KR1 plc - Audited Final Results to 31 December 2021
PR Newswire
London, June 30
30 June 2022
KR1 Plc
("KR1" or the "Company")
Audited Final Results
We are pleased to present the audited final results of the Company for the twelve months ended 31 December 2021.
Financial highlights
- Net assets of £185,030,165, +488.64% on FY20
- NAV per share of 122.68p as at 31 December 2021, +423.47% on FY20
- Income from digital assets of £20,959,934 +2,141.74% on FY20
- Total Profit of £143,743,931
Investment highlights
- Layer 1 (base-layer) blockchains: seed investment into Celestia (formerly LazyLedger Labs), follow-on investment into Moonbeam
- Decentralised finance (DeFi): follow-on investment into Vega, early stage investments into Exponent, Divergence and Interlay
- Infrastructure: seed-investment into Redstone, early-stage investments into Automata and zCloak (formerly Starks Network)
- Polkadot and Kusama Parachain Auctions: major contributions to Moonbeam, Acala and Astar
- Specialised fund subscriptions: Zee Prime II and Starry Night Capital
Strategic highlights
- New appointments to the Company's Board of Directors, including Rhys Davies as Non-Executive Chairman, Mona Elisa as Non-Executive Director, and (post-year end) Aeron Buchanan as Non-Executive Director, reflecting our efforts to further enhance our corporate governance.
- Improved transparency and internal structures, including a new website with enhanced Investors and Frequently Asked Questions sections, and the establishment of a more robust and aligned long-term relationship between the Company and the research team.
- Significant revenue stream from staking activities and Polkadot and Kusama parachain auction rewards.
Outlook
- Although the current market sentiment may still prevail for some time, we firmly believe that we will continue to see huge growth in the development of the underlying technology.
- The current 'crypto winter' presents attractive opportunities for follow-on investments in portfolio projects, opportunities in secondary markets and a welcome adjustment of early-stage project valuations.
Detail on post-year end note regarding investment in Starry Night Capital
During the previous financial year, the Company subscribed to 5,000,000 securities designated as "Class Starry Night Shares of US$1.00 each for November 2021" in Three Arrows Fund Ltd., which is managed by ThreeAC Ltd., a member of the Three Arrows Capital group. On 27 June 2022, a notice of default was issued by a subsidiary of Voyager Digital Ltd. to Three Arrows Capital for default on a loan of 15,250 BTC and $350 million USDC. Further, on 29 June 2022, it was widely reported that a British Virgin Islands court ordered the liquidation of Three Arrows Capital. The board of directors have decided to take a conservative approach as to the valuation of KR1 plc's holding of 'Class Starry Night Shares' in Three Arrows Fund Ltd. and have impaired the Company's holding by 100% as at 31 December 2021 while continuing to monitor the situation closely.
George McDonaugh and Keld van Schreven, Managing Directors ofKR1 plc, commented:
"2021 was a year of exceptional performance for KR1 in which we reported strong growth in net assets under management and profit. We were excited to see and participate in a strong influx of exciting, high quality and innovative investment opportunities which have strengthened our portfolio. The year also saw the continuation of the trend towards greater adoption of crypto and decentralised technology, as well as growing retail and institutional interest in the asset class.
Despite the current bear market for crypto, we believe that the interest in and adoption of blockchain technology will continue and are firm believers in the transformational opportunities that it will bring. As one of the first digital asset investment firms, we have already experienced previous crypto winters, and are well positioned to weather the current volatility. The current circumstances present many attractive opportunities for investment, and we will continue to seek out high quality projects in order to drive shareholder value over the long term."
Chairman's Report
At 31 December 2021, the net asset value of KR1 plc ("the Company") was 122.68 pence per share as compared with 28.97 pence per share a year earlier. The net assets of the Company at 31 December 2021 was £185,030,165, as compared with £37,866,475 a year earlier. Moreover, the Company reported a profit for the year of £143,743,931 (2020: £30,317,654).
The Company's investment team has, again in 2021, delivered to shareholders truly exceptional performance, further extending their outstanding track record of shareholder returns since the Company's establishment in 2016.
On behalf of the Board of Directors, I thank all Shareholders for their support.
Sincerely yours,
Rhys Davies
Chairman
30 June 2022
Managing Directors' Statement
2021 has been the best performing year in KR1 plc's history, bringing the Company's net assets to £185,030,165 at the year-end (2020: £37,866,475). It has also been one of the busiest years in terms of investments, in which the Company was able to add a selection of impressive projects to the portfolio. In parallel, the Company continued to strengthen its corporate governance, with further additions to the board of directors as well as continuing to engage with a broader set of professional service providers, with the results of much of this work expected to come to fruition over the next year.
The past period has undoubtedly been a watershed period for crypto, with many major technological advances and sustained heightened interest in the asset class across mainstream media, institutional investors and, most certainly, regulators. As demonstrated by the recent downturn, the crypto economy has once again shown its volatile character, but the success of 2021 has placed KR1 plc in a favourable position, and well prepared for a potentially lengthy period of stagnant crypto markets. Despite the recent market turmoil, the Directors are in no doubt that 2022 and the years to come will see the unstoppable growth of this technology, some of which may be concealed under the shadows of market uncertainty, drawing parallels to previous 'crypto winters'. It also seems likely that there are going to be further high-risk projects or investors finding that they may have rolled the dice one too many times. However, more importantly, the Directors believe that projects and participants that have firm structures and sustainable roadmaps in place will prove resilient to market conditions. While the current market sentiment has impacted valuations, the number of well-funded, innovative projects in the Company's portfolio is stronger than it has ever been.
Bitcoin's recent record decline after topping out at just above £50,000 in November 2021 has seen the sentiment change drastically and, as ever, with the high correlation in crypto markets, many other crypto assets followed suit. Understandably, this can be a difficult time to navigate for shareholders and, if we judge the outlook on the basis of previous crypto winters, it may take the market some time to return to a positive footing. As a Company, we will endeavour to not only weather this latest storm, but continue to build on all areas of the business, with the intention of emerging out of this period stronger than ever.
KR1 plc's strong view is that decentralised technologies and 'Web3' are here to stay and that these technologies will arise to form the backbone of a future digital society and financial system. The Company will continue to build its portfolio by seeking out the most attractive projects and opportunities that decentralised technologies have to offer in order to drive shareholder value over the long term. KR1 plc has always invested through the various market cycles and the current circumstances present many attractive opportunities.
Some of the Company's 2021 investment highlights were further investments into projects building 'base-layer' blockchains, decentralised finance products, crypto infrastructure and privacy technologies. Another important activity of the year was the Company's contributions to several Polkadot and Kusama crowdloans, kicking off 'Dotsama' season alongside projects including Moonbeam, Acala and many more. Our early exposure to investments such as Lido and the emerging Polkadot ecosystem, combined with the positive market sentiment towards crypto throughout 2021, led to significant growth of KR1 plc's balance sheet.
Another component that has cemented itself firmly into KR1 plc's long-term strategy is its revenue stream from staking activities, as well as from rewards originating from contributions to Polkadot and Kusama parachain auctions. This led to a total income from digital assets of £20,959,934 for 2021 (2020: £978,639).
Just as 2021 saw an influx of investment opportunities, it also saw a growing interest in the asset class among both retail and institutional investors, demonstrated by the penetration of crypto assets into many of today's fintech applications, brokerage accounts and large inflows of capital into funds and financial products with crypto exposure. KR1 plc also had more investors joining as shareholders, becoming one the most actively traded stocks on the AQSE market with an increasing number of institutional investors and family offices starting to participate.
KR1 plc remains at the very heart of the crypto ecosystem, fully focused and taking advantage of the disruption that this technology will bring to society.
George McDonaughKeld van Schreven
Managing Director & Co-Founder Managing Director & Co-Founder
30 June 2022
Statement of Comprehensive Income
For the year ended 31 December 2021
| 2021 | 202019 | |||
| £ | £ | |||
| Revenue | ||||
| Gain on disposal of intangible assets | 20,758,540 | 2,994,034 | ||
| Income from digital assets | 20,959,934 | 978,639 | ||
| Gain / (loss) on disposal of financial assets | - | (273,951) | ||
| Direct costs | (122,716) | (34,649) | ||
| Gross profit | 41,595,758 | 3,664,073 | ||
| Administrative expenses | (33,047,971) | (4,693,647) | ||
| Share options | 67,103 | (74,998) | ||
| Movement in credit loss provision | - | 3,194 | ||
| Operating profit/(loss) | 8,614,890 | (1,101,378) | ||
| Taxation on profit/(loss) | - | 78,497 | ||
| Profit/(loss) after taxation | 8,614,890 | (1,022,881) | ||
| Other comprehensive income: | ||||
| Movement in fair value of intangible assets | 138,894,148 | 31,112,822 | ||
| Movement in fair value of financial assets at fair value through profit and loss | (3,765,107) | 227,713 | ||
| Total other comprehensive income for the year | 135,129,041 | 31,340,535 | ||
| Total comprehensive income attributable to the equity holders of the Company | 143,743,931 | 30,317,654 | ||
| Earnings per share attributable to the equity owners of the company (pence): | ||||
| Basic earnings per share | 106.39 | 23.20 | ||
| Diluted (loss)/earnings per share | 6.38 | (0.78) | ||
The notes contained in the Company's Annual Report form part of these financial statements.
Statement of Financial Position
For the year ended 31 December 2021
| 2021 | 2020 | |||
| £ | £ | |||
| Assets | ||||
| Current assets | ||||
| Intangible assets | 207,786,430 | 41,073,202 | ||
| Fixed asset investments | - | 100 | ||
| Financial assets at fair value through profit and loss | 6,026,270 | 720,486 | ||
| Cash and cash equivalents | 3,488,421 | 276332,535 | ||
| Trade and other receivables | 103,305 | 31,034 | ||
| Total current assets | 217,404,426 | 42,157,357 | ||
| Total assets | 217,404,426 | 42,157,357 | ||
| Equity and liabilities Current liabilities | ||||
| Trade and other payables | 32,374,261 | (4,290,882) | ||
| Total Assetscurrent liabilities | 32,374,261 | 4,290,8827,473,823 | ||
| Equity | ||||
| Share capital | 758,320 | 720,076 | ||
| Share premium | 6,505,061 | 3,056,443 | ||
| Revaluation surplus | 168,925,801 | 33,796,760 | ||
| Option reserve | 185,527 | 252,630 | ||
| Profit and loss account | 8,655,456 | 40,566 | ||
| Total equity | 185,030,165 | 37,866,475 | ||
| Total equity and liabilities | 217,404,426 | 7,235,95842,157,357 |
The notes contained in the Company's Annual Report form part of these financial statements.
Statement of cash flows
For the year ended 31 December 2021
| 2021 | 2020 | ||
| £ | £ | ||
| Cash flows from operating activities | |||
| Profit for the financial year | 143,743,931 | 30,317,654 | |
| Adjustments for: | |||
| Movement in fair value of intangible assets | (138,894,148) | (31,112,822) | |
| Gain on disposal of intangible assets | (20,758,540) | (2,994,034) | |
| Loss on disposal of financial assets | - | 273,951 | |
| Movement in credit loss provision | 100 | (3,194) | |
| Foreign exchange loss | 17,354 | (137,220) | |
| Movement in fair value of financial assets at fair value through profit and loss | 3,765,107 | (227,713) | |
| Share option issue | (67,103) | 74,998 | |
| (12,193,299) | (3,808,380) | ||
| (Increase)/decrease in debtors | (72,271) | (2,427) | |
| Increase/(decrease) in creditors | 28,083,379 | 4,053,017 | |
| 28,011,108 | 4,050,590 | ||
| Net cash inflow from operating activities | 15,817,809 | 242,210 | |
| Cashflows from investing activities | |||
| Net sales/(purchases) of investments | 4,422,383 | 765,557[CH1] | |
| Net cash inflow from investing activities | 4,422,383 | 765,557 | |
| Cashflows fromfinancing activities | |||
| Proceeds from issue of ordinary shares | 3,486,862 | - | |
| Net cash generated by financing activities | 3,486,862 | - | |
| Net increase/(decrease) in cash | 28,027,584 | 1,007,767 | |
| Cash and at the beginning of the year | 332,535 | 279,373 | |
| Effect of exchange fluctuations on cash | 17,458 | 8,845 | |
| Non-cash transactions | (24,854,240)[CH2] | (963,450) | |
| Cash and at 31 December | 3,488,421 | 332,535 | |
| Represented by: | |||
| Cash at bank | 3,163,061 | 292,192 | |
| Cash held on trading platforms | 325,360 | 40,343 | |
| 3,488,421 | 332,535 |
The notes contained in the Company's Annual Report form part of these financial statements.
The financial statements were approved by the Board of Directors on 30 June 2022 and were signed on its behalf by:
George McDonaughKeld van Schreven
Director Director
The financial information set out in this announcement does not constitute statutory accounts. This financial information has been extracted from the audited full accounts of the Company for the year ended 31 December 2021. The Company does not declare a dividend for the period.
The full Annual Report of the Company will be available on the Company's website: www.KR1.io.
The Directors of the Company accept responsibility for the contents of this announcement.
For further information please contact:
| KR1 PLC George McDonaugh Keld van Schreven | +44 (0)1624 630630 |
| Peterhouse Capital Limited (AQSE Corporate Adviser) Mark Anwyl | +44 (0)20 7469 0930 |
| FTI Consulting LLP (PR Adviser) Laura Ewart Gina Magnin | +44 (0)7711 387 085 KR1@fticonsulting.com |
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.
www.KR1.io
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).
