Tuesday,
14 May 2024
KR1 plc
(“KR1” or
the “Company”)
Audited Results for the Twelve Months Ended 31 December 2023
KR1 plc, a
leading digital asset investment company, is pleased to announce
its audited results for the twelve months ended 31 December 2023 (“FY23”).
Financial Highlights
-
Net assets
of £195.0 million as at 31 December
2023, an increase of 178.48% on FY22 (and an increase of
115.01% on HY23);
-
NAV per
share of 109.91p as at 31 December
2023, an increase of 178.48% on FY22 (and an increase of
115.01% on HY23);
-
Income
from digital assets of £8.7 million, a decrease of 57.17% on FY22
(£20.2 million) mainly due to dampened market conditions throughout
the past financial year
Investment Highlights
-
Celestia
was KR1’s standout investment highlight in FY23, returning the
Company many magnitudes of its initial investment
-
Polkadot
and Cosmos continue to be major positions with positive updates and
strong future technical roadmaps
-
Lido is
still the strongest contributor to Ethereum’s liquid staking
ecosystem and remains a major holding alongside Ethereum (through
Lido’s stETH)
Strategic Highlights
-
Positioned
the Company as a leading voice in the UK’s ambition to become “a
global cryptoasset technology hub”
-
KR1 joined
CryptoUK and is engaging with the FCA and political representatives
to inform future UK digital asset regulations, establishing a
robust foundation for the future of the Company and the crypto
ecosystem
-
Throughout
the financial year, KR1 continued to allocate capital to
high-quality early-stage projects as well as expanded staking
activities through additions of Celestia (“TIA”) staking and
Ethereum staking through Lido’s staked ETH (“stETH”)
Market Outlook
-
Launch of
US Bitcoin ETFs, recent Bitcoin halving and further market
indicators signal to the Company that crypto is at the start of an
upcoming bull run
George McDonaugh and
Keld van Schreven, Managing
Directors and Co-Founders of KR1 plc,
commented:
“We are
proud to present KR1’s 2023 results and have positioned the Company
as a leading voice in the UK’s ambition to become “a global
cryptoasset technology hub”. The Company's net assets grew
substantially to £195 million as at year-end, providing
shareholders with capital growth, which remains our main long-term
focus. Alongside this, the income generated from digital assets
continues to be of great benefit to the Company and we are
confident that this should increase again in the coming year. An
array of indicators, including the launch of the US Bitcoin ETFs
and the recent Bitcoin halving, lead us to believe that we are at
the start of a period of sustained positive market momentum for
digital assets. KR1 is ideally positioned to capitalise on this,
and we look forward to adding to the Company’s high quality
‘long-only’ portfolio of innovative digital assets.”
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 2023.
At
31 December 2023, the net asset value
of KR1 plc (“the Company”) was 109.91
pence per share as compared with 39.47 pence per share a year earlier. The net
asset value of the Company at 31 December
2023 was £194,953,759, as compared with £70,006,184 a year
earlier. Moreover, the Company reported a profit for the year of
£124,947,575 (2022: loss £145,211,303).
On behalf
of the Board of Directors, I thank all Shareholders for their
support.
Sincerely
yours,
Rhys Davies
Chairman
13 May 2024
Managing Directors’ Report
It has
been another momentous period for digital assets and it would be
hard to summarise all the activities, but one thing is clear: the
digital asset economy is thriving.
The
record-breaking success of the US Bitcoin Exchange Traded Funds
(“ETFs”), with now more than half the assets under management of US
Gold ETFs has undoubtedly put pressure on UK regulators to make a
move. There is added competition globally from Hong Kong which has already authorised
launches of local spot Bitcoin ETFs alongside spot Ethereum (“ETH”)
ETFs. Historically, London
benefitted tremendously when embracing financial innovation when
the US hesitated. Eurodollar money markets and derivatives are good
examples of this, and appropriate regulation of digital assets
could benefit London again if the
City acts quickly.
We have
worked hard in recent years with relevant policymakers and other
relevant organisations such as CryptoUK, the FCA and various
political representatives across both parties to communicate what
is holding the UK back from realising its ambition to be a global
crypto-asset hub and stay competitive in the field. Recent
highlights for the Company have included progressive meetings with
MPs at Number 10 Downing Street, participation in relevant FCA
roundtables as well as co-hosting a roundtable with our new
communications and advocacy firm SEC Newgate, which was attended by
several large global financial institutions. Through all these
initiatives we established and strengthened KR1 as a leading voice
in this endeavour. We are confident that there is a shared will
across the broad spectrum of industry players for the UK to remain
competitive by how they regulate digital assets. We believe that
positive regulation will make the UK a world leader in the space,
not a follower, resulting in the creation of more crypto unicorns
in the UK, which will help develop a flourishing developer and
entrepreneur community.
As a
leading voice of the crypto industry and to position the Company
for a more senior public listing, once admission criteria allow
digital assets, it is essential we operate to the highest standards
of corporate governance and meet our responsibilities to
shareholders. Over the past years, KR1 has implemented numerous
initiatives toward achieving this goal. The Company has established
a strong and independent board, with the appointments of
Rhys Davies, Mona Elisa and
Aeron Buchanan, as independent
non-executive directors. In addition, we engaged PKF Littlejohn,
one of the UK’s largest auditors, to further bolster our in-depth
financial reporting and oversight. Furthermore, we onboarded
Formidium, a specialised digital asset fund administration company,
to help us release unaudited monthly NAV updates, providing
shareholders with superior levels of transparency and disclosures
on a timely basis.
Following
the recent EGM, the Company also received shareholder approval to
carry out ordinary share buybacks. This authorises the Company to
buy back shares if the directors believe that, to do so would be in
the best interests of shareholders. This initiative has been well
received by our shareholders and became relevant due to the
divergence of the share price from the underlying net asset value
per share. Of course, we will continue to allocate capital to new
investments as the Company has done successfully since its
inception.
KR1’s
standout performer in 2023 was Celestia, which we seed-funded after
meeting Mustafa Al-Bassam;
Celestia’s co-founder, in 2019 when he was still completing his PhD
at University College London. Armed with nothing more than a
whitepaper at the time; Celestia has since launched to become a
‘decacorn’, taking the top spot in KR1’s portfolio, and returning
the Company many magnitudes of its initial investment. Celestia
changed the game for blockchain architecture with its new modular
framework, akin to a ‘Lego-stack’ approach. This architecture fits
in perfectly with the latest developments of how blockchains such
as Ethereum are scaling and, thus, made Celestia the most exciting
crypto project launch of the year.
Other
ecosystems, which we seed-funded and continue to support, including
Polkadot and Cosmos, are still growing and have had a lot of recent
positive updates. This is especially true of Polkadot, which has
become more accessible to developers and has established a strong
technical roadmap for how it transitions out of its previous
parachain-dominated system into an even quicker, more secure and
more flexible protocol through the releases of ‘Asynchronous
Backing’, ‘Agile Coretime’, and Gavin Wood’s recent ‘JAM’ protocol
proposal. We believe these innovations are very promising for the
digital asset ecosystem as a whole and, subsequently, could result
in this being the catalyst for stronger Polkadot adoption and
activity.
Lido
continues to be one of our major positions and remains one of the
strongest contributors to Ethereum’s staking ecosystem, with the
protocol cementing itself across the entirety of Ethereum and its
various rollups as detailed in Lido’s most recent roadmap. The
Company also maintains a strong Ethereum position (staked through
Lido), as Ethereum underpins the now rapidly expanding ‘Layer 2’
and ‘Layer 3’ rollup ecosystems.
We are
looking forward to further portfolio projects that have yet to come
to market and launch their networks. Anoma pioneers another
generation of blockchain protocols with “humanised” programmable
settlements while Tanssi aims to simplify and enhance appchain
deployment like never before. Superchain helps developers to create
more responsive decentralised applications through superior data
indexing and handling. Redstone is seeing rapid growth of its
innovative modular multichain oracle solution and recently also
started supporting Mode, another recent investment, which is a new
‘Layer 2’ project, built on and supported by Optimism, that creates
new on-chain economic systems to enable developers to scale their
applications to users more easily.
Throughout
the previous year, the Company’s staking activities, where a range
of portfolio assets are contributing to the security of respective
blockchain networks, have remained strong and expanded in scope,
especially with Celestia’s launch towards the year-end. This
resulted in material income from digital assets where rewards in
the native network assets are increasing our respective holdings in
the underlying blockchain networks. The Company’s core staking
activities remain Polkadot (“DOT”), Cosmos (“ATOM”), Ethereum
(“ETH”) through Lido staked Ethereum (“stETH”), with the recent
addition of Celestia (“TIA”).
We believe
that the launch of the US Bitcoin ETFs, the recent Bitcoin halving
and an array of market indicators signal to us that we are at the
start of a sustained bull run. While it can be exciting for many
newcomers, this is often an adrenaline-fuelled time filled with
euphoric highs and immense volatility. It is at these times that
our thesis of investing early in the most innovative decentralised
projects with world-class founders at fair valuations keeps us in
good stead.
As we
continue into 2024 and beyond, we want to thank you for your
continued support as we keep building out a high-quality
‘long-only’ portfolio of innovative digital assets. As in previous
years, KR1 plc remains at the very heart of the thriving crypto
ecosystem, fully focused and taking advantage of the disruption
that this exciting technology will bring to society.
George McDonaugh and Keld van
Schreven
Managing
Directors and Co-Founders
13 May 2024
Statement
of Comprehensive Income
for the
year ended 31 December
2023
|
|
2023
£
|
2022
£
|
|
Continuing operations
|
|
|
|
Income
|
|
|
|
Income from digital assets
|
8,653,547
|
20,204,355
|
|
Interest received
|
17,869
|
2,371
|
|
|
|
|
|
Direct costs
|
(462,205)
|
(444,194)
|
|
Gross profit
|
8,209,211
|
19,762,532
|
|
|
|
|
|
Administrative expenses
|
(4,009,745)
|
(3,726,682)
|
|
Gain on disposal of intangible assets
|
12,115,075
|
3,642,819
|
|
Movement in fair value of financial assets at fair value through
profit and loss
|
(716,921)
|
(183,932)
|
|
Impairment
of digital assets
held under
the cost
model
|
(859,749)
|
-
|
|
Share options
|
-
|
(39,327)
|
|
|
|
|
|
Operating profit
|
14,737,871
|
19,455,410
|
|
|
|
|
|
Taxation on profit
|
-
|
-
|
|
|
|
|
|
Profit after taxation
|
14,737,871
|
19,455,410
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Movement in fair value of intangible assets
|
110,209,704
|
(164,666,713)
|
|
|
|
|
|
Total other comprehensive income for the
year
|
110,209,704
|
(164,666,713)
|
|
|
|
|
|
Total comprehensive income attributable to the equity
holders of the Company
|
124,947,575
|
(145,211,303)
|
|
|
|
|
|
Earnings per share attributable to the equity owners of the
company (pence):
|
|
|
|
Basic earnings per share
|
8.31
|
11.86
|
|
Diluted earnings per share
|
8.30
|
10.96
|
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
2023
|
|
2023
£
|
2022
£
|
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
23,615,464
|
3,270,856
|
|
Intangible assets receivable
|
-
|
3,795
|
|
Total non-current assets
|
23,615,464
|
3,274,651
|
|
|
|
|
|
Current assets
|
|
|
|
Intangible assets
|
161,993,773
|
57,669,180
|
|
Intangible assets receivable
|
163,494
|
1,774,020
|
|
Financial assets at fair value through profit and loss
|
8,880,105
|
8,067,895
|
|
Cash and cash equivalents
|
1,395,407
|
634,163
|
|
Trade and other receivables
|
42,849
|
125,570
|
|
Total current assets
|
172,475,628
|
68,270,828
|
|
|
|
|
|
Total assets
|
196,091,092
|
71,545,479
|
|
|
|
|
|
Equity and liabilities - Current
liabilities
|
|
|
|
Trade and other payables
|
1,137,333
|
1,539,295
|
|
Total current liabilities
|
1,137,333
|
1,539,295
|
|
|
|
|
|
Net assets
|
194,953,759
|
70,006,184
|
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
808,756
|
808,756
|
|
Share premium
|
36,602,619
|
36,602,619
|
|
Revaluation reserve
|
116,926,519
|
6,716,815
|
|
Option reserve
|
149,852
|
149,852
|
|
Retained reserves
|
40,466,013
|
25,728,142
|
|
Total equity
|
194,953,759
|
70,006,184
|
|
|
|
|
|
Total equity and liabilities
|
196,091,092
|
71,545,479
|
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
2023
|
|
2023
£
|
2022
£
|
|
Cash flows from operating activities
|
|
|
|
Profit after tax for the financial year
|
14,737,871
|
19,455,410
|
|
Other Comprehensive Income
|
110,209,704
|
(164,666,713)
|
|
Adjustments for:
|
|
|
|
Movement in fair value of intangible assets
|
(110,209,704)
|
164,666,713
|
|
Gain on disposal of intangible assets
|
(12,115,075)
|
(3,642,819)
|
|
Impairment of digital assets held under the cost model
|
859,749
|
-
|
|
Non-cash income from digital assets
|
(8,653,547)
|
(20,204,355)
|
|
Other non-cash transactions
|
1,053
|
270,344
|
|
Forex Exchange Loss
|
79,057
|
36,072
|
|
Movement in fair value of financial assets
at fair value through profit and loss
|
716,921
|
183,932
|
|
Share option issue
|
-
|
39,327
|
|
Decrease/(Increase) in debtors
|
82,721
|
(22,266)
|
|
(Decrease) in creditors
|
(401,962)
|
(30,834,966)
|
|
|
|
|
|
Net cash (outflow) from operating
activities
|
(4,693,212)
|
(34,719,321)
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Sales of investments
|
10,669,295
|
6,249,761
|
|
Purchases of investments
|
(5,135,782)
|
(4,496,617)
|
|
Net cash inflow from investing
activities
|
5,533,513
|
1,753,144
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds from issue of ordinary shares
|
-
|
30,147,991
|
|
Net cash generated by financing
activities
|
-
|
30,147,991
|
|
|
|
|
|
Net increase/(decrease) in cash
|
840,301
|
(2,818,186)
|
|
|
|
|
|
Cash and at the beginning of the year
|
634,163
|
3,488,421
|
|
Effect of exchange fluctuations on cash
|
(79,057)
|
(36,072)
|
|
|
|
|
|
Cash as at 31 December
|
1,395,407
|
634,163
|
|
|
|
|
|
Represented by:
|
|
|
|
Cash at bank
|
286,423
|
634,163
|
|
Cash held on trading platforms
|
1,108,984
|
-
|
|
|
1,395,407
|
634,163
|
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
13 May 2024 and were signed on its
behalf by: George McDonaugh
(Director) and Keld van Schreven
(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 2023. 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.
--ENDS--
For
further information please contact:
KR1 plc
George McDonaugh
Keld van Schreven
Phone: +44
(0)1624 630 630
Email:
investors@KR1.io
Peterhouse
Capital Limited (Aquis
Corporate Adviser)
Mark Anwyl
Phone: +44
(0)20 7469 0930
Email:
info@peterhousecap.com
SEC
Newgate (Financial
Communications)
Bob Huxford
Ian Silvera
Atif Nawaz
Phone: +44
(0)20 3757 6882
Email:
KR1@secnewgate.co.uk
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:ASE), 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).