TIDMKR1
28 September 2023
KR1 plc
("KR1", the "Company)
Interim Report for the Half Year Ended 30 June 2023
KR1 plc (KR1:AQSE), a leading digital asset investment company,today announces
its half year results for the six months ended 30 June 2023 (HY23).
Financial Highlights
? Net assets of £90.7 million, +94% on HY22; +29.5% on FY22
? NAV per share of 51.12p as at 30 June 2023, +67.1% on HY22; +29.5% on
FY22
? Income from digital assets of £3.9 million, -76.4% on HY22
Investment Highlights
? Investment pipeline and access to projects remains strong
? Investment in Anoma, building a next generation blockchain with an
intent-centric architecture
? Investment in Hydra Ventures, a newly launched investment Decentralised
Autonomous Organisation ("DAO")
? Further investments in Code & State, a Web3 venture studio, and others
Strategic Highlights
? Continuously strong staking activities through Polkadot, Cosmos,
Moonbeam and others
? Recent addition of Ethereum as a staked asset to the Company's staking
strategy
? Lido, a major portfolio projects, remains market share leader for
Ethereum staking (with Rocket Pool, another portfolio project competing)
? Polkadot, a major portfolio project, unveiled its plans for a future
Polkadot version 2.0 to accelerate its potential for many developers
? Cosmos, another major portfolio project, releasing `Mesh Security' to
increase the economic security of Cosmos ecosystem chains while allowing them to
retain complete sovereignty
Markets Outlook
? The upcoming mainnet launch for Celestia (formerly LazyLedger) is very
promising for the KR1 portfolio, continuing to build a high-quality, diversified
portfolio of innovative digital assets
? Bitcoin halving narrative starting to form again while numerous Bitcoin
spot ETF applications were filed by Wall Street heavyweights such as Blackrock,
suggesting potential for significant institutional adoption of the asset class.
George McDonaugh and Keld van Schreven, Managing Directors of KR1 plc,
commented:
"With some positive market momentum as well as major new investments that were
announced since the year end, the Company's net assets have grown substantially
to £90.7 million at the end of June, providing shareholders with capital growth,
which remains our main long-term focus. The year-on-year decline in income from
digital assets, driven by various factors, including stagnant prices over the
relevant period, was expected, while still being of great benefit to the
Company. A major event coming up for the Company will be the launch of Celestia
(formerly LazyLedger). The outlook is promising, as we continue strengthening
our organisation, keep building a high quality `long-only' portfolio of
innovative digital assets and monitor interesting developments in the wider
digital asset market."
Managing Directors' Report
The start of 2023 saw a resurgence in interest in digital assets after the
previous period of chaos and destruction precipitated by the aftermaths of the
collapses of various entities in the industry. Looking forward, we note that the
Bitcoin halving narrative has started forming, with the upcoming halving
expected to occur in the second quarter of next year. Further, Bitcoin Exchange
Traded Funds ("ETFs") have come back to the fore with applications from
Blackrock, Fidelity and other Wall Street heavyweights making headlines. While
the US regulatory stance remains uncertain with more and more eyes on the US SEC
Bitcoin ETF approval (or denial) processes, the recent judicial landscape seems
to be clearing up with the ongoing Ripple and Coinbase court proceedings.
As per the interim results, the net asset value of the Company at 30 June 2023
was £90.7 million, as compared with £70.0 million as at 31 December 2022, which
resulted in a net asset value per share of 51.12 pence as of 30 June 2023,
compared with 39.47 pence per share as at 31 December 2022.
Throughout 2023 our investment pipeline and access to projects remained strong
and the Company continued to invest in new exciting projects including Anoma,
Hydra Ventures, Code & State, Side Protocol and, most recently, Interop
Ventures, all of which were largely funded through partial disposals of
extremely successful investments from the existing portfolio, such as Lido and
Rocket Pool (while still retaining these as major position of the Company as per
the unaudited monthly NAV updates).
As mentioned previously in our full-year results report, a major upcoming event
for the Company is going to be the mainnet launch of Celestia (formerly
LazyLedger), a project that received investment from KR1 during its initial seed
funding round a few years ago. With the digital asset landscape becoming more
complex, fragmented and diverse, Celestia is leading a `new generation' of
emerging modular blockchain architectures, and we are excited to witness the
growth of an ecosystem around that.
Further major developments of existing portfolio projects are the unveiling of
Polkadot's roadmap towards a future Polkadot 2.0, which will be more flexible
and accelerate the adoption of Polkadot's technology to many more developers.
Similarly, the Cosmos ecosystem continues iterating with its release of `Mesh
Security', which provides projects with higher economic security while allowing
them to retain complete sovereignty. Another project previously mentioned in our
full-year results report, Vega Protocol, successfully launched its mainnet and
has been going from strength to strength with continuously increasing trade
volume being executed through the platform, which is a healthy sign for Vega to
capture further market share in 2024 and beyond.
While still a great benefit to the Company, income from digital assets in the
six months up until 30 June 2023 was £3.9 million, being down considerably from
the full-year results as, firstly, it relates to an interim period of only six
months but further as the `tail-end' of rewards still being distributed from
parachains in the Polkadot ecosystem has generally been lower compared to
initial rewards. Other contributing factors were fairly stagnant prices across
the entire crypto ecosystem, affecting the GBP equivalent for income from
digital assets over the period as well as no additional rewards from `special
situations' such as from `lockdrops' which materially added to the Company's
previous full-year results.
The underlying staking activities remain strong, even throughout a challenging
market environment, with the Company recently adding Ethereum ("ETH") through
Lido's Staked ETH ("stETH") to the Company's staked operations. This adds
another staked asset to the Company's existing staking activities, which already
feature assets such as Cosmos ("ATOM"), Moonbeam ("GLMR"), Kusama ("KSM") and
Moonriver ("MOVR"), where almost the entire amounts of all positions held by the
Company are staked. Polkadot ("DOT") is another major asset, which contributes
to KR1's income from digital assets through staking activities. The Company
expects to unlock all DOT that were contributed to parachain auctions in two
tranches: the first in October 2023 (1.05 million DOT) and the second in January
2024 (0.6 million DOT). While on the one hand, this results in a phasing out of
parachain rewards to the Company from the supported parachains (such as Acala,
Astar and Moonbeam), on the other hand, the unlocked DOT can be added to the
Company's Polkadot staking activities again which, in turn, shall increase
rewards on the staking side for the asset.
As we move through 2023 into 2024, we will keep building out the Company's high
-quality `long-only' portfolio of innovative digital assets and as previously,
KR1 plc remains at the very heart of the crypto ecosystem, fully focused and
taking advantage of the disruption that this exciting technology will bring to
society.
Statement of Comprehensive Income
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December
2022
Restated
Unaudited Unaudited Audited
£ £ £
Continuing
operations
Income
Income from digital 3,912,210 16,567,889 20,204,355
assets
Interest received 14,972 - 2,371
Direct costs (122,398) (188,380) (444,194)
Gross profit 3,804,784 16,379,509 19,762,532
Administrative (1,948,266) (1,683,567) (3,726,682)
expenses
Gain on disposal of 8,290,070 2,510,663 3,642,819
intangible assets
Movement in fair (140,787) (15,315) (183,932)
value of financial
assets at fair value
through profit and
loss
Share options - (39,328) (39,327)
Operating profit 10,005,801 17,151,962 19,455,410
Taxation - (180) -
Profit after 10,005,801 17,151,782 19,455,410
taxation
Other comprehensive
income:
Movement in fair 10,658,544 (155,483,650) (164,666,713)
value of intangible
assets
Total other 10,658,544 (155,483,650) (164,666,713)
comprehensive income
for the
period/year
Total comprehensive 20,664,345 (138,331,868) (145,211,303)
income attributable
to the equity
holders of the
Company
Earnings per share
attributable to the
equity owners of the
company (pence):
Basic earnings per 5.64 11.25 11.86
share
Diluted profit per 5.63 11.21 10.96
share
Statement of Financial Position
At 30 June At 30 June At 31 December 2022
2023 2022
Restated
Unaudited Unaudited Audited
£ £ £
Assets
Non-current assets
Intangible assets 22,232 10,036,812 3,270,856
Intangible assets - - 3,795
receivable
Total non-current assets 22,232 10,036,812 3,274,651
Assets
Current assets
Intangible assets 79,978,003 53,782,345 57,669,180
Intangible assets 926,995 5,323,793 1,774,020
receivable
Financial assets at fair 8,329,742 7,667,478 8,067,895
value through profit and
loss
Cash and cash equivalents 2,114,457 785,252 634,163
Trade and other receivables 107,019 42,737 125,570
Total current assets 91,456,216 67,601,605 68,270,828
Total assets 91,478,448 77,638,417 71,545,479
Equity and liabilities
Current liabilities
Trade and other payables 807,919 30,897,042 1,539,295
Total current liabilities 807,919 30,897,042 1,539,295
Equity
Share capital 808,756 762,070 808,756
Share premium 36,602,619 6,505,061 36,602,619
Revaluation surplus 17,375,359 15,899,878 6,716,815
Option reserve 149,852 149,852 149,852
Profit and loss account 35,733,943 23,424,514 25,728,142
Total equity 90,670,529 46,741,375 70,006,184
Total equity and 91,478,448 77,638,417 71,545,479
liabilities
Net Asset Value per share 51.12 30.59 39.47 pence
pence pence
Statement of Changes in Equity
Share Share Revaluation Option Retained
Total
premium reserve reserve reserves
capital
£ £ £ £ £
£
Balance at 1 758,320 6,505,061 171,383,528 110,524 6,272,732
185,030,165
January 2022
as restated
Profit for - - - - 17,151,782
17,151,782
the financial
period
Total other - - (155,483,650) - -
(155,483,650)
comprehensive
income for
the period
Total - - (155,483,650) - 17,151,782
(138,331,868)
comprehensive
income
for the
period
Issue of - - - 74,854 -
74,854
options
Exercise of 3,750 - - (35,526) -
(31,776)
options
Transactions 3,750 - - 39,328 -
43,078
with owners
recorded
directly
in equity
Balance at 30 762,070 6,505,061 15,899,878 149,852 23,424,514
46,741,375
June 2022
Balance at 1 808,756 36,602,619 6,716,815 149,852 25,728,142
70,006,184
January 2023
Profit for - - - - 10,005,801
10,005,801
the financial
period
Total other - - 10,658,544 - -
10,658,544
comprehensive
income for
the period
Total - - 10,658,544 - 10,005,801
20,664,345
comprehensive
income
for the
period
Transactions - - - - -
-
with owners,
recorded
directly in
equity
Balance at 30 808,756 36,602,619 17,375,359 149,852 35,733,943
90,670,529
June 2023
Statement of Cash Flows
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December
2022
Restated
Unaudited Unaudited Audited
£ £ £
Cash flows from
operating
activities
Profit for the 10,005,801 17,151,782 19,455,410
period
Other comprehensive 10,658,544 (155,483,650) (164,666,713)
income
Adjustments for:
Movement in fair (10,658,544) 155,483,650 164,666,713
value of intangible
assets
Gain on disposal of (8,290,070) (2,510,663) (3,642,819)
intangible assets
Non-cash income (3,912,210) (16,567,889) (20,204,355)
from digital assets
Other non-cash (121) 86,596 270,344
transactions
Foreign exchange 40,028 1,606 36,072
gain
Movement in fair 140,787 15,315 183,932
value of financial
assets at fair
value through
profit and
loss
Share option issue - 39,328 39,327
Decrease/(increase) 18,551 60,568 (22,266)
in debtors
(Decrease) in (731,376) (1,477,221) (30,834,966)
creditors
Net cash (outflow) (2,728,610) (3,200,578) (34,719,321)
from operating
activities
Cashflows from
investing
activities
Sales of 6,132,703 3,077,205 6,249,761
investments
Purchases of (1,883,770) (2,581,941) (4,496,617)
investments
Net cash inflow 4,248,933 495,264 1,753,144
from investing
activities
Cashflows from
financing
activities
Proceeds from issue - 3,750 30,147,991
of ordinary shares
Net cash generated - 3,750 30,147,991
by financing
activities
Net 1,520,323 (2,701,564) (2,818,186)
increase/(decrease)
in cash
Cash and at the 634,163 3,488,421 3,488,421
beginning of the
year
Effect of exchange (40,029) (1,605) (36,072)
fluctuations on
cash
Cash and at 31 2,114,457 785,252 634,163
December
Represented by:
Cash at bank 1,044,679 785,252 634,163
Cash held on 1,069,778 - -
trading platforms
2,114,457 785,252 634,163
Other non-cash transactions consist of expenses paid and investments purchased
using digital assets and cryptocurrency assets.
Interim Report Notes
1. Interim report
The information relates to the 6-month period from 1 January to 30 June 2023.
The interim report was approved by the Directors on 27 September 2023.
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 listed financial assets and
intangible assets traded in an active market which are carried at fair value as
specified in the accounting policies below and are in accordance with applicable
accounting standards.
3. Assets
Digital assets and Cryptocurrency assets
The Company holds digital assets and cryptocurrency assets 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 Open Exchange Rates and CoinMarketCap. 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.
The assets are identifiable, separable and future economic benefits are
expected. Intangible assets held are measured initially at cost and are
subsequently carried at a revalued amount based on fair value).
Revaluation increases in the carrying amount are recognised in other
comprehensive income and accumulated in the revaluation surplus within equity.
Revaluation decreases which offset previous increases are charged in other
comprehensive income and debited to the revaluation surplus directly in equity.
All other decreases are charged to the income statement.
The digital assets and cryptocurrency assets have indefinite useful lives and
are reviewed at each reporting period to determine whether events and
circumstances continue to support an indefinite useful life assessment for that
asset.
Digital assets and cryptocurrency assets may be locked due to participation in
activities including, but not limited to staking, parachain auctions and
lockdrops.
Digital assets and cryptocurrency assets delivered to the Company from early
-stage investments for future tokens may be subject to restrictions such as
lockups and vesting schedules. Digital assets and cryptocurrency assets may also
be temporarily locked at times due to participation in various activities
including but not limited to staking, parachain auctions and lockdrops.
The Company recognises digital assets and cryptocurrency assets as `locked' when
these assets are held in Company owned accounts or blockchain wallets under the
Company's control whereby the unlock of these digital assets and cryptocurrency
assets is in accordance with certain conditions, including but not limited to, a
schedule dependent on time or blockchain block count, which is dictated by
computer code, such as a smart contract deployed on a particular blockchain or
similar mechanisms. Locked digital assets and cryptocurrency assets may be
unlocked in a full tranche or partially over time.
Digital assets and cryptocurrency assets that are legally owned by the Company
from early-stage investments for future tokens may be distributed to Company
owned accounts or blockchain wallets under the Company's control by the investee
team over time in accordance with the terms of contractual agreements between
the Company and the investees. The Company recognises these owned but yet-to-be
-received digital assets and cryptocurrency assets as Intangible assets
receivable.
Whilst, under such circumstances the Company generally forfeits its ability to
sell or otherwise transfer its locked digital assets and cryptocurrency assets,
no other entity obtains the right to direct their use and the Company is still
the primary entity holding the risks and rewards of ownership. Locked digital
assets and cryptocurrency assets may be unlocked as a full tranche or may be
subject to unlock and vesting schedules.
The Company does not derecognise time locked or vesting digital assets and
cryptocurrency assets which are classified and measured in the same manner as
non-locked digital assets and cryptocurrency assets.
The Company classifies digital assets and cryptocurrency assets which are due
for release no later than one year after the period end as intangible assets
held as current assets. Digital assets and cryptocurrency assets, which are due
for release more than one year after the period end are classified as intangible
assets held as non-current assets.
Digital assets and cryptocurrency assets receivable from third parties subject
to unlock and vesting schedules, or as distributions and rewards are classified
as intangible assets receivable.
Early-stage investments for future tokens
Unlike the digital asset and cryptocurrencies held, there is no active market
for these agreements and hence these are held under the cost model and
subsequent to initial recognition will be held at cost less impairment. No
amortisation will be charged to the assets as the investment is entered into
with the outcome expected that digital assets and cryptocurrency assets will be
provided at the end of the agreement following a projects launch.
Revaluation increases in the carrying amount are recognised in other
comprehensive income and accumulated in the revaluation surplus within equity.
Revaluation decreases which offset previous increases are charged in other
comprehensive income and debited to the revaluation surplus directly in equity.
All other decreases are charged to the income statement.
Financial assets at fair value through profit or loss
A financial asset is classified at fair value through profit or loss if it is
classified as held for trading or is designated as such upon initial
recognition. Financial assets are designated at fair value through profit or
loss if the Company manages such investments and makes purchase and sale
decisions based on their fair value in accordance with the Company's documented
risk management or investment strategy. Upon initial recognition attributable
transaction costs are recognised in profit or loss as incurred. Financial assets
at fair value through profit or loss are measured at fair value, and changes
therein are recognised in profit or loss.
i. Financial 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 financial 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 financial 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.
4. Receivables
Receivables are financial assets with fixed or determinable payments that are
not quoted in an active market. Such assets are recognised initially at fair
value plus any directly attributable transaction costs. Subsequent to initial
recognition receivables are measured at amortised cost using the effective
interest method, less any impairment losses. Receivables comprise trade and
other receivables.
Digital assets and cryptocurrency assets which are legally owned by the Company
from early-stage investments for future tokens may be distributed to Company
owned accounts or blockchain wallets under the Company's control by the investee
team over time in accordance with the terms of contractual agreements between
the Company and the investees. The Company recognises these owned but yet-to-be
-received digital assets and cryptocurrency assets as Intangible assets
receivable.
5. Restatement of comparatives
As detailed in the Company's Annual Report for the year ended 31 December 2022
prior year figures relating to Financial assets at fair value through profit or
loss, attributed to other comprehensive income in error were restated to reflect
measurement at fair value through profit and loss. The Company has also restated
figures relating to the removal from the option reserve of the fair value of the
options (determined using the Black-Scholes option pricing model) upon exercise
of share options. Some elements of this were previously reported through profit
and loss and were restated to reflect a change in retained reserves.
In accordance with these prior year restatements figures for the 6 months ended
30 June 2022 have been corrected.
The Company will report again for the full year to 31 December 2023.
The Directors of KR1 plc accept responsibility for this announcement.
For further information please contact:
KR1 plc +44 (0)1624 630630
George McDonaugh
Keld van Schreven
Peterhouse Capital Limited (Aquis Corporate Adviser) +44 (0)20 7469 0930
Mark Anwyl
FTI Consulting LLP (PR Adviser) +44 (0)7711 387 085
Ed Berry KR1@fticonsulting.com
Maxime Lopes
Lynn Begany
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 Aquis 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
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).
This information was brought to you by Cision http://news.cision.com
https://news.cision.com/kr1-plc/r/interim-report-for-the-half-year-ended-30-june-2023,c3843573
END
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