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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Argo Blockchain Plc | LSE:ARB | London | Ordinary Share | GB00BZ15CS02 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.20 | 1.67% | 12.20 | 12.00 | 12.50 | 12.25 | 12.00 | 12.00 | 1,976,662 | 16:35:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 47.36M | -194.23M | -0.3628 | -0.34 | 65.58M |
From Apr 2019 to Apr 2024
TIDMARB
RNS Number : 4625M
Argo Blockchain PLC
17 September 2019
PRESS RELEASE
17 September 2019
Argo Blockchain Plc
("Argo" or "the Group")
Interim Results
Argo Blockchain Plc, a UK-based provider of enterprise-scale cryptocurrency mining services (LSE: ARB), is pleased to announce its unaudited interim results for the six month period ended 30 June 2019 (the "Interim Report").
Financial highlights
-- Revenue increased by 283% to GBP2.93 million (Full year to 31 December 2018: GBP0.76m) -- Operating profit of GBP0.94m (FY 2018: GBP4.14m loss) -- Achieved maiden profit of GBP0.94m (FY 2018: GBP4.12m loss) -- Earnings per share of 0.32p (FY 2018: 2.2p loss per share)
Operating highlights
-- Reduced annual mining cost base by 35% with new strategy
-- Successfully transitioned from consumer mining service to industrial-scale cryptomining for own account and institutional market from beginning of Q2 2019
-- Generated GBP1.4m of cryptoassets in June 2019 from a total of 5,000 machines in production at the end of 30 June 2019
-- Launched major expansion of inhouse mining infrastructure with 505 peta hash capacity to come on stream by end of 2019
Post-Period Highlights
-- On 20 August signed a new multi-year agreement increasing access to clean electricity six-fold to 64 megawatts (MW), up from 9.5MW a year ago and 14MW in June 2019
-- Strengthened Board with appointment of Matthew Shaw as independent non-executive director
Commenting on the results, Mike Edwards, executive chairman, said: "We have delivered strong growth and maiden profits only a year after the Company joined the London stock market as a pre-revenue venture. This result validates our decisive action to refocus the business in the light of volatile trading conditions. Our aggressive investment in scaling-up mining capacity, together with favourable industry conditions, provides strong momentum for the second half and our goal to become the world's largest public miner in 2020. Accordingly, the Board looks forward to the future with great confidence"
For further information please visit www.argoblockchain.com or contact:
Hot Features
Premium
Argo Blockchain
Mike Edwards via Tancredi +44 207 434 2334
Executive Chairman +44 (0) 7876 455323
Neil Thapar
Financial Communications
Advisor
------------------------------
Mirabaud
------------------------------
Peter Krens
Corporate Broker +44 203 167 7221
------------------------------
Tancredi Intelligent Communication
Media Relations
------------------------------
Salamander Davoudi
salamander@tancredigroup.com +44 7957 549 906
------------------------------
About Argo:
Argo Blockchain plc is a global data centre business that provides a purpose-built and flexible platform for mining of leading cryptocurrencies for the enterprise-scale and institutional sectors worldwide from operational centres in Canada. The Company is headquartered in London, UK and its shares are listed on the Main Market of the London Stock Exchange under the ticker: ARB.
www.argomining.co
Interim Management Report
I am delighted to report that Argo delivered a strong operational and financial performance in the first half of 2019, resulting in a significant maiden profit on stellar revenue growth - just 12 months after it joined the London Stock Exchange as a start-up venture.
The Group's results improved dramatically from a loss of GBP4.14m for the year ended 31 December 2018 to pre-tax profits of GBP0.94m on revenues up 283% to GBP2.93m for the six months to 30 June 2019. Earnings per share amounted to 0.32p against a loss per share of 2.2p at 31 December 2018.
The results reflect the benefits of a radical change in strategy implemented from April this year following a severe industry downturn brought on by a collapse in cryptocurrency prices in late 2018 and early this year.
In response Argo took a bold and timely decision to pivot from operating a subscription-based mining service aimed at the general public to generating profits by mining for its own account. Importantly, we also continued to invest in a state-of-the art mining platform during the recession in anticipation of an industry upturn which eventually took place from mid-March 2019 onwards.
It is also worth noting that we switched our focus to mining Bitcoin (BTC) from mining alt-coins, in October 2018, positioning the Company to benefit from a sustained rally led by Bitcoin this year. Since then, BTC has increased its market dominance with a current share at approximately 71%.
The closure of the consumer business enabled the Company to reduce its annual mining cost base by 35%. The new strategy also contributed to the elimination of annual marketing, administrative and customer support expenses, releasing more funds to scale-up its mining platform at a time when hardware prices were low.
These measures, aided by a strong upturn in industry conditions and cryptocurrency prices - with the price of Bitcoin nearly tripling from $3,827 to $10,817 at 30 June 2019 -- has led to, on average, mining margins on a cash basis of 80% in the first half.
As at 30 June, the Company held c.GBP3m of cryptoassets on its account generated from its own mining activities based on a BTC price of $10,817.
During the period, the Company committed to purchases of GBP18m of mining gear which puts it on track to have an installed base of more than 12,000 mining machines by the end of this year, representing a total hashing capacity of 505 petahash.
Financial review
Revenue increased by 283% to GBP2.9m attributable to increased mining operations from an installed base of 5,000 machines reached at the end of the period. The number of Company's data centres increased from two to three over the past 12 months.
Net cash equivalents amounted to GBP5.6m as at 30 June 2019 compared with GBP16m at 31 December 2018. The decrease in cash balances reflects a ramp up in investment in mining infrastructure.
Post period developments
On 20 August 2019, the Company announced a new power supply agreement with GPU.one to increase access to clean energy by 357% from 14MW as at June 2019 to 64MW on similar terms to its existing agreement, at its two data centres in Quebec and its new data centre in Eastern Canada. The Company had a 9.5MW supply agreement in place last year. The agreement covers a three-year period from June 25th, 2019, with an option to extend thereafter for an additional two years.
The addition of 50 megawatts of power will allow the Company to run up to 15,000 more mining machines concurrently, taking its total Bitcoin (BTC) mining capacity from 505 petahash (PH) at the end of 2019, as announced on July 4th, to 1.36 exahash (EH), which would currently make Argo the largest publicly listed crypto miner in the world.
The new agreement will be entirely funded out of crypto mining proceeds from Argo's existing facilities in Quebec.
Further to the Company's policy to strengthen Board representation, Matthew Shaw was appointed as independent non-executive director effective 17July 2019. He brings more than 25 years' experience as an international banker, corporate adviser and latterly an entrepreneur specialising in the technology and cryptocurrency sectors.
Outlook
Current trading is progressing well as Bitcoin prices remain firm and we continue to enjoy strong momentum from a rapid expansion of our mining capacity and return on investments.
Given a continued stable pricing environment for cryptocurrencies, our 2019 results are expected to reflect a full six-month contribution from our existing mining platform as well as the positive impact of further increase in installed capacity to approximately 12,000 machines by the end of this year.
With new long term electricity supply agreements in place and our drive to establish Argo as the world's largest public miner by next year, the Board looks to the future with great confidence.
Mike Edwards
Executive Chairman
Responsibility Statement
We confirm that to the best of our knowledge:
-- the Interim Report has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU; and
-- gives a true and fair view of the assets, liabilities, financial position and profit/loss of the Group; and
-- the Interim Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year.
-- the Interim Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.
The Interim Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:
Mike Edwards
Executive Chairman
16 September 2019
Condensed Consolidated Statement of Comprehensive Income
The unaudited, condensed, consolidated statement of comprehensive income of the Group for the six month period ended 30 June 2019 is set out below.
Group Unaudited Group Unaudited Group Audited
6 months 6 months Period ended
ended ended 31 December
30 June 30 June 2018
2019 2018
Notes GBP GBP GBP
Revenue 4 2,933,019 - 764,562
Cost of sales (1,358,771) - (1,175,964)
Gross profit/(loss) 1,574,248 - (411,402)
Administrative expenses (632,175) (1,147,039) (3,731,913)
------------------ ------------------ ----------------
Operating profit/(loss) 942,073 (1,147,039) (4,143,315)
Interest expense - - (9,934)
Finance income 4,784 1,011 35,964
Profit/(loss) before taxation 946,857 (1,146,028) (4,117,285)
Tax - - -
Profit/(loss) for the financial
period 946,857 (1,146,028) (4,117,285)
Other comprehensive income - - -
Total comprehensive profit/(loss)
attributable to the equity holders
of the parent 946,857 (1,146,028) (4,117,285)
================== ================== ================
Basic earnings/(loss) per share 5 0.32p (0.99)p (2.2)p
Fully diluted earnings/(loss)
per share 5 0.28p n/a n/a
Condensed Consolidated Statement of Financial Position
The unaudited, condensed, consolidated statement of financial position of the Group as at 30 June 2019 is set out below.
Group Unaudited Group Audited
As at As at
30 June 2019 31 December
2018
Notes GBP
GBP
ASSETS
Non-current assets
Investments 6 60,241 -
Financial assets fair
valued through profit
or loss 7 1,394,177 -
Intangible assets 8 575,599 619,500
Tangible assets 8 19,861,811 2,457,240
Total non-current assets 21,891,828 3,076,740
------------------
Current assets
Trade and other receivables 11 4,923,035 2,179,057
Cash and cash equivalents 10 5,612,964 16,389,443
Other current assets 9 3,044,044 2,082
Total current assets 13,580,043 18,570,582
------------------ ----------------
Total assets 35,471,871 21,647,322
------------------ ----------------
EQUITY and LIABILITIES
Share capital 12 293,750 293,750
Share premium 12 25,252,288 25,252,288
Retained earnings (3,170,428) (4,117,285)
Total equity 22,375,610 21,428,753
------------------ ----------------
Current liabilities
Trade and other payables 14 13,096,261 218,569
Total liabilities 13,096,261 218,569
------------------ ----------------
Total equity and liabilities 35,471,871 21,647,322
------------------ ----------------
Condensed Consolidated Statement of Changes in Equity
The unaudited, condensed, consolidated statement of changes in equity of the Group for the six month period ended 30 June 2019 is set out below.
Share Share premium Share Retained Total shareholders'
capital based losses equity
payment
reserve
CURRENT PERIOD GBP GBP GBP GBP GBP
Balance at 5 December 1 - - - -
2017
Loss for the period - - - (1,146,028) (1,146,028)
---------------------------- --------- -------------- --------- ------------ --------------------
Total comprehensive
loss for the period - - - (1,146,028) (1,146,028)
Transactions with owners
Issue of ordinary shares
net of share costs 137,499 2,420,000 - - 2,557,500
----------------------------
Balance at 30 June 2018 137,500 2,420,000 - (1,146,028) 1,411,472
Loss for the period - - (2,971,257) (2,971,257)
---------------------------- --------- -------------- --------- ------------ --------------------
Total comprehensive
loss for the period - - (2,971,257) (2,971,257)
Transactions with owners
Issue of ordinary shares
net of share costs 156,250 22,832,288 - - 22,988,538
Balance at 31 December
2018 293,750 25,252,288 - (4,117,285) 21,428,753
Profit for the period - - - 946,857 946,857
---------------------------- --------- -------------- --------- ------------ --------------------
Total comprehensive
profit for the period - - - 946,857 946,857
Transactions with owners
Issue of ordinary shares
net of share costs - - - - -
Balance at 30 June 2019 293,750 25,252,288 - (3,170,428) 22,375,610
---------------------------- --------- -------------- --------- ------------ --------------------
Condensed Consolidated Statement of Cash Flows
The unaudited condensed consolidated cash flow statement of the Group for the six month period ended 30 June 2019 is set out below.
Group Unaudited Group Unaudited Group Audited
6 months Period ended Period ended
ended 30 June 2018 31 December
30 June 2019 2018
GBP GBP GBP
Cash flows from operating activities
Operating profit/loss 942,073 (1,147,039) (4,153,249)
Depreciation 728,213 40,825 487,697
Cryptoasset purchases for resale - - 329,088
Cryptoasset mining (2,772,301) - -
Increase in fair value of cryptoassets (37,404) - -
Equity settled share-based payments - 60,000 60,000
Decrease / (increase) in trade
and other receivables (2,743,978) (90,192) (2,181,139)
(Decrease) / increase in trade
and other payables 12,877,692 18,200 218,569
------------------- ------------------ ------------------
Net cash inflow/(outflow) used
in operating activities 8,994,295 (1,118,206) (5,239,034)
------------------- ------------------ ------------------
Cash flows from investing activities
Investment (1,454,418) - -
Purchase of assets (18,088,883) (913,737) (3,564,437)
Cryptoassets for resale (232,257) - (329,088)
Finance income 4,784 1,011 35,964
------------------- ------------------ ------------------
Net cash outflow from investing
activities (19,770,774) (912,726) (3,857,561)
------------------- ------------------ ------------------
Cash flows from financing activities
Proceeds from issue of shares,
net of issue costs - 2,497,500 25,486,038
------------------- ------------------
Net Cash generated from Financing
Activities - 2,497,500 25,486,038
------------------- ------------------ ------------------
Net increase in cash and cash equivalents (10,776,479) 466,568 16,389,443
Cash and cash equivalents at beginning 16,389,443 - -
of period
Cash and cash equivalents at end
of period 5,612,964 466,568 16,389,443
------------------- ------------------ ------------------
Notes to the Condensed Consolidated Interim Report
For the period ending 30 June 2019
1 Company information
Argo Blockchain plc ("the company") is a public limited company
incorporated in England and Wales. The registered office is Room
4, 1st Floor 50 Jermyn Street, London, United Kingdom, SW1Y 6LX.
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 Blockchain Canada Holdings Inc.
(together "the Group"), incorporated in Canada, on 12 January
2018.
On 3 August 2018 the company placed 156,250,000 ordinary shares
at a price of 16 pence per ordinary share and gained admission
to the official list (by way of Standard Listing under chapter
14 of the Listing Rules) and to trading on the London Stock Exchange's
main market for listed securities.
The principal activity of the group is that of the provision
of crypto mining services.
Reporting period
The financial statements cover the six month period from 1 January
2019 to 30 June 2019.
1.1 Basis of preparation
The condensed consolidated interim financial statements ("interim
financial statements") have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting"
(IAS 34) as adopted by the European Union (EU). The interim financial
statements have been prepared on the historical cost basis and
are presented in pounds sterling, which is the currency of the
primary economic environment in which the Group operates. All
amounts have been rounded to the nearest pound, unless otherwise
stated. The financial information contained in the interim financial
statements is unaudited and does not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006.
The accounting policies are unchanged from those disclosed in
the previously filed audited financial statements for the period
ended 31 December 2018.
The consolidated interim financial statements are for the 6 months
to 30 June 2019, being 6 months from the period end of the first
financial year for Argo Blockchain Plc, 31 December 2018. The
interim consolidated financial information does not include all
the information and disclosures required in the annual financial
statements and should be read in conjunction with the group's
annual audited financial statements for the period ended 31 December
2018. As required by accounting standards, the Company has disclosed
comparative data for the statement of comprehensive income for
the trading company for the 6 months ended 30 June 2018.
Cyclicality
The interim results for the six months ended 30 June 2019 are
not necessarily indicative of the results to be expected for
the full year ending 31 December 2019. Due to the nature of the
entity, the operations are not affected by seasonal variations
at this stage.
Going concern
The Directors, having made appropriate enquiries consider that,
due to its cash and cryptocurrency reserves and current mining
revenues, adequate resources exist for the Company and Group
to continue in operational existence for the foreseeable future
and that, therefore, it is appropriate to adopt the going concern
basis in preparing the condensed interim financial statements
for the period ended 30 June 2019.
The condensed consolidated interim financial statements have
not been audited, nor have they been reviewed by the Company's
auditors in accordance with the International Standard on Review
Engagements 2410 issued by the Auditing Practices Board. The
figures have been prepared using applicable accounting policies
and practices consistent with those adopted in the audited annual
financial statements for the year ended 31 December 2018, with
the exception of the following policies in relation to 'Financial
instruments - initial recognition and subsequent measurement'
for which Financial assets recognised through fair value through
profit or loss ("FVTPL") now includes a convertible loan notes
which is included under 'Financial assets fair valued through
profit or loss' on the Statement of Financial Position. See note
9 for further details.
2 Adoption of new and revised standards
The International Accounting Standards Board (IASB) issued various
amendments and revisions to International Financial Reporting
Standards and IFRIC interpretations. The amendments and revisions
were applicable for the period ended 30 June 2019 but did not
result in any material changes to the financial statements of
the Group.
The following standards were adopted by the Group during the
year:
* IFRS 16 - Leases (effective 1 January 2019)
* IFRS 9 (Amendments) - Prepayment features with
negative compensation (effective 1 January 2019)
* Annual Improvements 2015-2017 Cycle
* IAS 19 - Plan amendment, curtailment or settlements
(effective 1 January 2019)
* IAS 28 - Long term interests in associates and joint
ventures (effective 1 January 2019)
* IFRIC 23 - Uncertainty over income tax treatments
(effective 1 January 2019)
IFRS 16 became effective for the Group as of 1 January 2019 and
was adopted from this date. IFRS 16, which replaces IAS 17, leases,
requires the Group to recognise lease liabilities in relation
to leases which had previously been classified as 'operating
leases' under the principles of the old standards.
Management have assessed all arrangements which could be considered
to contain a lease and assessed the impact of transition to the
new standard on the financial statements. There has been no material
effect of transition to the Group as there are no material lease
arrangements in the Group.
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the
following Standards and Interpretation, which have not yet been
applied in these financial statements, were in issue but not
yet effective.
Standard Description Effective date for
or Interpretation annual accounting period
beginning on or after
IFRS 3 Amendments to IFRS 3' 'Business Combinations' 1 January 2020
to clarify the definition of a business
IAS 1 Amendments to IAS 1, 'Presentation 1 January 2020
of Financial Statements' regarding
the definition of 'material'
IAS 8 Amendments to IAS 8, 'Accounting 1 January 2020
Policies, Changes in Accounting Estimates
and Errors' regarding the definition
of 'material'
The company have not early adopted any of the above standards
and the directors are assessing the impact on future financial
statements.
3 Judgements and key sources of estimation uncertainty
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.
Share-based payments
During the course of the period certain share based payments
were made based on the fees due to certain individual for services
to be performed by them in the future. In calculating these payments,
where possible the Directors consulted with professional advisers
to establish the market rate for these services.
Valuation of intangible fixed assets
The directors considered at length whether any further impairments
were required on the value of the computer equipment and website.
In doing so they made use of forecasts of revenues and expenditure
prepared by the Group and came to the conclusion that further
impairment of those assets were unnecessary based on current
forecasts.
Valuation of cryptocurrencies
The Board monitors regularly the values of the cryptocurrencies
and any market forecasts. During the period, the Group entered
into crypto currency transactions, which were assessed for fair
value in line with the requirements of IAS38. Revaluations were
made with such regularity that as at the end of the reporting
period the carrying amount of the asset does not differ materially
from its fair value. All revaluations were made with reference
to level 1 information, being crypto currencies actively traded
on the open market.
Valuation of financial assets fair valued through profit or loss
Fair values have been determined for measurement and/or disclosure
purposes based on the following
methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific
to that asset or liability.
Financial instruments that are measured subsequent to initial
recognition at fair value are based on a hierarchy of Levels
1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for
identical assets or liabilities; and
Level 2 fair value measurements are those derived from inputs
other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
Financial assets fair valued through profit or loss consists
of a convertible loan note, of which the fair value is recalculated,
when appropriate. using Level 3 inputs.
4. Revenue
30 June 2019 30 June 2018 31 December
GBP GBP 2018
GBP
UK (corporate reseller) - - 227,561
Canada (corporate reseller) 130,947 - 370,993
Subscriber revenue - worldwide 29,771 - 77,044
Crypto currency mining - worldwide 2,772,301 - 88,964
2,933,019 - 764,562
--------------- --------------- --------------
The directors consider that the Group has only one significant reporting segment. Accordingly, no segmental analysis is considered necessary due to the nature of mining cryptocurrency.
5. Earnings/loss per share
The basic loss per share is derived by dividing the loss for the period attributable to ordinary shareholders by the weighted average number of shares in issue.
30 June 2018 30 June 2018 31 December
2018
Operating profit/(loss) (GBP'000s) 947 (1,146) (4,117)
Weighted average number of
shares ('000s) 293,750 115,915 186,020
Basic earnings/(loss) per share
(GBP) 0.32p (0.0099)p (2.2)p
The Group has in issue 48,230,103 warrants and options at 30 June 2019. The fully diluted earnings per share for the period ended 30 June 2018 was 0.28p. The inclusion of the warrants in the number of shares in issue would be anti-dilutive for the periods ended 30 June 2018 and 31 December 2018 and therefore they have not been included.
6. Investments
On 27(th) June 2019 the Group made a strategic investment in GPU.one Holding Inc, a Canadian corporation which hosts the Group's mining gear and supplies clean power. The Group acquired 192,308 Class A Shares at a price of CDN$0.52 per share for CDN$100,000. This represents an interest of 0.4% in the share capital of GPU.one Holding Inc.
7. Financial assets fair valued through profit or loss
During the period, the Group issued a Convertible Loan Note in the amount of CDN$2,314,334, without a coupon, repayable on 26 June 2027 and convertible, subject to certain conditions, into Class A Shares based on a price per share of 90% of the fair value of GPU.one at the time of conversion. The directors have reviewed the treatment of this asset and consider it should be treated as a non-current financial asset fair valued through profit or loss, at GBP1,394,177. The financial asset shall be revalued on a fair value basis at the year ended 31 December 2019.
Based on the issue price of the Class A Shares to the Group and the current issued share capital of GPU.one Holding Inc. if the conversion took place now this would represent an interest of approximately 10% of GPU.one Holding Inc.
8. Fixed assets
Intangible Tangible Tangible Total
Group Assets Assets Assets
Website Computer Improvements
equipment to Datacentre
GBP GBP GBP GBP
Cost at 1 January
2019 671,921 2,807,589 84,927 3,564,437
Additions 28,335 18,056,966 3,582 18,088,883
At 30 June 2019 700,256 20,864,555 88,509 21,653,320
----------- ----------- --------------- -----------
Depreciation/Amortisation
At 1 January 2019 52,421 421,711 13,565 487,697
Charge for the period 72,236 646,554 9,423 728,213
At 30 June 2019 124,657 1,068,265 22,988 1,215,910
----------- ----------- --------------- -----------
Net Book Value
At 30 June 2019 575,599 19,796,290 65,521 20,437,410
At 1 January 2019 619,500 2,385,878 71,362 3.076,740
=========== =========== =============== ===========
As at 30 June 2019 the Group had approximately 5,000 mining machines in production mining cryptocurrencies. Further, the Group had committed to a further 7,000 machines so that by the end of 2019 it planned to have approximately 12,000 machines in production representing a total hashing capacity of 505 petahash. This is recorded above under computer equipment.
9 Other current assets
Group Crypto
assets
GBP
At 1 January 2019 2,082
Additions
Crypto assets purchased for resale 232,257
Crypto assets purchased for contractual
obligation -
Crypto assets mined 2,772,301
Fair value movements
Fair value movements on Crypto assets
held 37,404
Disposals
Disposal of Crypto assets -
Carrying amount
---------
At 30 June 2019 3,044,044
---------
10. Cash
The cash balance of GBP5,612,964 consisted of GBP5,515,177 of Sterling with the balance in a mix of Canadian and US Dollars.
11. Trade and other receivables
31 December
30 June 2019 30 June 2018 2018
GBP GBP GBP
Other receivables 1,673,692 90,192 1,643,424
Other taxation and social
security 3,249,343 - 535,633
At 30 June 2019 4,923,035 90,192 2,179,057
------------- ============= ------------
Other receivables include a deposit of GBP936,747 held by GPU.one with the balance of GBP736,945 relating to prepaid expenses. Included within other taxation is an amount of GBP3,224,642 due on GST and QST in Canada being value added taxes predominantly on the purchase of mining gear.
12. Share capital and premium
Number of Share Share premium
shares Capital Total
GBP GBP GBP
At incorporation 1,000 1 - 1
Issue of ordinary shares
(20/12/17) 89,999,000 89,999 89,999
Issue of ordinary shares
(02/01/18) 10,000,000 10,000 90,000 100,000
Issue of ordinary shares
(02/02/18) 31,250,000 31,250 2,270,750 2,302,000
Issue of ordinary shares
(02/02/18) 750,000 750 59,250 60,000
Issue of ordinary shares
(15/06/2018) 5,500,000 5,500 - 5,500
Issue of ordinary shares
(03/08/2018) 156,250,000 156,250 22,832,288 22,988,538
At 30 June 2019 293,750,000 293,750 25,252,288 25,546,038
============ ========= ============== ===========
On incorporation, the Company issued 1 ordinary share for consideration of GBP1. The Company later passed a written resolution to subdivide the 1 ordinary share into 1,000 ordinary shares, with a nominal value of GBP0.001 each. On 20 December 2017, 89,999,000 additional shares were subsequently issued for consideration of GBP0.001, at par value. An additional share issue occurred on 2 January 2018, where 10,000,000 ordinary shares were subscribed for GBP0.01 each, at a premium of GBP0.009. Subsequently, on 2 February 2018 the Company issued 31,250,000 shares for GBP0.08 each, at a premium of GBP0.079. The Company undertook a share-based payment to Timothy Le Druillenec, a Director of the company in respect of services rendered in relation to the admission of the Company. The 437,500 ordinary shares were issued on 2 February 2018 for consideration of GBP0.08, with a premium of GBP0.079. Similarly, 312,500 ordinary shares were issued to Align Research on 2 February 2018 for consideration of GBP0.08, with a premium of GBP0.079. The Company also issued warrants, which were exercised on 15 June 2018, for a total of 5,500,000 ordinary shares at GBP0.001. On 3(rd) August 2018 the Company placed 156,250,000 ordinary shares at a price of 16 pence per ordinary share and gained admission to the Official List (by way of Standard Listing under chapter 14 of the Listing Rules) and to trading on the London Stock Exchange's Main Market for listed securities.
17 13. Share options and warrants
The following options and warrants over Ordinary Shares have been
granted by the company and are outstanding:
Options Grant date Expiry date Exercise Number of Number of options
/ warrants price options and and warrants
warrants outstanding exercisable
at 31 December at 31 December
2018 2018
Warrants 2 February 2018 2 February 2023 GBP0.08 2,250,000 2,250,000
23-26 February 23-26 February
Warrants 2018 2021 GBP0.08 6,580,000 3,290,000
23 February
Warrants 2018 23 February 2021 GBP0.08 1,400,000 -
14 - 17 June
Warrants 2018 14-17 June 2021 GBP0.16 650,000 325,000
Warrants 15 June 2018 15 June 2021 GBP0.16 210,453 -
Warrants 3 August 2018 3 August 2023 GBP0.16 11,781,600 11,781,600
Options 25 July 2018 25 July 2024 GBP0.16 25,358,050 7,532,050
48,230,103 25,178,650
Movements in the number of options and warrants outstanding and
their related weighted average exercise prices are as follows:
Number of Weighted average
options and exercise price
warrants GBP
2019 2019
At beginning of period - -
Granted 48,230,103 0.14
Exercised - -
Lapsed - -
Outstanding at 30 June 2019 48,230,103 0.14
Exercisable at 30 June 2019 26,986,150 0.14
The weighted average remaining contractual life of options and warrants
as at 30 June 2019 is 3.5 years.
If the exercisable shares had been exercised on 30 June 2019 this
would have represented 8% of the enlarged
share capital.
At the grant date, the fair value of the warrants issued have been
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 the grant date. Risk free interest has been based
on UK Government Gilt rates for an equivalent term. As the exercise
price was equal or above the market value of the shares during the
period to 30 June 2019, and, the marketability of shares was low
and as such a discount rate of between 75% and 90% was placed on
the fair value of the shares depending on amounts and timing. The
Directors note that the expense for the fair value of options and
warrants are not material during the period and therefore not included
in the accounts.
As at 30 June 2019 there were warrants and options in issue for 48,230,103 ordinary shares of which 10,230,000 were at an exercise price of GBP0.08 (for which 7,185,000 had become exercisable) and 38,000,103 ordinary shares at an exercise price of GBP0.16 (for which 19,801,150 had become exercisable). Vesting terms varied, with the majority vesting 25% on issue and 25% every 6 months thereafter. If these shares had been exercised at 30 June 2019 they would have represented 8.41% of the enlarged share capital on listing.
The fair value of the warrants issued have been 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 the grant date. Risk free interest has been based on UK Government Gilt rates for an equivalent term. As the exercise price was mainly equal or above the market value of the shares during the period to 30 June 2019, the likelihood of the warrants being exercised was nil. As such, no expense has been recognised in the period.
The inputs to the Black-Scholes model were as follows:
Grant date share price 0.08/0.16
Exercise price 0.08/0.16
Expected volatility 40%
Option life 3/5 years
Risk free interest rate 1%
14. Trade and other payables
31 December
30 June 2019 30 June 2018 2018
GBP GBP GBP
Other creditors 12,808,910 5,000 15,801
Accruals 287,351 13,200 202,768
At 30 June 2019 13,096,261 18,200 218,569
------------- ------------- --------------
Other creditors include an amount of GBP10,772,195 payable on the purchase of 5,000 Antminer S17's.
15. Controlling party
There is no controlling party of the Company.
16. Related parties
Rental agreement
The Company rents office space from Dukemount Capital plc, for which Timothy Le Druillenec was a Director during part of the period. During the period, payments of GBP1,650 were made with a balance of GBPNil outstanding as at 30 June 2019.
The Group also rents office space from Vernon blockchain Inc, for which Peter Wall (considered to be key management personal) was a Director during the period. During the period, payments of GBP12,048 were made with a balance of GBPNil outstanding as at 30 June 2019.
For each agreement, there is no long term commitment, and these transactions were made on an arm's length basis.
Key management compensation
Key management includes Directors (executive and non-executive) and senior management. The compensation paid to related parties in respect of key management for employee services during the period was made only from Argo Innovation Labs Inc, amounting to: GBP114,506 paid to Possibilities Training Group Ltd in respect of the fees of Jonathan Bixby; GBP114,506 paid to MSE Management Inc. in respect of the fees of Mike Edwards; GBP75,145 paid to Blockchain Consulting in respect of fees of Inderpreet Hothi; GBP65,060 paid to Vernon Blockchain Inc in respect fees of Peter Wall. Other key management received GBP37,948. These are not inclusive of the related party transactions disclosed above.
17. Post Balance sheet events
Please see Highlights section and Interim Management Report for post balance sheet events.
18. Approval of Interim Financial Statements
The condensed interim financial statements were approved by the Board of Directors on 16 September 2019.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR BQLFFKKFLBBE
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September 17, 2019 02:00 ET (06:00 GMT)
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