TIDMKR1
29 June 2023
KR1 Plc
("KR1", the "Company ")
Audited final results for the twelve months ended 31 December 2022
KR1 plc, a leading digital asset investment company, is pleased to announce its
audited results for the twelve-month period ended 31 December 2022 ("FY22").
Financial
Highlights
* Net assets of £70.0 million down 62.2% (FY21 £185.0 million)
* NAV per share of 39.47p, a reduction of 67.8% (FY21 122.68p)
* Income from digital assets of £20.2 million, 3.6% lower (FY21 £21.0
million)
Strategic Highlights
* Consistent income from staking in 'Proof-of-Stake' network, as well as
other crypto-native strategies such as rewards from parachains and
lockdrops; aiming to strengthen staking activities further.
* Optimising our corporate structure, following recent initiatives such as
the unaudited monthly NAV updates, the previous appointment of new auditors
and the appointment of a new independent non-executive director.
Investment Highlights
* Continued progress developing our high-quality long-only portfolio of
innovative, diversified digital assets with continued investment activity
into attractive opportunities (Anoma, Code&State and Hydra Ventures since
year-end).
* Strong momentum for portfolio projects such as Lido and Rocket Pool
following Ethereum's 'Proof-of-Stake' upgrade.
* Well positioned within the modular blockchain space through the Company's
seed investment in Celestia (formerly LazyLedger), a pluggable consensus
and data availability layer.
* Decentralised Finance ("DeFi") continues to be the primary driver of
blockchain adoption and remains an important investment focus.
Markets Outlook
* Most recently, the crypto ecosystem has found stability, even witnessing
some sustained positivity following the return of investor confidence after
last years' events.
* Despite the still seemingly uncertain macroeconomic conditions, we remain
confident in the growth opportunity of the underlying technology and our
high quality portfolio.
George McDonaugh and Keld van Schreven, Managing Directors of KR1 plc,
commented:
"Whilst the Company's NAV has been impacted by a turbulent year for the crypto
market due to multiple crises, KR1 has shown remarkable resilience throughout.
Our continued focus on building a high quality long-only portfolio of
innovative digital assets enabled us to deliver consistent income from our
portfolio. We have also strengthened the Company with key internal and external
appointments and improved reporting transparency with the long-desired
publication of our unaudited monthly NAV updates. KR1 is well placed to capture
an ever-growing inflow of innovative projects seeking investment and deploying
capital through a disciplined investment approach."
Chairman's Report
We are pleased to present the Annual Report and Audited Financial Statements of
the Company for the twelve months ended 31 December 2022.
At 31 December 2022, the net asset value of KR1 plc ("the Company") was 39.47
pence per share as compared with 122.68 pence per share a year earlier. The net
asset value of the Company at 31 December 2022 was £70,006,184, as compared
with £185,030,165 a year earlier. Moreover, the Company reported a loss for the
year of £145,211,303 (2021: profit £143,663,018).
On behalf of the Board of Directors, I thank all Shareholders for their
support.
Sincerely yours,
Rhys Davies
Chairman
28 June 2023
Managing Directors' Report
The cyclical nature of the digital asset economy is once again fully evident:
Throughout the financial year, the crypto ecosystem saw the unravelling of
multiple crises, starting with the Luna and Terra implosion earlier in the
year, the subsequent blowups of formerly major entities in the space and,
ultimately, the demise of FTX and Alameda Research and their affiliated
operations. Following the momentous bull market cycle previous to that, 2022
saw investor confidence plummet and an exit of participants and liquidity from
the digital asset sector. As market cycle history repeats itself, the previous
year and recent partial recovery serves once again as a strong reminder that
with such extreme cyclical volatility, complex trading, loans and leverage are
a dangerous mix of unnecessary risks when investing in this asset class.
As shown in the Company's financial statements and despite the turmoils in the
crypto ecosystem, especially in the latter part of the financial year, the
Company's Net Asset Value stood at £70,006,184 (2021: £185,030,165) at the year
end, which resulted in a Net Asset Value per Ordinary Share of 39.47p (2021:
122.68p) at the year end. While the portfolio suffered from the decrease of
crypto assets prices across the board, we are continuing to build a high
quality 'long-only' portfolio of innovative digital assets. This strategy has
allowed the Company to ride out and benefit materially from the market cycles
that we have experienced to date. We believe the structure of KR1 as a publicly
listed permanent capital vehicle and its approach to investments creates a
resilient model which puts the Company in a leading position to take advantage
of crypto's exceptional growth potential going forward.
Throughout the year the Company generated a total Income from Digital Assets of
£20,204,355 (2021: £20,959,934) for the financial year. We are particularly
pleased with the consistency of this income, which is driven primarily by the
Company's staking activities and the rewards received from participation in
parachain auctions. These activities have very efficient underlying economics,
especially when compared to the capital-intensive Bitcoin mining businesses.
Since the close of the previous year, following the shock of the FTX panic and
its contagion, the crypto ecosystem has found stability, even witnessing some
sustained positivity more recently. While encouraging, it is not necessarily
indicative of an impending start of the bull market anytime soon with the macro
backdrop still threatening valuations of 'risk assets'. A seemingly overtly
hostile regulatory position of the current US administration towards digital
assets could also stifle adoption, suppress prices and continue to drive future
innovations out of the US, to nations more welcoming of the technology and its
potential benefits.
The recent partial US banking crisis reignited interest in Bitcoin's 'sound
money' narrative, however, Ethereum looks to potentially capture some of this
narrative following its successful upgrade to 'Proof-of-Stake' (ETH now being
termed 'ultra sound money' by respected voices in the Ethereum community).
Following the completion of Ethereum's upgrade, KR1 benefited from the
performance of Rocket Pool and Lido, both long-time seed investments since 2017
and 2020 respectively, that relate to Ethereum's staking ecosystem and were
placed firmly front and centre in the minds of the market after the successful
move.
In terms of technology, Ethereum remains the platform that sees by far the most
activity, currently still best expressed through the blossoming Decentralised
Finance ("DeFi") ecosystem, which will continue to become ever more relevant to
crypto's overall growth. There are also very exciting developments happening
within other layer-1 blockchain ecosystems. Cosmos has recently captured
attention as 'interchain security' shipped, which could benefit the ATOM token
economics while placing the Cosmos on a high-growth trajectory for hundreds of
new application specific chains to onboard. Likewise, the Polkadot ecosystem
continues to develop at a rapid pace, ranking at the top of developer activity
charts across the entire crypto landscape.
Throughout the past year and into this year we have continued to see strong
inflows of innovative projects seeking investment and have also seen portfolio
projects successfully go live and launch their products, such as Vega recently
with enabling trading for its alpha mainnet.
We are expecting further projects in the portfolio to come to market over the
next time period: A major one being Celestia (formerly LazyLedger), which
received investment from KR1 during its initial seed funding round a few years
ago and subsequently progressed on executing on their technical roadmap of
creating a modular blockchain architecture that solves the core scaling
problems of today's blockchains.
On the corporate side of the Company, the past year served as a great
opportunity to improve various internal structures and functions. The most
notable recent development of this being the introduction of our monthly
unaudited net asset value ("NAV") updates. These updates are currently
published on a monthly schedule as public announcements and detail not only the
relevant unaudited NAV and NAV per share, but also provide further insights
into the top holdings of the KR1 portfolio. This process has been a long time
in the making and we are thrilled to finally have the updates in production and
available to our shareholders. Another important milestone for the Company has
been the appointment of PKF Littlejohn LLP as the Company's new auditors. Their
expertise in the digital asset sector is highly suitable for KR1 and ensures
that the Company meets all its obligations as a publicly listed company in
terms of financial reporting and transparency. Last but not least, the Company
also welcomed Aeron Buchanan as a non-executive director. After gaining a
doctorate from Oxford University, Aeron was involved in several start-ups
before joining the Ethereum Foundation soon after it was founded and was
subsequently involved in the launch of Polkadot and the Web3 Foundation.
As we continue to move through 2023 and beyond, we will keep building a high
quality 'long-only' portfolio of innovative digital assets. As in previous
years, 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.
George McDonaugh
Keld van Schreven
Managing Director & Co-Founder Managing
Director & Co-Founder
28 June 2023
Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2021
Restated
Note £ £
Continuing operations
Income
Income from digital assets 8 20,204,355 20,959,934
Interest received 8 2,371 -
Direct costs 9 (444,194) (392,514)
Gross profit 19,762,532 20,567,420
Administrative expenses 9 (3,726,682) (32,778,173)
Gain on disposal of intangible assets 8 3,642,819 20,758,540
Movement in fair value of financial assets at fair 6 (183,932) (3,765,107)
value through profit and loss
Share options 9,16 (39,327) (13,810)
Operating profit 19,455,410 4,768,870
Taxation on profit 11 - -
Profit after taxation 19,455,410 4,768,870
Other comprehensive income:
Movement in fair value of intangible assets 13 (164,666,713) 138,894,148
Total other comprehensive income for the year (164,666,713) 138,894,148
Total comprehensive income attributable to the equity
holders of the Company (145,211,303) 143,663,018
Earnings per share attributable to the equity owners
of the company (pence):
Basic earnings per share 12 11.86 3.53
Diluted earnings per share 12 10.96 3.12
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 2022
2022 2021 1 January
Restated 2021
Note £ £ Restated
£
Assets
Non-current assets
Intangible assets 13 3,270,856 26,307,014 667,029
Intangible assets receivable 13,14 3,795 163,888 -
Total non-current assets 3,274,651 26,470,902 667,029
Current assets
Intangible assets 13 57,669,180 177,560,034 40,406,173
Intangible assets receivable 13,14 1,774,020 3,755,494 -
Financial assets at fair value through 6 8,067,895 6,026,270 720,586
profit and loss
Cash and cash equivalents 634,163 3,488,421 332,535
Trade and other receivables 14 125,570 103,305 31,034
Total current assets 68,270,828 190,933,524 41,490,328
Total assets 71,545,479 217,404,426 42,157,357
Equity and liabilities
Current liabilities
Trade and other payables 15 1,539,295 32,374,261 4,290,882
Total current liabilities 1,539,295 32,374,261 4,290,882
Net assets 70,006,184 185,030,165 37,866,475
Equity
Share capital 16 808,756 758,320 720,076
Share premium 17 36,602,619 6,505,061 3,056,443
Revaluation reserve 17 6,716,815 171,383,528 32,489,380
Option reserve 16 149,852 110,524 252,630
Retained reserves 17 25,728,142 6,272,732 1,347,946
Total equity 70,006,184 185,030,165 37,866,475
Total equity and liabilities 71,545,479 217,404,426 42,157,357
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 2022
2022 2021
Restated
£ £
Cash flows from operating activities
Profit / loss after tax for the financial year 19,455,410 4,768,870
Other Comprehensive Income (164,666,713) 138,894,148
Adjustments for:
Movement in fair value of intangible assets 164,666,713 (138,894,148)
Gain on disposal of intangible assets (3,642,819) (20,758,540)
Non-cash income from digital assets (20,204,355) (20,959,934)
Other non-cash transactions 270,344 392,410
Forex Exchange Loss 36,072 17,354
Movement in fair value of financial assets 183,932 3,765,107
at fair value through profit and loss
Share option issue 39,327 13,810
(Increase) in debtors (22,266) (72,271)
(Decrease) /increase in creditors (30,834,966) 28,083,379
Net cash (outflow)/inflow from operating activities (34,719,321) (4,749,815)
Cash flows from investing activities
Sales of investments 6,249,761 21,325,335
Purchases of investments (4,496,617) (16,902,952)
Net cash inflow from investing activities 1,753,144 4,422,383
Cash flows from financing activities
Proceeds from issue of ordinary shares 30,147,991 3,500,672
Net cash generated by financing activities 30,147,991 3,500,672
Net (decrease)/increase in cash (2,818,186) 3,173,240
Cash at the beginning of the year 3,488,421 332,535
Effect of exchange fluctuations on cash (36,072) (17,354)
Cash as at 31 December 634,163 3,488,421
Represented by:
Cash at bank 634,163 3,163,061
Cash held on trading platforms - 325,360
634,163 3,488,421
Non-cash transactions consist of expenses paid and investments purchased using
digital assets and cryptocurrency assets.
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 28 June
2023 and were signed on its behalf by:
George McDonaugh Keld 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 2022. 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 +44 (0)1624 630 630
George McDonaugh
Keld van Schreven
Peterhouse Capital Limited (AQSE Corporate
Adviser) +44 (0)20 7469 0930
Mark Anwyl
FTI Consulting (PR Adviser)
Ed Berry +44 (0)7711 387 085
Maxime Lopes KR1@fticonsulting.com
Lynn Begany
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).
END
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June 29, 2023 02:01 ET (06:01 GMT)
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