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KR1 KR1 Plc

74.00
-2.50 (-3.27%)
18 Apr 2024 - Closed
Realtime Data
Share Name Share Symbol Market Type Share ISIN Share Description
KR1 Plc AQSE:KR1 Aquis Stock Exchange Ordinary Share IM00BYYPQX37
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -2.50 -3.27% 74.00 67.00 77.00 76.50 71.00 76.50 613,751 15:24:55
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

KR1 Plc Interim Report for the Half Year Ended 30 June 2023

28/09/2023 7:00am

UK Regulatory


 
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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