Annual results
06/04/2023 07:00
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RNS Number : 5605V AQRU plc 06 April 2023
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014, as retained as part of the law of England and Wales. Upon
the publication of this announcement via the Regulatory Information Service,
this inside information is now considered to be in the public domain.
Press release
6 April 2023
AQRU PLC
("AQRU" or "the Company")
Annual results
AQRU plc (AQSE: AQRU), an incubator specialising in decentralised finance
("DeFi"), announces its audited results for the 12 months ended 31 October
2022.
Key financial information
· Loss before tax of £5.94m (2021: Profit before tax £0.31m).
· Fully diluted loss per share amounted to 0.49p (2021: Earnings per share
0.08p).
· Net assets amounted to £6.56m as at 31 October 2022 (2021: £12.22m)
including cash and cash equivalent balances of £4.84m (2021: £10.38m).
Operational highlights
· Launched AQRU.io, an online retail platform for cryptocurrency assets, on 1
December 2021.
· Partnered with Maple Finance, an institutional lending platform in the DeFi
sector, to integrate its yield-generating services into AQRU.io.
· Prior to the Terra USD ("UST") de-peg which sent the industry into a 'crypto
winter', the AQRU.io platform was stress tested and grew exponentially,
reaching over 20,000 customer sign-ups and US$50 million in assets under
management in a few months.
· Expanded the business offering further with Accru Finance's launch of AQRU
Trend, a high-return strategy optimised for cryptocurrencies designed to
enable retail investors to access competitive returns, and AQRU Exchange, a
cryptocurrency exchange platform.
· Launched the "ByBrix" brand in partnership with Blimp Technologies Inc. in
order to pursue opportunities in the underserved crypto-mortgage market.
· Partnered with Quickbit, a leading Swedish FinTech company, to offer Accru
Finance's yield generating products to a wider customer base.
· Launched a start-up offering cryptocurrency-collateralised lending services
under the brand "BlockLender" to offer digital asset-holders the opportunity
to use their cryptocurrency as collateral to access instant loans, with a
minimum starting value of US$100.
Post-period highlights
· Partnered with Ben Sampson and Elliott Fielding, Managing Partners of
the UK-based chartered accountancy firm Sampson Fielding Ltd. ("Sampson
Fielding"), to launch a start-up under the brand "Daxiom" offering
technology-led accountancy and advisory services for institutions holding
digital assets.
· Conducted operational reviews designed to make the business leaner and more
efficient amid volatile market conditions including cutting 75% of headcount.
· Acquired a shareholding in LawBEAM Ltd. ("LawBEAM"), a London-based legal
practice with a focus on digital assets and cryptocurrencies.
· Invested £2.3 million into Streaks Gaming PLC, the developer of a
conversational gaming platform.
· Launched a liquidity pool allowing investors to generate yield from tax credit
receivables originating from US Internal Revenue Service ("IRS") programmes.
· Incorporated the London Carbon Exchange specialising in opportunities in the
underserved voluntary carbon credit market.
Outlook
· The industry faced severe headwinds during the period which impacted the
growth of the business significantly. Although we are seeing green shoots with
digital asset prices recovering, we foresee these challenging conditions
continuing through 2023.
· AQRU remains focused on three pillars: (1) expansion of the business model
through building new products that will perform well in both bear and bull
markets, (2) strengthening our already strong pipeline of partnerships, and
(3) building consumer trust and strengthening our communities.
· Management has reduced its proforma annualised operational run-rate cost base
by approximately 69% compared to the 12 months ended 31 October 2022 as a
result of cost-cutting and greater efficiencies being achieved as AQRU gains
scale and adds efficiency across its operating businesses.
Commenting on the results, Philip Blows, Chief Executive of AQRU, said: "AQRU
has done well to weather a tricky year for the digital assets industry. We saw
many of our largest competitors end operations due to poor risk management in
volatile markets. We've taken significant steps to protect our customers'
assets and our own balance sheets from the industry headwinds that have
battered the sector since the collapse of Terra Luna, ending the year with a
host of early-stage products. We've also taken steps to diversify our
long-term revenue-generation strategies by leveraging our team's expertise
across the wider FinTech sector - including launching the London Carbon
Exchange. We remain vigilant of any emerging risks in the sector and will
continue with a cautious stance in 2023 remaining ready to capitalise on any
emerging opportunities."
The Directors of AQRU plc accept responsibility for this announcement.
For further information, please contact:
AQRU
Philip Blows via Tancredi +44 207 887 7633
Chief Executive
Tennyson Securities
Corporate Broker
Peter Krens +44 207 186 9030
First Sentinel
AQSE Corporate Adviser +44 203 989 2200
Brian Stockbridge
Tancredi Intelligent Communication
Media Relations
AQRU@tancredigroup.com (mailto:AQRU@tancredigroup.com)
About AQRU plc:
AQRU is an incubator specialising in opportunities in FinTech. Listed on the
Aquis Exchange in London, we apply our expertise to the business operations
and strategic plans of FinTech companies in the UK, USA and Canada, and act as
an accelerator for start-ups and early-stage companies. www.aqruplc.com
(http://www.aqruplc.com)
Chairman's statement
Introduction
I am delighted to report the Company's financial results for the twelve months
ended 31 October 2022. Good progress was made in the period, despite the very
challenging market conditions, as AQRU continued to expand its business
offering and enter into a series of strategic partnerships. The group reported
revenues amounting to £708,000 (2021:nil) for the full fiscal year.
AQRU made a pre-tax loss of £5.94m (2021: Profit £0.31m). Cash and cash
equivalents as at 31 October 2022 amounted to £4.84m (2021: £10.38m).
Despite the volatile conditions in the cryptocurrency and digital assets
markets during the period, the Company moved quickly to enter into further
strategic partnerships and to invest in exciting and potentially disruptive
businesses. The initiatives delivered during the year ended 31 October 2022
included partnering with Maple Finance to integrate its yield-generating
services into AQRU.io, launching ByBrix in partnership with Blimp
Technologies, and partnering with Quickbit to offer Accru Finance's yield
generating products to a wider customer base.
Following this period, the Company also made investments into LawBEAM and
Streaks Gaming, partnered with Sampson Fielding's Managing Partners to launch
Daxiom, launched a liquidity pool allowing investors to generate yield from
tax credit receivables originating from IRS programmes, and incorporated the
London Carbon Exchange. All these initiatives will enable the Company to
consolidate and benefit from the expected growth of these businesses and
sectors in the coming years.
The DeFi revolution is still at an early stage of development and growth and
is set to spawn many new financial products and applications. AQRU had the
objective to launch a platform in a highly competitive space and win
customers, and our results reflect this in terms of our expenditure for the
year. AQRU is well positioned to take advantage of the new opportunities ahead
and create value for shareholders.
The Company carried out an operational review in order to streamline the
business and improve its resilience amid the 'crypto winter', lowering
headcount and reducing operational costs. AQRU also strengthened its
leadership team with the appointments of Digby Try as Chief Commercial
Officer, and Dr Philipp Kallerhoff as Executive Director. Our subsidiary,
Accru Finance, also further reduced operational costs by focusing on
attracting high net worth individuals and institutional investors, while
raising the threshold for minimum deposits on its AQRU app.
On behalf of the Board, I would like to thank all our shareholders and staff
for their support and hard work during the year and look to the future with
optimism.
Mike Edwards
Non-Executive Chairman
A recovering market
DeFi is a disruptive technology that uses the blockchain and cryptocurrencies
to remove financial intermediaries from transactions, creating a quicker,
cheaper, more efficient, and more secure way of providing financial services.
Most DeFi applications are built on top of Ethereum, the world's
second-largest blockchain network.
Decentralised applications utilise smart contracts, programmes which
autonomously facilitate contracts and transactions, which are used within the
Ethereum network to safeguard from tampering and hacking. The Ethereum network
executes the smart contract's code on the blockchain, ensuring tamper proof,
verifiable transactions.
Blockchain organises this data into blocks which are then chained together in
an append-only mode. This is the building block of "internet value" and
facilitates recording of interactions and transfer of the record of ownership
peer-to-peer, without requiring a centrally coordinating entity.
DeFi applications include:
· Decentralised exchanges, otherwise known as DEXs, on which users can exchange
fiat currencies for cryptocurrencies without involving an intermediary;
· Lending platforms which use smart contracts to replace the bank; and
· Prediction markets where bets can be laid on the outcome of future events but
without an intermediary bookkeeper.
Since the UST de-peg and the following 'crypto winter' the total value locked
(the overall value of assets deposited in transactions) of the DeFi market has
fallen from US$213bn on 1 November 2021 to $71bn by 30 November 2022. While
this represents a real-terms increase from 1 November 2020, when it stood at
US$10.5bn, it is a significant fall from the end of 2021. Green shoots are
appearing in the market, and as of 31 March 2023, the DeFi market had
recovered to US$67bn (source: DeFi Llama, 2023).
Operational review
The Company's strategy is to identify investment opportunities in the FinTech
sector within the UK, US and Canada. The Company plans to add value by
applying capital and expertise to the business operations and strategic plans
of incubatee companies. The experience and operational skills of the Board are
intended to act as an accelerator to start-ups and early-stage companies
that have technological know-how but lack the skills, contacts, and capital
to maximise their profit opportunity.
The Company has made ten investments to date, including two made during the
year under review and one following this period. The investments are described
below:
· Acquisition of Bison Exchange UAB, a Lithuanian blockchain company, for
€30,000.
· A share subscription agreement with LawBEAM, a London-based legal practice, to
develop and build a technology-driven legal and regulatory solution for the
digital assets industry.
· £2.3 million was invested into Streaks Gaming PLC, a developer of a
conversational gaming platform listed on the London Stock Exchange.
Outlook
The Company considers that there remains a sizable opportunity for the DeFi
industry, with applications that include decentralised currency exchanges,
lending platforms which use smart contracts to replace banks, and further use
cases for stablecoins and 'flatcoins' (inflation resistant instruments).
2022 saw some of the largest asset managers and FinTech companies enter the
digital asset space, and we firmly believe that the growth in DeFi will
continue despite the current headwinds. We are in an excellent position to
take advantage of this move and have also diversified our holdings to give
additional optionality to investors:
· Our retail trading app AQRU.io raised its minimum account threshold and moved
to a lower cost more decentralised operating model that leverages third-party
distribution channels to increase funds on the platform.
· AQRU has pioneered the move of real-world yield initiatives such as
receivables financing on-chain. This is a use case that demonstrates the
scalability and efficiency realised by blockchain technology for the first
time.
· We have diversified our portfolio of companies to gain exposure to different
aspects of the digital asset sector including legal and accountancy, among
others. Our investment in Streaks Gaming PLC has also given us exposure to the
rapidly growing conversational AI sector and London Carbon Exchange will allow
us to benefit from the growth of the voluntary carbon market.
With a strong operating platform and experienced management team, the Company
is well positioned to take advantage of the recent correction in the
blockchain and digital assets sectors by investing at attractive valuations.
As a result, the Board looks forward to the future with optimism.
Philip Blows
Chief Executive
AQRU PLC - COMPANY NUMBER 12291603
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022
Audited Audited
Year ended
Year ended
31 October 2022
31 October 2021
Note £'000 £'000
Continuing Operations
Revenue 3 708 -
Cost of sales (648) -
Gross profit 60 -
Gain on bargain purchase - 912
Administrative expenses 4 (4,105) (1,164)
Depreciation & amortisation (38) (1)
Loss on trading stock (970) -
Operating loss (5,053) (253)
Fair value gains / (losses) on investments (890) 564
Profit / (loss) before taxation (5,943) 311
Taxation 7 - -
Profit / (loss) after taxation (5,943) 311
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Gains on cryptocurrencies held 208 31
Total comprehensive Profit / (loss) for the year attributable to shareholders (5,735) 342
from continuing operations
Basic earnings per share - pence 8 (0.491) (0.09)
Diluted earnings per share - pence (0.491) (0.08)
The notes in the Company's Annual Report form an integral part of these
consolidated financial statements
Audited Restated
As at
As at
31 October 2022
31 October 2021
Note £'000 £'000
NON-CURRENT ASSETS
Intangible assets 10 200 95
Intangible assets - cryptocurrencies 11 2,085 5,448
Property, plant and equipment 9 15 9
Investments 12 1,116 2,006
TOTAL NON-CURRENT ASSETS 3,416 7,558
CURRENT ASSETS
Trade and other receivables 15 316 336
Cash and cash equivalents 13 4,884 4,618
Trading stock - cryptocurrency 14 7,630 -
TOTAL CURRENT ASSETS 12,830 4,954
TOTAL ASSETS 16,246 12,512
EQUITY
Share capital 17 1,211 1,211
Share premium 17 9,817 9,817
Fair value reserve 18 239 31
Share based payment reserve 18 923 854
Retained earnings (5,632) 311
TOTAL EQUITY 6,558 12,224
CURRENT LIABILITIES
Trade and other payables 16 9,688 288
TOTAL CURRENT LIABILITIES 9,688 288
TOTAL LIABILITIES 9,688 288
TOTAL EQUITY AND LIABILITIES 16,246 12,512
The Company has taken advantage of section 408 of the Companies Act 2006 and
consequently a profit and loss account has not been presented for the Company.
The Company's loss after taxation for the year was £1,952,448 (2021:
£600,486)
The notes in the Company's Annual Report form an integral part of these
consolidated financial statements.
Audited Restated
As at
As at
31 October 2022
31 October 2021
Note £'000 £'000
NON-CURRENT ASSETS
Intangible assets - cryptocurrencies 11 - 5,444
Property, plant and equipment 9 1 1
Investments 12 2,410 3,300
TOTAL NON-CURRENT ASSETS 2,411 8,745
CURRENT ASSETS
Trade and other receivables 15 3,878 268
Cash and cash equivalents 13 3,440 2,478
TOTAL CURRENT ASSETS 7,318 2,746
TOTAL ASSETS 9,729 11,491
EQUITY
Share capital 17 1,211 1,211
Share premium 17 9,817 9,817
Fair value reserve 18 239 31
Share based payment reserve 18 923 854
Retained earnings (2,552) (600)
TOTAL EQUITY 9,638 11,313
CURRENT LIABILITIES
Trade and other payables 16 91 178
TOTAL CURRENT LIABILITIES 91 178
TOTAL LIABILITIES 91 178
TOTAL EQUITY AND LIABILITIES 9,729 11,491
The notes contained in the Company's Annual Report form an integral part of
these consolidated financial statements
Issued Share Capital Share Premium Share based payments reserve Fair value reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 November 2020 - - - - - -
Loss for the year - - - - 311 311
Other comprehensive income - - - 31 - 31
Total comprehensive loss for the year - - - 31 311 342
Shares issued during the year 1,211 9,989 - - - 11,200
Share issue costs during the year - (172) - - - (172)
Warrant issued during the year - - 854 - - 854
Total transactions with owners 1,211 9,817 854 - - 11,882
As at 31 October 2021 1,211 9,817 854 31 311 12,224
Loss for the year - - - (5,943) (5,943)
Other comprehensive income - - - 208 - 208
Total comprehensive loss for the year - - - 208 (5,943) (5,735)
Warrants issued during the year - - 69 - - 69
Total transactions with owners - - 69 - - 69
As at 31 October 2022 1,211 9,817 923 239 (5,632) 6,558
Issued Share Capital Share Premium Share based payments reserve Fair value reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 November 2020 - - - - - -
Loss for the year - - - - (600) (600)
Other comprehensive income - - - 31 - 31
Total comprehensive loss for the year - - - 31 (600) (569)
Shares issued during the year 1,211 9,989 - - - 11,200
Share issue costs during the year - (172) - - - (172)
Warrant issued during the year - - 854 - - 854
Total transactions with owners 1,211 9,817 854 - - 11,882
As at 31 October 2021 1,211 9,817 854 31 (600) 11,313
Loss for the year - - - (1,952) (1,952)
Other comprehensive income - - - 208 - 208
Total comprehensive loss for the year - - - 208 (1,952) (1,744)
Warrants issued during the year - - 69 - - 69
Total transactions with owners - - 69 - - 69
As at 31 October 2022 1,211 9,817 923 239 (2,552) 9,638
Audited Restated
Year ended
Year ended
31 October 2022
31 October 2021
Note £'000 £'000
Cash flow from operating activities
Loss for the financial year (5,943) 311
Adjustments for:
Amortisation of intangible assets 32 -
Depreciation on property, plant and equipment 6 1
Receipt of research and development tax offset 165 -
Goodwill adjustment on bargain purchase - (912)
Fair value (gain)/loss on investments 890 (564)
Share based payments 18 69 682
Changes in working capital:
Decrease / (increase) in trade and other receivables 20 (268)
Increase in trade and other payables 9,400 178
(Increase) in cryptocurrencies held as trading stock (7,630) -
Net cash outflow from operating activities (2,991) (572)
Cash flows from investing activities
Investment in intangible assets (302) (18)
Disposal/(purchase) of cryptocurrencies held to collect 3,363 (5,425)
Purchase of property, plant and equipment (12) (2)
Investments - (1,442)
Investment in subsidiary - 1,445
Fair value gains on crypto currencies 208 31
Net cash flow from investing activities 3,257 (5,411)
Cash flows from financing activities
Proceeds from issue of shares net of issue costs - 10,601
Net cash flow from financing activities - 10,601
Net increase in cash and cash equivalents 266 4,618
Cash and cash equivalents at beginning of the period 4,618 -
Cash and cash equivalents at end of the period 13 4,884 4,618
The notes contained in the Company's annual report form an integral part of
these consolidated financial statements
During the period there were the following material non-cash transactions:
- £2.085m was re-classified from trading stock to intangibles to
correctly state the split between the cryptocurrencies "held for sale" vs
"held to collect."
As stated in note 2.17 the statement of cashflows has been restated to
incorporate the revised accounting treatment
Audited Restated
Year ended
Year ended
31 October 2022
31 October 2021
Note £'000 £'000
Cash flow from operating activities
Loss for the financial year (1,952) (600)
Adjustments for:
Inter company management charge (171) -
Finance income (78) -
Fair value loss on investments 890 (564)
Share based payments 18 69 682
Changes in working capital:
(Increase) in trade and other receivables (3,361) (268)
Increase / (decrease) in trade and other payables (87) 179
Net cash outflow from operating activities (4,690) (571)
Cash flows from investing activities
Disposal/(purchase) of cryptocurrencies held to collect 5,444 (5,444)
Purchase of property, plant and equipment - (2)
Purchase of fixed asset investments - (1,442)
Investment in subsidiary - (1,294)
Fair value gains on crypto currencies 208 31
Net cash flow from investing activities 5,652 (8,151)
Cash flows from financing activities
Proceeds from issue of shares net of issue costs - 11,200
Net cash flow from financing activities - 11,200
Net increase in cash and cash equivalents 962 2,478
Cash and cash equivalents at beginning of the period 2,478 -
Cash and cash equivalents at end of the period 13 3,440 2,478
The financial statements were approved and authorised for issue by the board
on 4 April 2023 and were signed on its behalf by:
Nicholas Lyth - Chief Financial Officer
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