Company Announcements

KR1 plc - Audited Final Results to 31 December 2021

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 of KR1 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 McDonaugh                                                                Keld 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         3,765,107     (227,713)
fair value through profit and loss

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 from financing 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 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 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                                    +44 (0)1624 630630
Keld van SchrevenPeterhouse Capital Limited (AQSE Corporate Adviser)
Mark Anwyl                                          +44 (0)20 7469 0930

FTI Consulting LLP (PR Adviser)
Laura Ewart                                         +44 (0)7711 387 085
Gina MagninKR1@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).