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KR1 plc (KR1)

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Monday 30 September, 2019

KR1 plc

Interim Report for the Half Year Ended 30 June 2019

30 September 2019

KR1 Plc
(“KR1”, the “Company “or, together with its subsidiary the “Group”)

Interim Report for the Half Year Ended 30 June 2019

The Group is pleased to present its interim report for the half year ended 30 June 2019.

Chief Executive Officer’s statement

During a period of significant price fluctuations in digital asset markets, we are pleased that the first half of 2019 has seen our portfolio appreciate in value. Seeing a significant change in market character since December 2018, with Bitcoin bouncing off a low of $3,200 USD/BTC and peaking at over $13,000 USD/BTC some six months later, our investments have performed well during this volatile period. As ever, there is a strong correlation with Bitcoin across the crypto markets and we've seen encouraging results from our portfolio in recent months, posting a profit of £4,567,975 for the half-year. This result was largely driven by the successful launch of the Cosmos network, one of our most successful investments to date. As announced previously this year, a part of our strategy is to ‘stake’ our Cosmos ATOM to produce a generous monthly staking yield, recognized in the revenue of £116,788 over the three and a half months period since Cosmos’ launch on 14 March 2019. We believe Cosmos, Polkadot, Dfinity and other Proof-of-Stake blockchains are going to yield healthy cash flows to the business going forward to support operations and keep our cash balance strong. Similar to yields in traditional financial markets, the yields from digital assets are, of course, subject to the underlying assets’ market prices. There are also encouraging numbers of new projects launching in the Polkadot and Cosmos ecosystem and we are fully focused on seeking out new investment opportunities in these areas. As such, we are getting involved with Commonwealth and Edgeware, which are building on Polkadot and have previously made investments in Althea Mesh and the Foam Protocol, which will be placed in the wider Cosmos ecosystem.

The most significant area of blockchain attention and growth in the last few months has been and continues to be the area of 'Decentralised Finance' (DeFi). DeFi is an umbrella term for a group of projects on Ethereum that allow for lending, credit, exchange, storage and insurance. The excitement in DeFi stems from the ‘composability’ of these projects, where each separate project can be deeply integrated with each other, allowing processes that would have taken many months in the legacy finance world to be reduced to just a few transactions on the blockchain. Given the risk and immaturity of these markets and products, the DeFi space provides yields and rates not available anywhere outside of the sector. We are proud to have backed a few major projects in the DeFi space, namely Nexus Mutual, which provides smart contract cover, Argent’s brilliant award-winning smart contract wallet and the Melon Protocol, which ultimately sits in the very heart of the whole DeFi space. All those projects are live and thriving with strong growth and interest.

The wider blockchain space continues to innovate and evolve at a striking pace and we are seeing a resurgence in interest in the concept of DAOs (decentralised autonomous organisations), and a clear push towards more privacy-focused technologies. Our interest in privacy is reflected in our recent investment into the Nym Project, which is considered a forerunner in terms of research and implementation in decentralising and securing privacy.

Moving forward, we expect to see renewed growth in terms of new blockchain projects launching and widespread adoption as more and more people and institutions recognise the profound importance of blockchain-based financial, social and trustless ecosystems. At KR1 we believe that our unique portfolio and reputation in the market positions us strongly to drive investor returns in this new cycle of the market.

George McDonaugh CEO
Date: 30 September 2019

Group Statement of Comprehensive Income

6 months to
30 June
2019
6 months to 30 June 2018 12 months to
31 December 2018
Unaudited
GBP
Unaudited
GBP
Audited
GBP
Income
Unrealised profit/(loss)
Realised profit
Staking yields
Advisory fees
4,292,325
580,320
116,788
19,036
(8,099,865)
1,118,846

(12,075,829)
2,586,337

Gross profit (loss) 5,008,469 (6,981,019) (9,489,492)
Administrative expenses (386,313) (380,190) (1,368,420)
Profit/(loss) on ordinary activities before taxation 4,622,156 (7,361,209) (10,857,912)
Taxation (54,181) 1,472,242 2,519,393
Profit/(loss) on ordinary activities after taxation 4,567,975 (5,888,967) (8,338,519)
Consolidated profit/(loss) per share 7.01 pence (5.33) pence (6.95) pence

Group Statement of Financial Position

At 30 June 2019 At 30 June 2018 At 31 December 2018
Unaudited
GBP
Unaudited
GBP
Audited
GBP
Current assets
Debtors
Investments

 

52,290
3,598,106

2,040
7,514,839

819,247
3,958,177
Digital currencies 5,332,059 1,176,006 1,042,896
Cash held on trading platforms 506,720 1,057,350 618,150
Cash equivalents 1,116,503 - 99,320
Cash at bank 572,807 58,424 87,387
11,178,485 9,808,659 6,625,177
Creditors
Amounts falling due within one year

(464,574)

(2,135,282)

(508,172)
Net current assets 10,713,911 7,673,377 6,117,005
Creditors
Amounts falling due over one year



Total assets less current liabilities 10,713,911 7,673,377 6,117,005

Capital and reserves
Called up share capital
Share premium account
Profit and loss account


726,076
3,056,444
6,931,391


685,993
2,163,649
4,823,735


718,843
3,034,746
2,363,416
Equity shareholders’ funds 10,713,911 7,673,377 6,117,005


Consolidated Net Asset Value per share


8.20 pence


6.95 pence


4.82 pence

Interim report notes

1.   Interim report

The information relates to the 6-month period from 1 January to 30 June 2019. 

The interim report was approved by the Directors on 30 September 2019.

The interim report has been reviewed by the group’s auditors but has not been audited.

2.   Basis of accounting

a.            While the financial information included in this interim financial report has been prepared in accordance with the recognition and measurement criteria of Financial Reporting Standard 102 – ‘The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland’ (‘FRS 102’), this interim financial information does not itself contain sufficient information to comply fully with FRS 102.

b.            These interim financial statements are the financial statements of the Group.

c.            The financial statements are prepared under the historical cost convention except for the modification to a fair value basis for certain financial instruments as specified in the accounting policies below and are in accordance with applicable accounting standards.

d.            These interim financial statements consolidate the financial statements of the Company and its subsidiary KRX Limited.

e.            Investments 

i.      Investments are held as current asset trade investments and 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 investments listed on a recognised market, net realisable value is taken as mid-market price. Where the directors consider the market price of a company is likely to irreversibly fall, additional write downs in valuation to below mid-market price are made.

ii.     The net realisable value of certain investments 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 investment where it is considered less than cost. This estimate requires estimation techniques, which are reliant upon their experience and expertise.

iii.    The Group accounts for digital currencies, which it considers to be an operating asset, at their initial cost and subsequently revalues the carrying amounts of the digital currencies held at each reporting date based on their current fair value using rates obtained from various exchanges, including Oanda and Coinmarket. 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. Digital currencies which have not undergone their ICO (initial coin offering) at the reporting date are valued at cost and the directors have verified that this is in line with the opening prices at ICO post period end. The changes in fair value are recognised in the Group’s Statement of Comprehensive Income.

f. The Group will report again for the full year to 31 December 2019.

The Directors of KR1 Plc accept responsibility for this announcement.

--ENDS--

Contact Details:

Stephen Corran
KR1 Plc:
Tel : 01624 676716
Email : [email protected]


NEX Corporate Adviser
Peterhouse Capital Limited
Mark Anwyl
+44 (0)20 7469 0930

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.


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