share-based payments
Equity-settled
share-based payments are measured at fair value at the date of
grant by reference to the fair value of the equity instruments
granted using the Black-Scholes model. The fair value determined at
the grant date is expensed on a straight-line basis over the
vesting period, based on the estimate of shares that will
eventually vest. A corresponding adjustment is made to
equity.
Cancellations or
settlements are treated as an acceleration of vesting and the
amount that would have been recognised over the remaining vesting
period is recognised immediately.
RSUs (Restricted Stock Units)
Where
RSUs are granted to employees, the fair value of the RSUs at grant
date is based upon the market price of the shares underlying the
awards and is charged to the Statement of Comprehensive Income over
the vesting period. The expense charged is adjusted based on actual
forfeitures.
Foreign exchange
Transactions in
currencies other than US dollars are recorded at the rates of
exchange prevailing at the dates of the transactions. At each
reporting end date, monetary assets and liabilities that are
determined in foreign currencies are retranslated at the rates
prevailing on the reporting end date - Gains and losses arising on
translation are included in the income statement for the period. At
each reporting end date, non-monetary assets and liabilities that
are determined in foreign currencies are retranslated at the rates
prevailing on the opening balance sheet date. Gains and losses
arising on translation of subsidiary undertakings are included in
other comprehensive income and contained within the foreign
currency translation reserve.
Earnings per share
Basic
earnings per share is calculated by dividing:
●
the profit
attributable to owners of the company, excluding any costs of
servicing equity other than ordinary shares;
●
by the weighted
average number of ordinary shares outstanding during the financial
year, adjusted for bonus elements in ordinary shares issued during
the year and excluding treasury shares.
●
Diluted earnings
per share adjusts the figures used in the determination of basic
earnings per share to take into account:
●
the after-income
tax effect of interest and other financing costs associated with
dilutive potential ordinary shares; and
●
the weighted
average number of additional ordinary shares that would have been
outstanding, assuming the conversion of all dilutive potential
ordinary shares.
4.
FINANCIAL RISK FACTORS
The
Group’s activities expose it to a variety of financial risks:
market risk, credit risk and liquidity risk. The Group’s
overall risk management programme seeks to minimise potential
adverse effects on the Group’s financial performance. Risk
management is undertaken by the Board of Directors.
Market Risk
The
Group is dependent on the state of the cryptocurrency market,
sentiments of crypto assets as a whole, as well as general economic
conditions and their effect on exchange rates, interest rates and
inflation rates. During the year the Group sold its digital assets
held at 31 December 2022 at a loss. The Group now sells its Bitcoin
production as it is mined to reduce the impact of Bitcoin
prices.
The
Group is also subject to market fluctuations in foreign exchange
rates. The subsidiary (Argo Innovation Labs Inc.) is based in
Canada, and transacts in CAD$, USD$ and GBP. 9377-2556 Quebec Inc.
and 9366-5230 Quebec Inc. are based in Canada and transact in CAD.
Argo Innovations Facilities (US) Inc., Argo Holdings US Inc. and
Argo Operating US LLC are located in the United States of America
and transacts in USD. The Group bond is denominated in USD.
Cryptocurrency is primarily convertible into fiat through USD
currency pairs and through USD denominated stable coins and is the
primary method for the Group for conversion into cash. The Group
maintains bank accounts in all applicable currency
denominations.
Foreign currency sensitivity
The
following tables demonstrate the sensitivity to a reasonable
possible change in GBP and CAD exchange rates, with all other
variables held constant. The impact on the Group’s profit
before tax is due to changes in the fair value of monetary assets
and liabilities.
|
Change
in GBP
rate
|
Effect
on profit
before
tax
|
|
|
$’000
|
2023
|
+/-10%
|
+/-
74
|
2022
|
+/-10%
|
+/-77
|
|
Change
in CAD
rate
|
Effect
on profit
before
tax
|
Effect
on pre-
tax
equity
|
|
|
$’000
|
$’000
|
2023
|
+/-10%
|
+/-
274
|
-
|
2022
|
+/-10%
|
+/-1,384
|
+/-3,208
|
Interest
rate sensitivity
The
following table demonstrates the sensitivity to a reasonable
possible change in interest rates on the portion of the loans and
borrowings affected. With other variables held constant, the impact
on the Group’s profit before tax is affected through the
impact on floating rate borrowings, as follows.
|
Increase/decrease
in basis points
|
Effect
on profit before
tax
|
|
|
$’000
|
2023
|
+/-180
|
+/-464
|
2022
|
+/-180
|
+/-665
|
Credit
risk
Credit
risk arises from cash and cash equivalents as well as any
outstanding receivables. Management does not expect any losses from
non-performance of these receivables. The amount of exposure to any
individual counter party is subject to a limit, which is assessed
by the Board.
The
Group considers the credit risk on cash and cash equivalents to be
limited because the counterparties are banks with high credit
ratings assigned by international credit rating
agencies.
The
carrying amount of financial assets recorded in the financial
statements represents the Group’s and Company’s maximum
exposure to credit risk. The Group and Company do not hold any
collateral or other credit enhancements to cover this credit
risk.
Liquidity
risk
Liquidity risk
arises from the Group’s management of working capital. It is
the risk that the Group will encounter difficulty in meeting its
financial obligations as they fall due.
Management updates
cashflow projections on a regular basis and closely monitors the
cryptocurrency market on a daily basis. Accordingly, the
Group’s controls over expenditure are carefully managed, in
order to maintain its cash reserves. The Treasury committee meets
on a weekly basis to make decisions around future cashflows and
working capital requirements. Decisions may include considering
debt/equity options alongside selling Bitcoin.
The
table below analyses the Group’s non-derivative financial
liabilities and net-settled derivative financial liabilities into
relevant maturity groupings, based on the remaining period at the
Statement of Financial Position to the contractual maturity date.
Derivative financial liabilities are included in the analysis if
their contractual maturities are essential for an understanding of
the timing of the cash flows. The amounts disclosed in the table
are the contractual undiscounted cash flows.
The
Group complied with all covenants during the year and through to
the reporting date.
|
Less than 1
year
|
Between
1
and
2 years
|
Between
2
and
5 years
|
Over 5 years
|
At
31 December 2023
|
|
|
|
|
Loans
|
14,320
|
9,830
|
197
|
-
|
Issued
debt – bonds
|
-
|
-
|
38,170
|
-
|
|
At
December 2022
|
|
|
|
|
|
Loans
|
11,605
|
13,643
|
12,273
|
-
|
|
Lease
liabilities
|
5
|
5
|
15
|
511
|
|
Issued
debt – bonds
|
-
|
-
|
37,810
|
-
|
|
Capital
risk management
The
Group’s objectives when managing capital are to safeguard the
Group’s ability to continue as a going concern, in order to
provide returns for shareholders and benefits for other
stakeholders, and to maintain an optimal capital
structure.
5.
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 2023. The adoption of these standards and
amendments did not have any material impact on the financial result
or position of the Group.
At the
date of authorisation of these financial statements, the following
Standards and Interpretation, which have not yet been applied in
these financial statements, were in issue but not yet
effective:
Standard
or Interpretation
|
Description
|
Effective
date for annual accounting period beginning on or
after
|
IFRS
S1
|
General
Requirements for Disclosure of Sustainability-related Financial
Information
|
1 January 2024
|
IFRS
S2
|
Climate-related
Disclosures
|
1 January 2024
|
IAS
1 (amendments)
|
Classification
of Liabilities as Current and Non-Current
|
1 January 2024
|
IAS
1 (amendments)
|
Presentation
of Non-current Liabilities with Covenants
|
1 January 2024
|
IAS
7 and IFRS 7 (amendments)
|
Disclosures
on Supplier Finance Arrangements
|
1 January 2024
|
The
Group has not early adopted any of the above standards and intends
to adopt them when they become effective.
6.
KEY JUDGEMENTS AND
ESTIMATES
In the
application of the Group’s accounting policies, the directors
are required to make judgements, estimates and assumptions about
the carrying amount of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The
estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised where the revision affects
only that period, or in the period of the revision and future
periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities are outlined below.
Valuation
of tangible fixed assets – Note 18
The
directors considered whether any impairments were required on the
value of the property, plant and equipment. In doing so they made
use of forecasts of revenues and expenditure prepared by the Group
and came to the conclusion that impairment of those assets was
required based on current forecasts. Key assumptions include
Bitcoin production, hashprice, power prices and discount
rate.
Share-based
payments – Note 21
The
company has issued options and warrants to Directors, consultants
and employees which have been valued in accordance with the Black
Scholes model. Significant estimation and judgement is required in
determining the assumptions under the Black Scholes method. Further
details of these estimates are available in note 21.
The
company has issued restricted stock units (RSUs) and performance
stock units (PSUs) to employees which have been valued based on the
share price on the date of the award. The RSUs vest over three
years, beginning six months after the award and then every three
months thereafter. It is assumed that employees will meet each
vesting period and a related expense is recorded each month. If an
employee’s employment is terminated prior to a vesting date,
the prior expense for that vesting period is reversed. PSUs are
amortised over the vesting period based on the mostly outcome of
the performance metrics.
Taxation
and Contingent liabilities – Notes 13 and 27
The
Group is subject to tax liabilities (both income and excise
taxes)as assessed by the tax authorities in the jurisdictions in
which it operates. The Group has recorded its tax liabilities based
on the information which it has available, as described in Note
13.
However, a tax
authority could challenge our allocation of income, transfer
pricing and eligibility for input tax credits or assert that we are
subject to a tax in a jurisdiction where we believe we have not
established a taxable connection. If successful, these challenges
could increase our expected tax liability in one or more
jurisdictions. The Group is also subject to a class action lawsuit
as described in Note 28 and no accrual has been made as there is no
basis to estimate any liability.
Cryptocurrency
mining revenues are recognised at a point in time.
Cryptocurrency
management fees are services recognised over time.
Other Income
Argo
held 2,441 Bitcoin (fair valued at $80 million as at 31 December
2022) on its Balance Sheet at the beginning of 2022. The Group used
up to 1,504 Bitcoins as collateral with Galaxy Digital LP for a
short-term payable on demand loan of USD $30 million taken out on
December 23, 2022. To protect its Bitcoin holdings used as
collateral for the loan and reduce overall exposure, Argo took
positions in the markets which resulted in a net hedge gain of $2.1
million for 2022. There were no hedging contracts in
2023.
During
the year, Argo generated $7,163,000 in power credits (2022: $nil),
with $3.8 million generated in the month of August during a
state-wide heat wave.
|
|
2023
|
2022
|
Operating
expenses
|
$’000
|
$’000
|
Salary
and other employee related costs
|
6,430
|
11,887
|
Restructuring
and transaction related costs
|
4,969
|
11,862
|
Insurance
|
2,128
|
7,455
|
Depreciation and
amortisation
|
1,473
|
8,535
|
Legal,
professional and regulatory fees
|
1,431
|
3,925
|
Indirect
taxes
|
994
|
4,208
|
Property
tax
|
919
|
349
|
Consulting
fees
|
533
|
1,024
|
Repairs
and maintenance
|
455
|
1,067
|
Audit
fees
|
341
|
383
|
Office
general expenses
|
285
|
1,039
|
Public
relations and associated activities
|
255
|
642
|
Travel
|
226
|
839
|
Carbon
credits
|
129
|
-
|
Bank
charges
|
34
|
297
|
Freight, postage
and delivery
|
30
|
1,625
|
Capital
loss
|
-
|
143
|
Research
costs
|
-
|
11
|
Foreign
exchange loss
|
(1,287)
|
(21,234)
|
Total
operating expenses
|
19,345
|
34,057
|
|
|
|
Finance
costs – interest on borrowings and bond
|
11,556
|
22,661
|
Total
finance costs
|
11,556
|
22,661
|
|
9.
AUDITOR’S
REMUNERATION
|
2023
|
2022
|
|
$’000
|
$’000
|
In
relation to statutory audit services
|
341
|
383
|
Total
auditor’s remuneration
|
341
|
383
|
The
average monthly number of persons (including directors) employed by
the group during the period was:
|
2023
|
2022
|
|
Number
|
Number
|
Directors and
employees
|
30
|
82
|
The
aggregate remuneration (including directors) comprised
of:
|
2023
|
2022
|
|
$’000
|
$’000
|
Wages
and salaries
|
6,017
|
11,051
|
Social
security costs
|
250
|
799
|
Pension
costs
|
163
|
37
|
Share
based payments
|
3,892
|
6,096
|
|
10,322
|
17,983
|
11.
DIRECTOR’S
REMUNERATION
|
2023
|
2022
|
|
$’000
|
$’000
|
Director’s
remuneration for qualifying services
|
591
|
1,588
|
Severance
|
765
|
-
|
Share
based payments
|
916
|
1,883
|
Total
remuneration for directors and key management
|
2,272
|
3,471
|
Further
details of Directors’ remuneration are available in the
Remuneration report and note 28.
The
basic earnings per share are calculated by dividing the loss
attributable to equity shareholders by the weighted average number
of shares in issue.
|
2023
|
2022
|
Net
loss for the period attributable to ordinary equity holders from
continuing operations ($’000)
|
(35,033)
|
(228,961)
|
Finance
Weighted average number of ordinary shares in issue
(‘000)
|
503,917
|
473,930
|
Basic
and diluted loss per share for continuing operations
(pence)
|
(0.07)
|
(0.48)
|
The
diluted loss per Ordinary Share is calculated by adjusting the
weighted average number of Ordinary Shares outstanding to consider
the impact of options, warrants and other dilutive securities. As
the effect of potential dilutive Ordinary Shares in the current
year would be anti-dilutive, they are not included in the above
calculation of dilutive earnings per Ordinary Share for
2023.
|
Current
tax:
|
2023
$’000
|
2022
(Restated)
$’000
|
|
Current
tax recovery on loss for the year
|
-
|
(11,731)
|
|
Total
current tax
|
-
|
(11,731)
|
|
|
|
Deferred
tax:
|
2023
$’000
|
2022
$’000
|
|
Origination and
reversal of temporary differences
|
-
|
9,840
|
|
Total
deferred tax liability
|
-
|
|
|
|
|
|
Total
tax credit
|
-
|
(446)
|
No
deferred tax has been recognised on the losses brought forward and
carried forward on the UK, Canada and US losses given the
uncertainty on the generation of future profits.
Income tax expense
The tax
on the Group’s profit before tax differs from the theoretical
amount that would arise using the weighted average tax rate
applicable to profits of the consolidated entities as
follows:
|
2023
|
2022
|
|
$’000
|
$’000
|
Profit
(loss) before taxation
|
(35,033)
|
(240,693)
|
Expected tax charge
(recovery) based on a weighted average of 25% (2022 - 25%) (UK, US
and Canada)
|
(8,758)
|
(60,172)
|
Effect
of expenses not deductible in determining taxable
profit
|
851
|
32,662
|
Temporary
differences
|
5,930
|
8,470
|
Other
tax adjustments
|
18
|
254
|
Origination and
reversal of temporary differences
|
-
|
(1,023)
|
Unutilised tax
losses carried forward
|
1,959
|
8,078
|
Taxation
charge in the financial statements
|
-
|
(11,731)
|
The group has tax losses available to be carried
forward and used against trading profits arising in future periods
of approximately $136,000,000
(2022 - $87,000,000).
The
weighted average applicable tax rate was 25% (2022:
25%).
A tax
authority may disagree with tax positions that we have taken, which
could result in increased tax liabilities. For example, His
Majesty’s Revenue & Customs (“HMRC”), the IRS
or another tax authority could challenge our allocation of income
by tax jurisdiction and the amounts paid between our affiliated
companies pursuant to our intercompany arrangements and transfer
pricing policies, including amounts paid with respect to our
intellectual property development. Similarly, a tax authority could
assert that we are subject to tax in a jurisdiction where we
believe we have not established a taxable connection and such an
assertion, if successful, could increase our expected tax liability
in one or more jurisdictions.
14.
ASSETS AND
LIABLITIES HELD FOR SALE
In
December 2023, the group signed an offer to purchase 9366-5230
Quebec Inc. In March 2024, a purchase and sale agreement was signed
for the sale of 9366-5230 Quebec Inc. (“Mirabel”) for
proceeds of $6.1 million. As a result of the sale, the material
assets and liabilities of Mirabel were reclassified to be held for
sale as at December 31, 2023, as follows:
Non-current
Assets
|
2023
$’000
|
Tangible Fixed
Assets
|
2,725
|
Right
of use assets
|
536
|
Assets
held for sale
|
3,261
|
Non-current
liabilities
|
2023
$’000
|
Mortgage
Payable
|
1,532
|
Lease
Liability
|
558
|
Liabilities
held for sale
|
2,090
|
15.
INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR
LOSS
Non-current
Group
|
2023
$’000
|
2022
$’000
|
At 1
January
|
414
|
543
|
Foreign
exchange movement
|
-
|
1
|
Additions
|
-
|
300
|
Fair
value through profit or loss
|
-
|
(430)
|
Disposals
|
(14)
|
-
|
At
31 December
|
400
|
414
|
16.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY
METHOD
|
2023
|
2022
|
|
$’000
|
$’000
|
Opening
balance
|
2,863
|
18,642
|
Share
of loss
|
(716)
|
(6,027)
|
Share
of fair value (losses)/gains on intangible assets through other
comprehensive income
|
-
|
(8,744)
|
Foreign
exchange movement
Write
off of investment
|
89
(2,236)
|
(1,008)
-
|
Closing
balance
|
-
|
2,863
|
Nature
of investment in associates:
Name
of entity
|
Address
of the registered office
|
% of
ownership
interest
|
Nature
of
relationship
|
Measurement
method
|
Emergent
Entertainment PLC Previously Pluto Digital plc)
|
Hill
Dickinson LLP, 8th Floor The Broadgate Tower, 20 Primrose Street,
London, United
Kingdom, EC2A
2EW
|
19.5%
|
Refer
below
|
Equity
|
In
December 2023, Emergent Entertainment Ltd (“EEL”)
announced they have engaged an insolvency advisor to place it in
liquidation. On January 10, 2024, EEL appointed liquidators to
voluntarily wind up the company. The Group has written off the
balance of the investment in 2023.
17.
INTANGIBLE FIXED
ASSETS
Group
|
Goodwill
|
Digital
assets
|
Website
|
2023
Total
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Cost
|
|
|
|
|
At 1
January 2023
|
96
|
5,722
|
873
|
6,691
|
Foreign
Exchange Movements
|
16
|
334
|
19
|
369
|
Disposals
|
-
|
(727)
|
-
|
(727)
|
At 31
December 2023
|
112
|
5,329
|
892
|
6,333
|
Amortisation
and impairment
|
|
|
|
|
At 1
January 2023
|
-
|
3,811
|
780
|
4,591
|
Foreign
exchange movement
|
-
|
88
|
-
|
88
|
Fair
value movement
|
-
|
654
|
-
|
654
|
Amortisation
charged during the period
|
-
|
-
|
112
|
112
|
At 31
December 2023
|
-
|
4,553
|
892
|
5,445
|
|
Balance
At 31 December 2023
|
112
|
776
|
-
|
888
|
Group
|
Goodwill
|
Digital
assets
|
Website
|
2022
Total
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Cost
|
|
|
|
|
At 1
January 2022
|
96
|
6,394
|
873
|
7,364
|
Foreign Exchange movement
|
-
|
(274)
|
-
|
(274)
|
Additions
|
-
|
2,084
|
-
|
2,084
|
Disposals
|
-
|
(2,482)
|
-
|
(2,482)
|
At 31
December 2022
|
96
|
5,722
|
873
|
6,691
|
Amortisation
and impairment
|
|
|
|
|
At 1
January 2022
|
-
|
146
|
543
|
689
|
Foreign
exchange movement
|
-
|
(1,490)
|
(31)
|
(1,521)
|
Fair
value movement
|
-
|
5,155
|
-
|
5,155
|
Amortisation
charged during the period
|
-
|
-
|
267
|
267
|
At 31
December 2022
|
-
|
3,811
|
780
|
4,588
|
|
Balance
At 31 December 2022
|
96
|
1,913
|
94
|
2,103
|
Digital
assets are cryptocurrencies not mined by the Group. The Group held
crypto assets during the year, which are recorded at cost 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, impairment of the
intangible assets and any increase in fair value are recorded in
the fair value reserve.
The
digital assets held below are held in Argo Labs (a division of the
Group) as discussed above. The assets are all held in secure
custodian wallets controlled by the Group team and not by
individuals within the Argo Labs team. The assets detailed below
are all accessible and liquid in nature.
Crypto
asset name
|
Coins
/ tokens
|
Fair
value
$’000
|
Polkadot –
DOT
|
16,554
|
135
|
Ethereum –
ETH
|
4
|
10
|
USDC
(stable coin – fixed to USD)
|
31,713
|
55
|
Other
tokens, NFTs and other digital assets
|
N/A
|
576
|
As
at 31 December 2023
|
|
776
|
Crypto
asset name
|
Coins
/ tokens
|
Fair value
$’000
|
Token
Deals
|
N/A
|
931
|
Ethereum
– ETH
|
518
|
626
|
Polkadot
– DOT
|
32,964
|
142
|
Other
tokens, NFTs and other digital assets
|
N/A
|
214
|
As at 31 December 2022
|
|
1,913
|
18.
TANGIBLE FIXED ASSETS
Group
|
Mining
Machinery
|
Data
Centres
|
Equipment
|
Total
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Cost
|
|
|
|
|
At 1
January 2023
|
162,839
|
8,700
|
5,414
|
176,953
|
|
|
|
|
|
Foreign
Exchange Movement
|
108
|
517
|
569
|
1,195
|
Additions
|
5,203
|
-
|
27
|
5,230
|
Transfer to Assets
held for sale
|
-
|
(2,937)
|
(1,976)
|
(4,913)
|
At 31
December 2023
|
168,150
|
6,280
|
4,034
|
178,464
|
Depreciation
and impairment
|
|
|
|
|
At 1
January 2023
|
(97,481)
|
(1,924)
|
(31)
|
(99,437)
|
Foreign
exchange movement
|
-
|
(38)
|
(43)
|
(81)
|
Depreciation
charged during the period
|
(18,656)
|
(359)
|
(1,000)
|
(20,015)
|
Impairment in
asset
|
(855)
|
-
|
-
|
(855)
|
Transfer to Assets
held for sale
|
-
|
784
|
868
|
1,652
|
At 31
December 2023
|
(116,992)
|
(1,537)
|
(206)
|
(118,736)
|
Carrying
amount
|
At 1
January 2023
|
65,358
|
6,775
|
5,383
|
77,516
|
At
31 December 2023
|
51,158
|
4,743
|
3,828
|
59,728
|
Group
|
Mining
Machines
|
Assets
under
construction
|
Data
Centres
|
Equipment
|
Total
|
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
Cost
|
|
|
|
|
|
At 1
January 2022
|
70,539
|
73,924
|
7,900
|
5,313
|
157,676
|
|
|
|
|
|
|
Foreign
exchange movement
|
3,310
|
8,787
|
701
|
-
|
12,797
|
Additions
|
162,315
|
-
|
99
|
103
|
162,518
|
Transfers to
another class – cost
|
-
|
(82,711)
|
82,711
|
-
|
-
|
Disposals
|
(73,325)
|
-
|
(82,711)
|
(2)
|
(156,038)
|
At 31
December 2022
|
162,839
|
-
|
8,700
|
5,414
|
176,953
|
Depreciation
and impairment
|
|
|
|
|
|
At 1
January 2022
|
(22,316)
|
-
|
(364)
|
-
|
(22,680)
|
Foreign
exchange movement
|
(1,047)
|
-
|
(17)
|
-
|
(1,064)
|
Depreciation
charged
|
(19,955)
|
-
|
(8,286)
|
(31)
|
(28,273)
|
Impairment in
asset
|
(54,163)
|
-
|
(271)
|
-
|
(54,434)
|
Transfer to another
class
|
-
|
-
|
7,014
|
-
|
7,014
|
At 30
December 2022
|
(97,481)
|
-
|
(1,924)
|
(31)
|
(99,437)
|
Carrying
amount
|
At 1
January 2022
|
48,223
|
73,924
|
7,536
|
5,313
|
134,966
|
At
31 December 2022
|
65,358
|
-
|
6,775
|
5,383
|
77,516
|
Acquisition
of DPN LLC
On 8
March 2022 the Group completed the acquisition of DPN LLC to
acquire 160 acres (with option to purchase a further 157 acres) of
land in West Texas for the construction of a 200MW mining facility
for completion mid-2023.
The
acquisition of DPN LLC, effectively comprising the land acquisition
in West Texas, has been treated as an asset acquisition in the
financial statements. The consideration for the acquisition was an
initial price of GBP 3.6m, satisfied by the issue and allotment to
the shareholders of DPN LLC of 3,497,817 new ordinary shares in
Argo, with up to a further 8.6m of shares payable if certain
contractual milestones related to the facility are
fulfilled.
The
initial issue and allotment of GBP 3.6m has been recognised based
on the estimated fair value of assets received at acquisition in
line with IFRS 2 Share-based payments. Contingent consideration
balance of this business combination has been subsequently measured
at fair value with changes recognised in profit and loss in line
with IFRS 9. The fair value of assets acquired was assessed in line
with independent valuations of the site by CBRE as well as external
financial due diligence and financial modelling. Financial models
used historical power purchase assumptions for the area and the
Company’s internal hash rate and Bitcoin pricing assumptions
to help the Company evaluate the financial benefits of developing a
Bitcoin mining operation on the land. Work performed by DPN LLC
from August 2019, when it purchased the land, to March 2022, when
it sold the land to the Company, to prepare for a Bitcoin mining
operation added to the value of the land for that
purpose.
Consideration
at 8 March 2022
|
|
|
$’000
|
Share
based payment
|
4,355
|
Contingent
consideration to be settled in shares
|
10,710
|
Total
|
15,065
|
Allocated
as follows
|
$’000
|
Tangible fixed
assets (Asset under construction)
|
15,065
|
Total
|
15,065
|
Property,
Plant and Equipment Impairments and Loss on Sale
The
Group has a single line of business, crypto mining. As such, the
Group has one cash generating unit (CGU). At each reporting date,
the Group assesses whether there is an indication that an asset may
be impaired. If an indication exists, the Group estimates an
asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset or CGU’s fair value, less
costs of disposal and its value in use. When the carrying value of
an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable
amount.
In
assessing the fair value of Mining and Computer Equipment, the
Group used readily available tera hash pricing ("hashprice") less a
15% discount for used equipment. In assessing value in use, the
discounted estimated future cash flows over the useful life of the
mining machines using a pre-tax discount rate of 14.09%. As a
result of the analysis, an impairment charge of $0.9 million (2022
- $55.8 million) was recorded. A 5% change in the hashprice has a
$1.5 million impact on the impairment. A 1% change in the discount
rate has a $0.4 million impact on the impairment.
Impairment of Chips
In
assessing the fair value of machine components, the Group used
readily available chip set prices and management’s estimate
of other components in the chip sets to determine the value of
chips on hand. As a result of this analysis, an impairment of $(0.1
million) was recorded (2022 - $18 million).
Loss
on Sale
During
2022, the Group sold chips for proceeds of $12,404 and recorded a
loss on disposal of $23,228.
Mining
Machine Swap
In
March 2022, the Group entered into an agreement to exchange mining
machines and terminate a hosting agreement. With the completion of
Helios, the Group no longer required third party hosting services.
The agreement provided the hosting provider with ownership of the
Group's machines at their facilities in exchange for new mining
machines for our Helios facility. The hash rate between the two
groups of mining machines was similar. This transaction lacks
commercial substance, therefore, IFRS 16 requires the mining
machines acquired to be recorded at the book value of the mining
machines transferred to the hosting service provider.
19.
TRADE AND OTHER
RECEIVABLES
|
Group
2023
|
Group
2022
|
|
$’000
|
$’000
|
Trade
and other receivables
|
1,131
|
-
|
Prepaids
|
1,355
|
-
|
Mining
equipment prepayments
|
-
|
5,978
|
Other
taxation and social security
|
1,349
|
824
|
Total
trade and other receivables
|
3,835
|
6,802
|
Within
other taxation and social security is a provision against
GST/QST/VAT receivable of $2,325,000 in relation to ongoing matters
in connection with GST Notice 324 released by the Canadian Revenue
Authority, and ongoing discussions with HMRC. The Group have
included the provision for prudence and upon conclusion of the
matter, the Group will adjust this provision
accordingly.
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.
All of
the Group’s holding in crypto currencies other than Bitcoin
are now classified as intangible assets.
At the
period end, the Group held Bitcoin representing a fair value of
$385k. The breakdown of which can be seen below:
Group
|
|
|
|
2023
$’000
|
2022
$’000
|
At
1 January
|
443
|
108,956
|
Foreign
Exchange Movement
|
24
|
833
|
|
|
|
Crypto
assets purchased and received
|
-
|
264
|
Crypto
assets mined
|
50,558
|
60,172
|
Total
additions
|
50,582
|
61,269
|
Disposals
|
|
|
Transferred to/from
intangible assets
|
|
420
|
Crypto
assets sold
|
(51,378)
|
(114,646)
|
Total
disposals
|
(51,378)
|
(114,226)
|
Fair
value movements
|
|
|
Gain/(loss) on
crypto asset sales
|
738
|
(55,410)
|
Movements on crypto
assets held at the year end
|
-
|
(145)
|
Total
fair value movements
|
738
|
(55,555)
|
At
31 December
|
385
|
443
|
|
As at
31 December 2023, digital assets comprised of 9 Bitcoin (2022: 25
Bitcoin).
21.
SHARE OPTIONS,
RESTRICED STOCK UNITS AND WARRANTS
In
2022, the Remuneration Committee of the Board
(“Committee”) approved the 2022 Equity Incentive Plan
(“the Plan”). Under the Plan, the Committee, at its
discretion, may issue awards, including share awards, stock
options, stock appreciation rights (“SARs”), restricted
stock units, performance awards and American Depository Shares to
any employee of the Group. The exercise price of stock options and
the base price of SARs may not be less than the market price of the
underlying shares on the date of grant. Stock options and SARs may
have an exercise period up to ten years after the grant
date.
The
following table summarizes share-based compensation expense for the
years ended December 31, 2023 and 2022:
|
2023
|
2022
|
Stock
options and warrants
|
3,332
|
6,096
|
Restricted
stock units
|
287
|
-
|
Performance
stock units
|
273
|
-
|
|
3,892
|
6,096
|
|
Number
of options
and
warrants ‘000
|
Weighted
average
exercise
price £
|
At 1
January 2023
|
18,698
|
0.78
|
Granted
|
659
|
0.13
|
Exercised
|
-
|
-
|
Lapsed
|
(8,329)
|
0.67
|
Outstanding
at 31 December 2023
|
11,028
|
0.83
|
Exercisable at 31
December 2023
|
7,904
|
0.89
|
|
Number
of options
and
warrants ‘000
|
Weighted
average
exercise
price £
|
At 1
January 2022
|
17,689
|
0.81
|
Granted
|
5,220
|
0.50
|
Exercised
|
(1,593)
|
0.07
|
Lapsed
|
(2,618)
|
0.89
|
Outstanding at 31
December 2022
|
18,698
|
0.78
|
Exercisable at 31
December 2022
|
11,345
|
0.61
|
The
weighted average remaining contractual life of options and warrants
as at 31 December 2023 is 83 months (2022
-93
months). If the exercisable shares had been exercised on 31
December 2023 this would have represented 1.5% (2022 – 2.3%)
of the enlarged share capital.
At the
grant date, the fair value of the options and warrants prior to the
listing date was the net asset value and post listing determined
using the Black-Scholes option pricing model. Volatility was
calculated based on data from comparable listed technology start-up
companies, with an appropriate discount applied due to being an
unlisted entity at grant date. Risk free interest has been based on
UK Government Gilt rates for an equivalent term. The inputs into
the Black-Scholes model are as follows:
|
2023
|
2022
|
Grant
date share price £
|
0.14
|
0.94 -
1.57
|
Exercise
price £
|
0.13
|
0.94 -
1.57
|
Volatility
|
187%
|
91
– 169%
|
Life
|
10
years
|
5
– 10 years
|
Risk
free rate
|
3.4%
|
1.6 -
3.6%
|
Dividend
yield
|
0%
|
0%
|
Restricted
Stock Units
In
2023, the Committee approved the grant of RSUs to employees. The
RSUs vest quarterly beginning the sixth month after the grant date
over a three-year period. The weighted average remaining vesting
period is the period to the last vesting date.
|
2023
|
|
Number
of Awards
|
Weighted
Average Grant Date Price £
|
Weighted
Average Remaining Vesting Period (months)
|
Outstanding
at beginning of period
|
-
|
-
|
|
Granted
during the period
|
12,041,192
|
0.13
|
|
Vested
during the period
|
(3,617,136)
|
0.13
|
|
Forfeited
during the period
|
(1,424,239)
|
0.13
|
|
Outstanding
at the end of period
|
6,999,817
|
0.12
|
28
|
Performance
Stock Units (American Depository Shares)
In
2023, the Committee approved the grant of PSUs for the American
Depository Shares to the CEO of the Group. The PSUs vest annually
over a three-year period. The annual vesting amount may vary from
25% - 100%. The weighted average remaining vesting period assumes
the last vesting date is the latest vesting date
possible.
|
2023
|
|
Number
of Awards
|
Weighted
Average Grant Date Price $
|
Weighted
Average Remaining Vesting Period (months)
|
Outstanding
at beginning of the period
|
-
|
-
|
|
Granted
during the period
|
2,850,000
|
1.15
|
|
Vested
during the period
|
-
|
-
|
|
Forfeited
during the period
|
-
|
-
|
|
Outstanding
at the end of the period
|
2,850,000
|
1.15
|
35
|
|
As
at 31 December
2023
|
As
at 31 December
2022
|
|
$’000
|
$’000
|
Ordinary
share capital
|
|
|
Issued and fully paid
|
|
|
477,825,166
Ordinary Shares of $0.001 each
|
634
|
622
|
Issued in the period
|
|
|
59,138,305 Ordinary
Shares of $0.001 each
|
78
|
12
|
536,963,471
Ordinary Shares of $0.001 each
|
712
|
634
|
Share
premium
|
At
beginning of the period
|
202,103
|
196,911
|
Issued
in the period
|
7,676
|
5,192
|
Issue
costs
|
-
|
-
|
At the
end of period
|
209,779
|
202,103
|
See the
subsequent events note for additional shares issued after period
end.
23. 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 reserve
|
Represents the fair
value of options and warrants granted less amounts transferred on
exercise, lapse or expiry
|
Currency
translation reserve
|
Cumulative effects
of translation of opening balances on non-monetary assets between
subsidiaries functional currencies (Canadian dollars and Uk
Sterling) and Group presentational currency (US
Dollars).
|
Fair
value reserve
|
Cumulative net
gains on the fair value of intangible assets
|
Other
comprehensive income of equity accounted associates
|
The
other comprehensive income of any associates is recognised in this
reserve
|
Accumulated
surplus
|
Cumulative net
gains and losses and other transactions with equity holders not
recognised elsewhere.
|
24.
TRADE AND OTHER
PAYABLES
|
Group
2023
|
Group
2022
|
|
$’000
|
$’000
|
Trade
payables
|
2,336
|
3,079
|
Accruals and other
payables
|
7,153
|
6,012
|
Other
taxation and social security
|
1,686
|
689
|
Total
trade and other creditors
|
11,175
|
9,780
|
The
directors consider that the carrying value of trade and other
payables is equal to their fair value.
Contingent
consideration
In June
2022, the Company issued 8,147,831 Ordinary Shares to settle $5.0
million in contingent consideration. The remaining contingent
consideration of $5.0 million was not earned and as a result was
reversed into profit or loss.
Non-current
liabilities
|
As at 31 December
2023
$’000
|
As at 31 December
2022
$’000
|
Issued
debt – bond (a)
|
38,170
|
37,810
|
Galaxy
loan (b)
|
9,230
|
18,475
|
Mortgage –
Quebec facility (c)
|
797
|
2,785
|
Lease
liability
|
-
|
531
|
Total
|
48,197
|
59,601
|
Current
liabilities
|
Galaxy
loan (b)
|
13,444
|
10,169
|
Mortgage- Quebec
facility (c)
Other
Loans
|
600
276
|
1,130
306
|
Lease
liability
|
-
|
5
|
Total
|
14,320
|
11,610
|
In
November 2021, the Group issued an unsecured 5-year bond with an
interest rate of 8.75%. The bonds mature on 30 November 2026. The
bonds may be redeemed for cash in whole or in part at any time at
the Group’s option (i) on or after 30 November 2023 and prior
to 30 November 2024, at a price equal to 102% of their principal
amount, plus accrued and unpaid interest to, but excluding, the
date of redemption, (ii) on or after 30 November 30 and prior to 30
November 2025, at a price equal to 101% of their principal amount,
plus accrued and unpaid interest to, but excluding, the date of
redemption, and (iii) on or after November 30, 2025 and prior to
maturity, at a price equal to 100% of their principal amount, plus
accrued and unpaid interest to, but excluding, the date of
redemption. The Group may redeem the bonds, in whole, but not in
part, at any time at its option, at a redemption price equal to
100.5% of the principal amount plus accrued and unpaid interest to,
but not including, the date of redemption, upon the occurrence of
certain change of control events. The bonds are listed on the
Nasdaq Global Select Market under the symbol ARBKL.
(b)
Galaxy
and related loans
On 23
December 2021 the Group entered into a loan agreement with Galaxy
Digital LP for a loan of USD$30 million. The proceeds of the loan
were used, in conjunction with funds raised previously, to continue
the build-out of the Texas data centre, Helios. The short-term loan
was a Bitcoin collateralised loan with an interest rate of 8% per
annum. This loan was repaid during 2022 as part of the Galaxy
transaction.
In
March 2022, the Group entered into loan agreements with NYDIG ABL
LLC for loans in the amounts of USD$97 million for the purchase of
mining machines and Helios infrastructure, respectively. The loan
was repaid during the year as part of the Galaxy
transaction.
In May
2022, the Group entered into a loan agreement with Liberty
Commercial Finance for a loan of USD$1.2 million ($1.0m) to
purchase equipment. The loan is repayable over a period of 36
months with an interest rate of 11.9%. In June 2022, the loan was
assigned to North Mill Equipment Finance LLC (“New
Mill”). The loan was repaid during the year as part of the
Galaxy transaction.
In
December 2022, the Group sold Galaxy Power LLC (see note 14) and
entered into a loan agreement with Galaxy Digital LLC for USD$35
million. Proceeds were used to pay off the Galaxy Digital LP, New
Mill and NYDIG loans and working capital. The Galaxy Digital LLC
loan is payable monthly based on an amortization schedule over 32
months with an interest rate of the secured overnight financing
rate by the Federal Reserve Bank of New York plus 11%. The loan is
secured by the Group’s property, plant and
equipment.
(c)
Mortgage
– Quebec Facility
The
mortgage is secured against the property at Baie-Comeau and is
repayable over 36 months at an interest rate of Lender Prime +
0.5%. (7.7% as of 31 December 2023).
26.
FINANCIAL
INSTRUMENTS
|
Group
2023
|
Group
2022
|
|
$’000
|
$’000
|
Carrying
amount of financial assets
|
|
|
Measured at
amortised cost
|
|
|
- Mining
equipment prepayments
|
-
|
5,978
|
- Trade
and other receivables
|
1,131
|
-
|
- Cash
and cash equivalents
|
7,443
|
20,091
|
Measured at fair
value through profit or loss
|
400
|
414
|
Total
carrying amount of financial assets
|
8,974
|
26,483
|
Carrying
amount of financial liabilities
|
|
|
Measured at
amortised cost
|
|
|
- Trade
and other payables
|
7,501
|
10,020
|
- Short
term loans
|
280
|
11,605
|
- Long
term loans
|
25,599
|
25,915
|
- Issued
debt – bonds
|
38,170
|
37,810
|
- Lease
liabilities
|
-
|
545
|
Total
carrying amount of financial
liabilities
|
71,550
|
85,895
|
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 that are measured
at fair value at 31 December 2023 and 31 December
2022.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Assets
|
$’000
|
$’000
|
$’000
|
$’000
|
Financial assets at
fair value through profit or loss
|
|
|
|
|
- Equity
holdings
|
-
|
-
|
400
|
400
|
- Digital
assets
|
-
|
385
|
-
|
385
|
Total
at 31 December 2023
|
-
|
385
|
400
|
785
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Assets
|
$’000
|
$’000
|
$’000
|
$’000
|
Financial assets at
fair value through profit or loss
|
|
|
|
|
- Equity
holdings
|
14
|
-
|
400
|
414
|
- Digital
assets
|
-
|
443
|
-
|
443
|
Total
at 31 December 2022
|
329
|
443
|
400
|
857
|
All
financial assets are in listed and 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.
-
The deferred
consideration has been fair valued to the year-end date as the
amount is to be paid in Argo shares.
27.
COMMITMENTS AND
CONTINGENCIES
The
Group’s material contractual commitments relate to the
hosting services agreement with Galaxy Digital Qualified
Opportunity Zone Business LLC, which provides hosting, power and
support services at the Helios facility. 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. The agreement is for services with no identifiable
assets, therefore, there is no right of use asset associated with
the agreement.
As the
company disclosed on February 8, 2023, it is currently subject to a
class action lawsuit. The case, Murphy vs Argo Blockchain plc et
al, was filed in the Eastern District of New York on 26 January
2023. The company refutes all of the allegations and believes that
this class action lawsuit is without merit. The company is
vigorously defending itself against the action. We are not
currently subject to any other material pending legal proceedings
or claims.
The
Company is also subject to other litigation matters in the ordinary
course of business. Subsequent to period end, the Company settled a
breach of contract claim for $0.5 million. This was accrued in
operating expenses at 31 December 2023.
28.
RELATED PARTY
TRANSACTIONS
The
compensation paid to related parties in respect of services
rendered in 2023 were:
●
$170,554 (2022 -
$133,867) to Webslinger Advisors in respect of fees of Matthew Shaw
(Non-executive director);
●
$129,752 (2022 -
$148,679) in respect of fees for Maria Perrella (Non-executive
director);
●
$135,105 (2022 -
$130,438) in respect of fees for Raghav Chopra (Non-executive
director);
●
$27,659 (2022 -
$nil) to Jim MacCallum (CFO) through JMM Consulting
Inc.;
●
$166,738 (2022 -
$803,112) to Alex Appleton (Previous CFO) through Appleton Business
Advisors Limited.
There
is no controlling party of the Group.
30.
POST BALANCE SHEET
EVENTS
In
January 2024, the Company issued 38,064,000 new ordinary shares at
a price per share of £0.205 to certain institutional investors
for gross proceeds of $9.9 million.
In
March 2024, the Group sold its Mirabel Facility for proceeds of
$6.1 million. See note 14 for additional details.
VII.
COMPANY STATEMENT OF FINANCIAL
POSITION
Note
|
As at
December
2023
|
As at
December
2022
|
As at
January 1
2022
|
$’000
|
$’000
|
$’000
|
ASSETS
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Investment at fair
value through profit or loss
|
3
|
100
|
100
|
100
|
Investments in
Associate
|
|
-
|
2,863
|
18,642
|
Investments in
Subsidiary
|
4
|
43,983
|
65,000
|
-
|
Tangible Fixed
Assets
|
|
739
|
2,195
|
-
|
Total
non-current assets
|
44,822
|
70,158
|
18,742
|
Current
assets
|
|
|
|
|
Trade
and Other Receivables
|
1
|
77
|
-
|
1,466
|
Prepaids
|
1
|
573
|
1,080
|
10,226
|
Cash
and cash equivalents
|
3
|
705
|
139
|
170
|
Intercompany
|
1
|
28,199
|
10,336
|
253,935
|
Total
Current Assets
|
29,554
|
11,555
|
265,797
|
|
|
|
Total
assets
|
74,376
|
81,713
|
284,539
|
EQUITY
AND LIABILITIES
|
|
|
|
|
Equity
|
|
|
|
|
Share
Capital
|
22
|
(712)
|
(634)
|
(622)
|
Share
Premium
|
22
|
(209,779)
|
(202,103)
|
(196,911)
|
Share
based payment reserve
|
|
(12,166)
|
(8,528)
|
(2,531)
|
Foreign
Currency Translation Reserve
|
|
29,295
|
26,935
|
8,100
|
Other comprehensive
income of equity accounted associates
|
|
-
|
-
|
(8,744)
|
Accumulated
(surplus)/deficit
|
|
161,448
|
146,547
|
(24,929)
|
Total
equity
|
(31,914)
|
(37,783)
|
(225,637)
|
Current
liabilities
|
|
|
|
|
Trade
and other payables
|
2
|
(4,042)
|
(6,120)
|
(11,710)
|
Contingent
consideration
|
|
-
|
-
|
(10,899)
|
Loan
|
|
(250)
|
-
|
-
|
Total
current liabilities
|
(4,292)
|
(6,120)
|
(22,599)
|
Non-current
liabilities
|
|
|
|
|
Issued
Debt
|
|
(38,170)
|
(37,809)
|
(36,303)
|
Total
liabilities
|
(42,462)
|
(43,930)
|
(58,902)
|
|
|
|
Total
equity and liabilities
|
(74,376)
|
(81,713)
|
(284,539)
|
As
permitted by s408 Companies Act 2006, the company has not presented
its own profit and loss account and related notes. The
company’s total comprehensive loss for the year was $17.3
million (2022: $191.1 million). The Group financial statements were
approved by the board of directors on 24 April 2024 and authorised
for issue; they are signed on its behalf by:
Thomas
Chippas
Chief
Executive Officer
24
April 2024
The
accounting policies and notes on pages 91 to 94 form part of the
financial statements.
Registered number:
11097258
VIII.
COMPANY STATEMENT OF CHANGES IN
EQUITY
|
Share
Capital
|
Share
Premium
|
Currency
Translation
Reserve
|
Share
based
payment
reserve
|
Accumulated
surplus/
(deficit)
|
Total
|
|
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
Balance
at 1 January 2023
|
|
634
|
202,103
|
(26,935)
|
8,528
|
(146,547)
|
37,783
|
Total
comprehensive income for the
period:
|
|
|
|
|
|
|
|
Loss
for the period
|
|
-
|
-
|
-
|
-
|
(14,901)
|
-
|
Other
comprehensive income
|
|
-
|
-
|
(2,360)
|
-
|
-
|
(2,360)
|
Total
comprehensive income for the period
|
|
-
|
-
|
(2,360)
|
-
|
(14,901)
|
(17,261)
|
Transactions
with equity owners:
|
|
|
|
|
|
|
|
Share
capital issued
|
|
78
|
7,676
|
-
|
-
|
-
|
7,754
|
Share
based payments charge
|
|
-
|
-
|
-
|
3,892
|
-
|
3,892
|
Share
RSUs vested
|
|
-
|
-
|
-
|
(254)
|
-
|
(254)
|
Total
transactions with equity owners
|
|
78
|
7,676
|
-
|
3,316
|
-
|
11,392
|
|
|
|
Balance
at 31 December 2023
|
|
712
|
209,779
|
(29,295)
|
12,166
|
(161,448)
|
31,914
|
|
Share
Capital
|
Share
Premium
|
Share
based
payment
reserve
|
Currency
Translation
Reserve
|
Other
comprehensive
income of associate
|
Accumulated
surplus/
(deficit)
|
Total
|
|
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
Balance
at 1 January 2022
|
|
622
|
196,911
|
2,531
|
(8,100)
|
8,744
|
24,929
|
225,637
|
Total
comprehensive income for the
period:
|
|
|
|
|
|
|
|
|
Loss
for the period
|
|
-
|
-
|
-
|
-
|
-
|
(171,476)
|
(171,476)
|
Other
comprehensive income
|
|
-
|
-
|
-
|
(18,835)
|
(8,744)
|
-
|
(27,579)
|
Total
comprehensive income for the period
|
|
-
|
-
|
-
|
(18,835)
|
(8,744)
|
(171,476)
|
(199,055)
|
Transactions
with equity owners:
|
|
|
|
|
|
|
|
|
Share
capital issued
|
|
12
|
5,192
|
-
|
-
|
-
|
-
|
5.204
|
Share
based payments charge
|
|
-
|
-
|
5,997
|
-
|
-
|
-
|
5,997
|
Share
options/warrants exercised
|
|
-
|
-
|
|
-
|
|
-
|
-
|
Total
transactions with equity owners
|
|
12
|
5,192
|
5,997
|
-
|
-
|
-
|
11,201
|
|
|
|
Balance
at 31 December 2022
|
|
634
|
202,103
|
8,528
|
(26,935)
|
-
|
(146,547)
|
37,783
|
COMPANY STATEMENT OF CASH
FLOWS
|
Year
ended December 2023
|
Year ended December 2022
|
$’000
|
$’000
|
Cash
flows from operating activities
|
|
|
|
Loss
before tax
|
|
(14,901)
|
(171,476)
|
Adjustments
for:
|
|
|
|
Share
of loss from associate
|
|
716
|
6,026
|
Fair
value adjustment on contingent consideration
|
|
-
|
(4,995)
|
Foreign
exchange movements
|
|
(1,877)
|
(7,617)
|
Finance
cost
Write
off of investments
Impairment
of assets
Share
based payment expense
|
|
4,888
22,764
83
3,874
|
-
-
-
6,095
|
Loss on
disposal of investment in subsidiary
|
|
-
|
128,949
|
Impairment of
assets
|
|
-
|
18,702
|
Working
capital changes:
|
|
|
|
(Increase)/decrease
in trade and other receivables
|
|
1,803
|
10,071
|
Increase/(decrease)
in trade and other payables
|
|
(2,079)
|
(4,116)
|
Net
cash generated/used in operating activities
|
15,271
|
(18,361)
|
Investing
activities
|
|
|
|
(Increase)/decrease
in loan to subsidiary
|
|
(17,863)
|
18,346
|
Net
cash used in/generated from investing activities
|
(17,863)
|
18,346
|
Financing
activities
|
|
|
|
Loan
proceeds
Loan
repayments
Interest
paid
|
|
811
(561)
(4,602)
|
-
-
-
-
|
Proceeds from
shares issued – net of issue costs
|
|
7,518
|
-
|
Net
cash generated from financing activities
|
3,166
|
-
|
|
|
Net
(decrease)/increase in cash and cash equivalents
|
574
|
(14)
|
Cash
and cash equivalents at beginning of period
|
|
139
|
156
|
Effect
of foreign exchange on cash and cash equivalents
Cash
and cash equivalents at end of period
|
|
(8)
705
|
(2)
139
|
|
Company
- net debt reconciliation
|
|
Year
ended
31 December
2023
|
Year
ended
31 December
2022
|
|
|
$’000
|
$’000
|
Non-current loans
and borrowings
|
2
|
(38,170)
|
(37,809)
|
Cash
and cash equivalents
|
|
705
|
139
|
Total
net (debt) / asset
|
|
(37,465)
|
(37,670)
|
X.
NOTES TO THE
FINANCIAL STATEMENTS
Argo
Blockchain PLC (“the company”) is a public company,
limited by shares, and incorporated in England and Wales. The
registered office is Eastcastle House, 27-28 Eastcastle Street,
London, W1W 8DH. The company was incorporated on 5 December 2017 as
GoSun Blockchain Limited and changed its name to Argo Blockchain
Limited on 21 December 2017. Also on 21 December 2017, the company
re-registered as a public company, Argo Blockchain plc. Argo
Blockchain plc acquired a 100% subsidiary, Argo Innovation Labs
Inc. (together “the Group”), incorporated in Canada, on
12 January 2018.
The
Company financial statements are required by Companies House and do
not include any intercompany eliminations, The Company financial
statements and note disclosures should be read in conjunction with
the Group statements and notes above.
1.
TRADE AND OTHER
RECEIVABLES / INTERCOMPANY
|
Company
2023
|
Company
2022
|
|
$’000
|
$’000
|
Trade
and other receivables/prepayments
|
650
|
1,080
|
Total trade and other receivables
|
650
|
1,080
|
Within
receivables is a provision against VAT receivable of $499,000 in
relation to ongoing matters in connection with ongoing discussions
with HMRC. The Group have included the provision for prudence and
upon conclusion of the matter, the Group will adjust this provision
accordingly.
COMPANY - INTERCOMPANY
|
Company
2023
|
Company
2022
|
|
$’000
|
$’000
|
Amounts
due from group companies, net
|
28,199
|
10,336
|
Funds
advanced to group companies were used for operating expenses,
settling debt and purchasing tangible and intangible assets. There
are no terms of repayment. The amounts due are non-interest
bearing. The decrease in 2022 is as a result of the debts from Argo
Innovation Facilities (US) which were converted to shares to be
issued prior to the sale.
The
Company considers the intercompany loan to its subsidiary (Argo US
Operating LLC.) to be fully recoverable based on review of
projected cash flows and acceptance of regular payments directly to
the Company’s creditors.
2.
TRADE AND OTHER
PAYABLES
|
Company
2023
|
Company
2022
|
|
$’000
|
$’000
|
Trade
payables
|
1,253
|
2,690
|
Accruals and other
payables
|
2,781
|
3,430
|
Other
taxation and social security
|
9
|
-
|
Total
trade and other creditors
|
4,043
|
6,120
|
The
directors consider that the carrying value of trade and other
payables is equal to their fair value.
Contingent consideration
In June
2022, the Company issued 8,147,831 Ordinary Shares to settle $5.0
million in contingent consideration. The remaining contingent
consideration of $5.0 million was not earned and as a result was
reversed into profit or loss.
|
Company
2023
|
Company
2022
|
|
$’000
|
$’000
|
Carrying
amount of financial assets
|
|
|
Measured at
amortised cost
|
|
|
- Trade
and other receivables
|
77
|
-
|
- Cash
and cash equivalents
|
705
|
139
|
Measured at fair
value through profit or loss
|
100
|
100
|
Total
carrying amount of financial assets
|
882
|
239
|
Carrying
amount of financial liabilities
|
|
|
Measured at
amortised cost
|
|
|
- Trade
and other payables
|
3,044
|
4,431
|
- Short
term loans
|
250
|
-
|
- Long
term loans
|
-
|
-
|
- Issued
debt – bonds
|
38,170
|
37,810
|
- Lease
liabilities
|
-
|
-
|
Total
carrying amount of financial
liabilities
|
41,464
|
42,241
|
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 company’s assets that are
measured at fair value at 31 December 2023 and 31 December
2022.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Assets
|
$’000
|
$’000
|
$’000
|
$’000
|
Financial assets at
fair value through profit or loss
|
|
|
|
|
- Equity
holdings
|
-
|
-
|
100
|
100
|
Total
at 31 December 2023
|
-
|
-
|
100
|
100
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Assets
|
$’000
|
$’000
|
$’000
|
$’000
|
Financial assets at
fair value through profit or loss
|
|
|
|
|
- Equity
holdings
|
|
-
|
100
|
100
|
Total
at 31 December 2022
|
-
|
-
|
100
|
100
|
All
financial assets are in unlisted securities. 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.
-
The deferred
consideration has been fair valued to the year-end date as the
amount is to be paid in Argo shares.
4.
INVESTMENT IN
SUBSIDIARIES AND LOSS ON SALE OF SUBSIDIARY
Company
Details
of the Company’s subsidiaries at 31 December 2023 are as
follows:
Name
of Undertaking
|
Country of
Incorporation
|
Ownership
Interest
(%)
|
Voting Power
Held (%)
|
Nature
of
Business
|
Argo
Innovation Labs Inc.
|
Canada
|
100%
|
100%
|
***
|
9377-2556 Quebec
Inc.
|
Canada
|
100%
|
100%
|
**
|
9366-5230 Quebec
Inc.
|
Canada
|
100%
|
100%
|
**
|
Argo
Holdings US Inc.
|
USA
|
100%
|
100%
|
****
|
Argo
Operating US LLC
|
USA
|
100%
|
100%
|
*
|
* The provision of cryptocurrency mining
services
** The
provision of cryptocurrency mining sites
***
Converted from the provision of cryptocurrency mining services to
cost centre in 2023
****
Holding company
Investment
in subsidiaries
|
2023
$’000
|
2022
$’000
|
|
|
|
At
January 1
|
65,000
|
15,067
|
Impairment
|
(21,017)
|
-
|
Additions
|
-
|
65,000
|
Disposals
|
-
|
(15,067)
|
At
31 December
|
43,983
|
65,000
|
Argo
Holdings US Inc. was incorporated on November 22, 2023, with a
registered office of 1209 Orange Street, Wilmington, Delaware, USA,
19801. The company contributed shares in Argo Innovation Facilities
(US) valued at $65m.
Argo
Operations US LLC was formed on November 22, 2022, with a
registered office of 1209 Orange Street, Wilmington, Delaware, USA,
19801.
Argo
Innovation Facilities (US) Inc was incorporated on 25 February 2022
with a registered address of 2028 East Ben White Blvd. Austin, TX
78740. This entity held the Helios facility and real property
in Dickens County, Texas. On 21 December 2023, Argo
Innovation Facilities (US) Inc. was converted to Galaxy Power LLC.
Galaxy Power LLC was sold on 28 December 2023 pursuant to an equity purchase
agreement. The proceeds received for the sale were $65
million against a book value of $120 million resulting in a loss on
sale for the Group of $120 million.
The
effects of the disposal of Galaxy Power LLC on the cash flows of
the Group were:
|
Group
At 28 December
2022
|
|
$000
|
Carrying
amounts of assets and liabilities as at the date of
disposal:
|
Cash
and bank balances
|
1,678
|
Property, plant and
equipment
|
129,736
|
Trade
and other debtors
|
367
|
Total
assets
|
131,782
|
Trade
and other creditors
|
12,077
|
Total
liabilities
|
12,077
|
Net
assets disposed of
|
119,705
|
Cash
flows arising from disposal:
|
|
Proceeds used to
paydown existing debt
|
56,029
|
Proceeds used for
new loans
|
8,258
|
Total
Proceeds
|
64,287
|
Net
assets disposed of (as above)
|
119,705
|
Loss on
disposal
|
(55,418)
|
|
|
5.
KEY JUDGEMENTS AND
ESTIMATES
Valuation of investments in subsidiaries and amounts due from group
companies – Note 19
The
Board considered amounts due from group companies and whether any
further impairments were required on their carrying value. When
considering these amounts, they made use of forecasts of the
profitability of the subsidiary and of their revenues and
expenditure and concluded that impairment of those assets was
necessary based on current forecasts and performance during the
first part of 2024.
The
forecasts to support this were built using our existing internal
models showing positive cash contribution and profitability of the
subsidiaries and their future value to the Group as a whole. Both
pre and post year end these models continue to show that the
contribution to the Group is at least the carrying value of these
investments and as such no impairment has been
recognised.
The average monthly number of persons (including directors)
employed by the company during the period was:
|
2023
|
2022
|
|
Number
|
Number
|
Directors and
employees
|
6
|
10
|
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date:
25 April,2024
|
ARGO BLOCKCHAIN PLC
By:
/s/ Jim
MacCallum
Name:
Jim MacCallum
Title:
Chief Financial Officer
|