TIDMKR1
30 September 2021
KR1 Plc
("KR1", the "Company)
Interim Report for the Half Year Ended 30 June 2021
KR1 plc (KR1: AQSE), a leading digital asset investment company, today
announces its half year results for the six months ended 30 June 2021 (HY21).
Financial highlights
* Net current assets of £105,736,099, +1,208% on HY20; +179% on FY20
* NAV per share of 80.30p as at 30 June 2021
* Staking revenue £5,473,597, +7,373% on HY20; +558% on FY20
Investment highlights
* Continued investments in innovative decentralised blockchain projects
* Emerging Polkadot and Kusama ecosystems: Initial and follow-on investments
into Moonbeam, Interlay and more.
* Major participant in ongoing Kusama parachain crowdloan auctions - a large
majority of KR1's KSM position was contributed into crowdloan campaigns of
Karura, Shiden, Moonriver, Basilisk with a view to continue allocating to
further projects.
* DeFi: Initial and follow-on investments into Exponent, Divergence, Vega
Protocol, and Redstone.
* Base layer blockchains: Invested in Celestia (formerly LazyLedger), which
aims to bring better data availability to blockchains.
* Privacy: Initial investments into Automata, a decentralised service privacy
middleware layer for multiple platforms
Strategic highlights
* Growing revenue stream from 'Proof-of-Stake' networks, primarily coming
from Polkadot and Cosmos with a view to add further streams going forward
(in particular Ethereum 2.0 and Internet Computer/Dfinity)
* New appointments to the Company's Board of Directors, including Rhys Davies
as Non-Executive Chairman and Mona Elisa as Non-Executive Director,
reflecting our efforts to further enhance our corporate governance.
* Improved internal structures and processes, including establishment of a
more robust and aligned relationship between the Company and the research
team.
Outlook
* We are currently witnessing unprecedented usage of blockchain networks,
accompanied by increasing allocations to digital assets among institutional
investors - trends which we expect to continue.
* Further clarifications with regards to regulation in the crypto and digital
assets space is expected, with stablecoins being a likely area of focus.
Regulatory bodies are also taking note of the rate of growth and power
inherent in decentralised technologies, but we are confident that
permission-less, open-source, decentralised technologies will continue to
proliferate globally.
* The current enthusiasm in the digital asset market and increasing rates of
adoption mean we expect KR1 to remain in a very strong position to the end
of the financial year 2021.
George McDonaugh and Keld van Schreven, Managing Directors of KR1 plc,
commented:
"The first half of the year was very positive for the Company, our long-term
strategic commitment to digital assets and the crypto space continues to serve
us well, resulting in a significant increase of our Net Current Assets to £
105,736,099 GBP. We have also recently seen a major acceleration in the
adoption of decentralised technologies, ensuring a full pipeline of innovative
and disruptive projects. We also made important steps in the evolution of our
corporate governance, including two new appointments to the Company's Board of
Directors which bring a valuable mix of capital markets experience and digital
assets expertise. As we look ahead, we are excited about the significant
investment opportunities available to the Company. We remain confident that
KR1's portfolio performance and its ability to generate strong revenues from
staking activities will continue to deliver consistent shareholder returns."
Managing Director's Report
We were delighted by the positive start of 2021 which saw crypto markets take
off lifting KR1's underlying portfolio of high-quality projects into new highs.
Most significantly, we saw material increases in Polkadot and Cosmos, two of
our core holdings. We also saw Lido, a more recent investment, go from
strength-to-strength as Lido's liquid Ethereum 2.0 staking product went live
and attracted vast sums of ETH without signs of stopping. As a Company, we look
to allocate capital strategically and actively manage portfolio investments
over time to derive the best possible returns for our shareholders. Managing
the incoming pipeline of projects successfully is critical to the success of
KR1 and in 2021, we continued to analyse and invest in many exciting disruptive
projects, increasing the number of investments in our portfolio. The rate of
innovation throughout the highs and lows of price volatility in the crypto
markets has not slowed and, looking ahead, we are confident to see the pipeline
of investable new projects continue to grow.
As a Company, we are building on the foundation of our successes since 2016,
throughout long crypto winters but also hype cycles, enabling us to continue on
our journey of investing in and supporting world-class teams building
decentralised technologies. As part of this effort, KR1 strengthened the
Company's corporate governance, by appointing Non-Executive Director Rhys
Davies as Chairman. Rhys brings extensive public markets experience and
corporate governance insights to KR1's operations and has become a key member
of the Board of Directors. Alongside Rhys, Mona Elisa, Founder of Enzyme
Finance (previously Melon Protocol) was also appointed as a Non-Executive
Director. Mona is one of the most respected voices in decentralised finance and
the crypto world and we are excited to work with both of them and they will
both add huge expertise to our efforts moving forward. While expanding the
team, the Company has also improved internal structures and processes in line
with the rate of change KR1 has seen over the last year.
Some of the highlights for KR1 in the first half of 2021 were Lido's ETH 2.0
liquid staking product going live, the Internet Computer (formerly Dfinity)
mainnet launch and the kick-off of the Kusama crowdloan campaigns and parachain
auctions. These Kusama auctions allow projects to secure a parachain slot on
the Kusama network but are also a precursor to Kusama's 'bigger' sister chain
Polkadot, which could see crowdloan and parachain auctions go live in the
upcoming final quarter of the year. Current sentiment suggests that the
parachain auction model has performed very strongly with enormous communities
forming around successful crowdloan campaigns as witnessed with Karura, Shiden,
Moonriver etc. All of this is a glimmer of what is to come for Polkadot later
this year.
As positive market sentiment continues, we are excited by KR1's portfolio
performance, composition and the Company's ability to generate strong revenues
from staking activities and consistent shareholder returns. All these bode well
for a strong end to the year and exciting 2022.
George McDonaugh and Keld van Schreven, KR1 plc
Statement of Comprehensive Income
6 months to 30 6 months to 30 12 months to
June 2021 June 2020 31 December
2020
Unaudited Unaudited Audited
£ £ £
Revenue
Gain on disposal of
intangible assets 4,881,832 315,359 2,994,034
Investment income 5,473,597 75,840 978,639
Loss on disposal of
financial assets - (273,951) (273,951)
Direct costs (14,793) (7,839) (34,649)
Gross profit 10,340,636 109,409 3,664,073
Administrative expenses (11,973,395) (296,187) (4,693,647)
Share options 17,526 - (74,998)
Movement in credit loss
provision (6,474) (2,149) 3,194
Operating (loss) (1,621,707) (188,927) (1,101,378)
Taxation - 87,159 78,497
(Loss) after taxation (1,621,707) (101,768) (1,022,881)
Other comprehensive income:
Movement in fair value of
intangible assets 69,725,002 377,810 31,112,822
Movement in fair value of
financial assets at fair
value through profit and (217,996) 332,783 227,713
loss
Total other comprehensive
income for the year 69,507,006 710,593 31,340,535
Total comprehensive income
attributable to the equity
holders of the Company 67,885,299 608,825 30,317,654
Earnings per share
attributable to the equity
owners of the company
(pence):
Basic earnings per share 51.56 0.47 23.20
Diluted (loss) per share (1.23) (0.08) (0.78)
Statement of Financial Position
At 30 June At 30 June At 31 December
2021 2020 2020
Unaudited Unaudited Audited
£ £ £
Assets
Current assets
Intangible assets 119,573,398 7,305,104 41,073,202
Fixed asset investments 100 100 100
Financial assets at fair value
through profit and loss 694,154 683,269 720,486
Cash and cash equivalents 870,449 180,494 332,535
Trade and other receivables 42,202 21,086 31,034
Total current assets 121,180,303 8,190,053 42,157,357
Total assets 121,180,303 8,190,053 42,157,357
Equity and liabilities
Current liabilities
Trade and other payables (15,444,204) (107,405) (4,290,882)
Total current liabilities (15,444,204) (107,405) (4,290,882)
Equity
Share capital 721,926 720,076 720,076
Share premium 3,056,443 3,056,443 3,056,443
Revaluation surplus 103,521,763 822,828 33,796,760
Option reserve 235,104 177,632 252,630
Profit and loss account (1,799,137) 3,305,669 40,566
Total equity 105,736,099 8,082,648 37,866,475
Total equity and liabilities 121,180,303 8,190,053 42,157,357
Net Asset Value per share 80.30 pence 6.18 pence 28.97 pence
Statement of Changes in Equity
Share Share premium Revaluation Option Profit and
capital surplus surplus loss account Total
£ £ £ £ £ £
Balance at 1 January 2020 720,076 3,056,443 112,234 177,632 3,407,438 7,473,823
Profit for the financial year - - 710,594 - (101,769) 608,825
Total comprehensive income for the - - 710,594 - (101,769) 608,825
year
Balance at 30 June 2020 720,076 3,056,443 822,828 177,632 3,305,669 8,082,648
Balance at 1 January 2021 720,076 3,056,443 33,796,760 252,630 40,566 37,866,475
Profit for the financial year - - 69,725,003 - (1,839,703) 67,885,299
Total comprehensive income for the - - 69,725,003 - (1,839,703) 67,885,299
year
Issue of options 1,850 - - (17,525) - (15,675)
Transactions with owners, recorded
directly in equity 1,850 - - (17,525) - (15,675)
Balance at 30 June 2021 721,926 3,056,443 103,521,763 235,104 (1,799,137) 105,736,099
Statement of cash flows
6 months to 6 months to 30 12 months to 31
30 June 2021 June 2020 December 2020
Unaudited Unaudited Audited
£ £ £
Cash flows from operating activities
Profit for the period 67,885,299 608,825 30,317,654
Adjustments for:
Movement in fair value of intangible (69,725,002) (377,810) (31,112,822)
assets
Gain on disposal of intangible assets (4,881,832) (315,359) (2,994,034)
Loss on disposal of financial assets - 273,951 273,951
Movement in credit loss provision 6,474 2,149 (3,194)
Foreign exchange gain/(loss) 1,237 - (137,220)
Movement in fair value of financial 217,996 (332,783) (227,713)
assets at fair value through profit and
loss
Share option issue (17,526) - 74,998
(6,513,354) (141,027) (3,808,380)
(Increase)/decrease in debtors (17,642) 5,372 (2,427)
Increase/(decrease) in creditors 11,153,322 (130,458) 4,053,017
11,135,680 (125,086) 4,050,590
Net cash inflow/(outflow) from operating 4,622,326 (266,113) 242,210
activities
Cashflows from investing activities
Net sales/(purchases) of investments (3,884,750) 243,077 765,557
Net cash inflow/(outflow) from investing (3,884,750) 243,077 765,557
activities
Cashflows from financing activities
Proceeds from issue of ordinary shares 1,850 - -
Net cash generated by financing 1,850 - -
activities
Net increase/(decrease) in cash 739,426 (23,036) 1,007,767
Cash and at the beginning of the year 332,535 279,373 279,373
Effect of exchange fluctuations on cash (1,236) 1,235 8,845
Non-cash transactions (200,276) (77,078) (963,450)
Cash and at 31 December 870,449 180,494 332,535
Represented by:
Cash at bank 833,528 180,493 292,192
Cash held on trading platforms 36,921 1 40,343
870,449 180,494 332,535
Interim report notes
1. Interim report
The information relates to the 6-month period from 1 January to 30 June 2021.
The interim report was approved by the Directors on 30 September 2021.
2. Basis of accounting
a. While the financial information included in this interim financial report
has been prepared in accordance with International Financial Reporting
Standards ("IFRSs"), this interim financial information does not itself contain
sufficient information to comply fully with IFRSs.
b. These interim financial statements are the financial statements of the
Company.
c. The financial statements are prepared under the historical cost convention
except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below and are in accordance
with applicable accounting standards.
d. Consolidated financial statements have not been prepared as they are not
required under the Isle of Man Companies Act 2006 and the subsidiary is
immaterial to the financial statements.
e. Current assets
i. Current assets are valued at the lower of cost and net
realisable value. Foreign denomination loans are translated into sterling at
the rate of exchange ruling at the balance sheet date. For those current
assets listed on a recognised market, net realisable value is taken as
mid-market price. Where the directors consider the market price of a current
asset is likely to irreversibly fall, additional write downs in valuation to
below mid-market price are made.
ii. The net realisable value of certain current assets is not
readily determinable by reference to a quoted market price. The directors have
therefore made their own assessment of the net realisable value and adjusted
the carrying value of the current asset where it is considered less than cost.
This estimate requires estimation techniques, which are reliant upon their
experience and expertise.
iii. The Company accounts for digital currencies, as Intangible
Assets in accordance with IAS 38 and the revaluation model has been applied as
there is an active market for the cryptocurrencies. Intangible assets held are
measured initially at cost and are subsequently carried at a revalued amount
(based on fair value) less any subsequent impairment losses, using rates
obtained from various exchanges, including Oanda and Coinmarket. The rates
obtained from these sources represent a generally well recognised quote price
in an active market, which market and database is accessible to the Company on
an ongoing basis.
Revaluation increases are recognised in other comprehensive income and
accumulated in the revaluation surplus within equity except to the extent that
they reverse as revaluation decrease previously recognised in profit and loss.
Gains are not recycled however if the gain reverses a prior reduction in the
asset's value, the loss is recorded in other comprehensive income and the
reduce the carrying amount of the asses in the revaluation reserve to the
extent of the gain previously recognised.
f. The Company will report again for the full year to 31 December 2021.
3. Prior year restatement
The Company's audited financial statements for the year ended 31 December 2020
were the first financial statements prepared in accordance with IFRSs and IFRS
1 First-time Adoption of International Financial Reporting Standards was
applied. Comparative figures for the 6 months ended 30 June 2020 have been
restated accordingly.
The Directors of KR1 Plc accept responsibility for this announcement.
For further information please contact:
KR1 PLC +44 (0)16 2467 6716
George McDonaugh
Keld van Schreven simon@KR1.io
Simon Nicol
Peterhouse Capital Limited (AQSE Corporate +44 (0)20 7469 0930
Adviser)
Mark Anwyl
FTI Consulting LLP (PR Adviser) +44 (0)7711 387 085
Ed Berry KR1@fticonsulting.com
Laura Ewart
ENDS
Notes to Media
About KR1 plc
KR1 plc is a leading digital asset investment company supporting early-stage
decentralised and open source blockchain projects. Founded in 2016 and publicly
traded in London on the AQSE Growth Market (KR1:AQSE), KR1 has one of the
longest and most successful track records of investment in the digital assets
space by investing in decentralised platforms and protocols that are emerging
to form new financial and internet infrastructures.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to be in the
public domain.
END
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