Interim results
29/07/2022 07:00
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RNS Number : 1693U AQRU plc 29 July 2022
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
29 July 2022
AQRU PLC
("AQRU" or "the Company")
Interim results
AQRU plc (AQSE: AQRU), a company specialising in decentralised finance
("DeFi"), announces its unaudited financial results for the six months ended
30 April 2022 ("H1 2022").
Group Financial highlights
· Began to generate revenue which amounted to £553,527 (H1 2021: nil)
· Loss before tax amounted to £2.32m (H1 2021 profit: £145,167) reflecting
investments in infrastructure and product development
· Net cash of £6.1m (30 April 2021: £4.2m) and £24.1m in deposits by
customers on the AQRU.io online retail platform as at 30 April 2022
Operating highlights
· Launched AQRU.io, an online retail platform for cryptocurrency assets, on 1
December 2021
· Completed a brand streamlining exercise that included changing its name from
Dispersion Holdings plc to AQRU plc
· Partnered with Maple Finance, an institutional lending platform in the DeFi
sector, to integrate its yield-generating services into AQRU.io
Post-period highlights
· Prior to the 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
short months
· Strengthened the executive board with the appointment of Dr Philipp
Kallerhoff, chief investment officer of AQRU, as executive director on 23 June
2022
· Expanded the business offering further with the launch of AQRU Trend, a
high-return strategy optimised for cryptocurrencies designed to enable retail
investors to access competitive returns
· Launched the "ByBrix" brand in partnership with Blimp Technologies Inc. in
order to pursue opportunities in the underserved crypto-mortgage market
Outlook
· Industry facing severe headwinds which will impact the growth of the business
but AQRU has a strong cash position and continues to build its products with a
consumer-first view. Management believes AQRU is well positioned to emerge
from the "crypto winter" stronger and with increased market share
· AQRU is focused on three pillars: (1) expansion of the business model through
building new products that will perform well in both bear and bull crypto
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 50% since April 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 made good progress developing new products, building and scaling-up its
operations, and investing in new opportunities at favourable valuations to
support growth and establish itself as a leading player in the DeFi sector.
"While the current macroeconomic environment and market conditions have
created challenges for the industry as a whole, AQRU has implemented strong
initiatives to streamline its cost base and has focused on developing new
products, strengthening its pipeline of partnerships, and building consumer
trust. These efforts, coupled with a strong cash position, allow the company
to support the long-term growth of its current businesses and will enable AQRU
to emerge from the 'crypto winter' stronger and with increased market share.
We will continue to focus on delivering long-term growth and value creation
for our shareholders."
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
Gabriela Amaya Garcia +44 7915 035 294
Charlie Hobbs +44 7897 557 112
AQRU@tancredigroup.com (mailto:AQRU@tancredigroup.com)
About AQRU plc:
AQRU is a company specialising in opportunities in decentralised finance
(DeFi), a disruptive technology using blockchain and cryptocurrencies to
remove financial intermediaries from transactions, creating a cheaper, more
efficient and more secure way of providing financial services. 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 pleased to report the Company's financial results for the six months
ended 30 April 2022. Good progress was made in the period as AQRU gained
increasing momentum following the launch of its commercial operations and the
scaling up of the business. The group reported revenues for the first time,
amounting to £553,527 for the first half of the fiscal year.
The loss before tax was £2.32m compared to a profit before tax of £145,167
for the six months ended 30 April 2021. This was attributable to a significant
ongoing investment across the business to support growth and establish AQRU as
a leading specialist in opportunities in decentralised finance, in line with
its stated strategy.
While the Company's long-term prospects are underpinned by favourable
fundamentals, the difficult market conditions in cryptocurrency combined with
growing global economic uncertainty has meant that significant action has been
taken to streamline the Company's cost base. These measures include a
rationalisation of suppliers and right-sizing staff numbers. The Company has
reduced its proforma cost base by approximately 50% since April.
Net cash amounted to £6.1m and deposits made by customers onto the AQRU.io
platform to £24.1m as at 30 April 2022. The strong cash balance sheet
reflects our policy to restrict investments made in cash. As a result, AQRU
has considerable financial liquidity and flexibility to support the long-term
growth of its current businesses as well as to consider new opportunities at
favourable valuations.
The DeFi revolution is still at an early stage of development and growth and,
despite the challenging market conditions, the sector is set to spawn many new
financial products and applications. With a strong balance sheet and highly
experienced management team, AQRU is well positioned to take advantage of the
new opportunities ahead and create value for shareholders.
We are delighted with the progress made by the AQRU.io platform, having seen
it sign up over 10,000 customers in its first few months of operation. It then
surpassed US$50 million in assets under management and 20,000 user signups
five months after launch.
On behalf of the Board, I would like to thank all our shareholders, staff and
partners for their support and hard work during the year and look to the
future with optimism.
Mike Edwards, Non-Executive Chairman
Operational review
The Company's strategy is to identify opportunities in the FinTech sector
within the UK, US, and Canada. The Company plans to add value by applying
capital and expertise to the operations and strategic plans of its business
divisions. The experience and operational skills of the Board are intended to
act as an accelerator to the businesses it carries on.
The Company entered into a partnership with Maple Finance, an institutional
lending platform in the DeFi sector, to offer AQRU customers access to
enhanced yields in decentralised finance. Maple Finance's yield-generating
services have been integrated into AQRU's mobile and web-based platform. The
partnership will enable AQRU to broaden its range of yield generating
strategies and investment opportunities that users can choose from depending
on their risk and return profile.
In the post-period, Accru Finance Ltd. launched AQRU Trend, a high-return
strategy optimised for cryptocurrencies designed to enable retail investors to
diversify, capture market upside, limit market downside, and access the
competitive returns available in the crypto market. This launch marked a
further expansion of the Company's offering to enable customers to take
advantage of all the opportunities available in DeFi.
The Company also partnered with Blimp Technologies Inc. to launch ByBrix, a
business focused on opportunities in what management sees as a vast and
largely untapped market for crypto mortgage products. The Company already
boasts internal resources capable of accelerating the growth of this new and
exciting business.
Outlook
The Company considers that despite the current macro conditions and "crypto
winter" there is a sizable, and rapidly growing market for the DeFi industry,
with applications that include decentralised currency exchanges, lending
platforms which use smart contracts to replace banks, and prediction markets
which remove or reduce human inputs and inefficiencies.
We firmly believe that the growth in DeFi will continue as evidenced by the
increased presence of large institutional investors in the space. We are in an
excellent position to take advantage of this move.
With a strong balance sheet and experienced management team, the Company is
well positioned to take advantage of the recent correction in the blockchain
and digital assets sectors by continuing to build our products and capturing
market share from faltering competitors. As a result, the Board looks forward
to the future with great confidence.
Phil Blows
Chief Executive
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the Period 1 November 2021 to 30 April 2022
Period
1.11.21
to Year ended
30.4.22 31.10.21
Notes £ £
CONTINUING OPERATIONS
Revenue 4 553,527 -
Cost of sales (807,119) -
GROSS LOSS (253,592) -
Gain on bargain purchase - 912,192
Administrative expenses (2,333,199) (1,164,758)
OPERATING LOSS (2,586,791) (252,566)
Fair value gains on investments 270,760 564,000
Finance income - 273
(LOSS)/PROFIT BEFORE INCOME TAX (2,316,031) 311,707
Income tax - -
(LOSS)/PROFIT FOR THE PERIOD (2,316,031) 311,707
OTHER COMPREHENSIVE INCOME
Gains on crypto currency held 176,962 30,967
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD (2,139,069) 342,674
Earnings per share expressed
In pence per share: 6
Basic -0.19 0.09
Diluted -0.18 0.08
Consolidated Statement of Financial Position
30 April 2022
30.4.22 31.10.21
Notes £ £
ASSETS
NON-CURRENT ASSETS
Intangible assets 7 16,242,771 117,163
Property, plant and equipment 8 17,325 9,212
Investments 9 2,346,401 2,005,564
18,606,497 2,131,939
CURRENT ASSETS
Trade and other receivables 10 183,161 336,197
Cash 4,350,102 4,618,394
Cash equivalents - cryptocurrencies 25,886,495 5,425,668
30,419,758 10,380,259
TOTAL ASSETS 49,026,255 12,512,198
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 11 1,211,226 1,211,226
Share premium 12 9,816,612 9,816,612
Other reserves 12 922,909 853,593
Fair value reserve 12 207,929 30,967
Retained earnings 12 (2,004,324) 311,707
TOTAL EQUITY 10,154,352 12,224,105
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 13 38,871,903 288,093
TOTAL LIABILITIES 38,871,903 288,093
TOTAL EQUITY AND LIABILITIES 49,026,255 12,512,198
Company Statement of Financial Position
30 April 2022
30.4.22 31.10.21
Notes £ £
ASSETS
NON-CURRENT ASSETS
Intangible assets 7 24,176 18,205
Property, plant and equipment 8 773 1,031
Investments 9 3,640,086 3,299,249
3,665,035 3,318,485
CURRENT ASSETS
Trade and other receivables 10 1,545,990 267,609
Cash 2,828,407 2,478,270
Cash equivalents - cryptocurrencies 3,273,306 5,425,139
7,647,703 8,171,018
TOTAL ASSETS 11,312,738 11,489,503
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 11 1,211,226 1,211,226
Share premium 12 9,816,612 9,816,612
Other reserves 12 922,909 853,593
Fair value reserve 12 207,929 30,967
Retained earnings 12 (927,048) (600,486)
TOTAL EQUITY 11,231,628 11,311,912
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 13 81,110 177,591
TOTAL LIABILITIES 81,110 177,591
TOTAL EQUITY AND LIABILITIES 11,312,738 11,489,503
Consolidated Statement of Changes in Equity
for the Period 1 November 2021 to 30 April 2022
Called up Fair
Share Retained Share Other value Total
Capital Earnings Premium reserves reserve Equity
£ £ £ £ £ £
Balance at 1 November 2021 1,211,226 311,707 9,816,612 853,593 30,967 12,224,105
Comprehensive income for the period
Profit/(loss) for the period - (2,316,031) - - - (2,316,031)
Other comprehensive income - - - - 176,962 176,962
Transactions with owners
Share warrant charges - - - 69,316 - 69,316
Balance at 30 April 2022 1,211,226 (2,004,324) 9,816,612 922,909 207,929 10,154,352
Company Statement of Changes in Equity
for the Period 1 November 2021 to 30 April 2022
Called up Fair
Share Retained Share Other value Total
Capital Earnings Premium reserves reserve Equity
£ £ £ £ £ £
Balance at 1 November 2021 1,211,226 (600,486) 9,816,612 853,593 30,967 11,311,912
Comprehensive income for the period
Profit/(loss) for the period - (326,562) - - - (326,562)
Other comprehensive income - - - - 176,962 176,962
Transactions with owners
Share warrant charges - - - 69,316 - 69,316
Balance at 30 April 2022 1,211,226 (927,048) 9,816,612 922,909 207,929 11,231,628
Consolidated Statement of Cash Flows
for the Period 1 November 2021 to 30 April 2022
Period
1.11.21
to Year ended
30.4.22 31.10.21
Notes £ £
Cash flows from operating activities
Cash generated from operations 16 36,237,575 (572,697)
Net cash generated from operations 36,237,575 (572,697)
Cash flows from investing activities
Purchase of intangible fixed assets (16,211,672) (18,205)
Purchase of tangible fixed assets (10,330) (1,547)
Purchase of fixed asset investments - (1,441,564)
Purchase of subsidiaries less cash - 1,445,691
Fair value gains from crypto currencies 176,962 30,967
Interest received - 273
Net cash from investing activities (16,045,040) 15,615
Cash flows from investing activities
Share issue net of issuing costs - 10,601,144
Net cash from financing activities - 10,601,144
Increase in cash and cash equivalents 20,192,535 10,044,062
Cash and cash equivalents at beginning of period 17 10,044,062 -
Cash and cash equivalents at end of period 17 30,236,597 10,044,062
Company Statement of Cash Flows
for the Period 1 November 2021 to 30 April 2022
Period
1.11.21
to Year ended
30.4.22 31.10.21
Notes £ £
Cash flows from operating activities
Cash generated from operations 16 (467,527) (572,699)
Net cash generated from operations (467,527) (572,699)
Cash flows from investing activities
Purchase of intangible fixed assets (5,971) (18,205)
Purchase of tangible fixed assets - (1,547)
Purchase of fixed asset investments - (1,441,564)
Purchase of subsidiaries - (1,293,685)
Fair value gains from crypto currencies 176,962 30,967
Loans to other group undertakings (1,505,160) -
Interest received - 273
Net cash from investing activities (1,334,169) (2,723,761)
Cash flows from investing activities
Share issue net of issuing costs - 11,199,869
Net cash from financing activities - 11,199,869
(Decrease)/Increase in cash and cash equivalents (1,801,696) 7,903,409
Cash and cash equivalents at beginning of period 17 7,903,409 -
Cash and cash equivalents at end of period 17 6,101,713 7,903,409
Notes to the Financial Statements
for the Period 1 November 2021 to 30 April 2022
1. STATUTORY INFORMATION
AQRU plc (formerly known as Dispersion Holdings plc) is a public limited
company incorporated in England and Wales, registration number 12291603. The
registered office of the company is 9th Floor 16, Great Queen Street, London
WC2B 5DG.
The company was set up to identify and assist other companies in the
Decentralised Finance space (DeFi). Its shares are listed on the Access
segment of Aquis Stock Exchange Growth Market in London, UK.
The principal activity of the company and the group is that of the incubation
of companies specialising in Decentralised Finance ("DeFi").
2. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards and IFRIC interpretations and with those parts
of the Companies Act 2006 applicable to companies reporting under IFRS. The
financial statements have been prepared under the historical cost convention
as modified by the revaluation of certain assets.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of AQRU plc ('company' or 'parent entity') as at 30 April
2022 and the results of all subsidiaries for the period then ended. AQRU plc
and its subsidiaries together are referred to in these financial statements as
the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has
control. The consolidated entity controls an entity when the consolidated
entity is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the consolidated entity.
Intercompany transactions, balances and unrealised gains on transactions
between entities in the consolidated entity are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the
consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method
of accounting. A change in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Business combinations and related goodwill
The group accounts for business combinations using the acquisition method when
control is transferred to the group. The consideration transferred in the
acquisition is generally measured at fair value, as are the identifiable net
assets acquired. Acquisition related costs are generally recognised in profit
or loss as incurred.
Any contingent consideration payable is measured at fair value at the
acquisition date. If the contingent consideration is classified as equity,
then it is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
The excess of the consideration transferred over the fair value of the net
identifiable assets, liabilities and contingent liabilities acquired is
capitalised as goodwill. Any gain on the bargain purchase is recognised in
profit and loss immediately. Goodwill is not amortised but tested for
impairment at least annually and upon the occurrence of an indication of
impairment.
On disposal of a subsidiary, associate or jointly controlled entity, the
attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
Foreign operations
The results and financial position of all the group entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
(i) assets and liabilities for each statement of financial position presented
are translated at the closing rate at the date of that statement;
(ii) income and expenses for each income statement are translated at spot
exchange rates (unless the spot is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on the dates of the
transactions); and
(iii) all resulting exchange differences are recognised in the Statement of
Comprehensive Income and accumulated in the translation reserve in equity.
When a foreign operation is disposed of in its entirety or partially such that
control is lost, the cumulative amount in the translation reserve related to
that foreign operation is reclassified to profit or loss as part of the gain
or loss on disposal.
New standards, interpretations and amendments
IFRS standards, amendments and interpretations applicable after 2021 and not
applied early by the Group:
- IFRS 17 "Insurance Contracts"
- Amendments to IAS 1 - Presentation of financial statements -
Classification of current and non-
current liabilities
- Amendment to IAS 37 Provisions
- Amendment to IAS 16 Property, plant and equipment
- 2018-2020 cycle of annual IFRS improvements
The above are not expected to have a material impact on the entity.
Interest receivable recognition
Interest receivable is recognised in the period in which it is earned.
Cash and cash equivalents
Cash represents cash in hand and deposits held on demand with financial
institutions. Cash equivalents are short-term, highly-liquid investments with
original maturities of three months or less (as at their date of
acquisition). Cash equivalents are readily convertible to known amounts of
cash and subject to an insignificant risk of change in that cash value.
In the presentation of the Statement of Cash Flows, cash and cash equivalents
also include bank overdrafts. Any such overdrafts are shown within borrowings
under 'current liabilities' on the Statement of Financial
Position.
Intangible assets
Development costs
Development costs are initially recognised at cost where it is probable that
there will be future economic benefits from the asset and the cost of the
asset can be reliably measured. The cost of internally generated intangible
assets is only recognised in the development phase of an internal project,
with the cost of the research phase and maintaining or running the day-to-day
operations recognised as an expense. These capitalised costs comprise all
directly attributable costs
necessary to create, produce, and prepare the asset to be capable of operating
in the manner intended by management.
After recognition, under the cost model, intangible assets are measured at
cost less any accumulated amortisation and any accumulated impairment losses.
Capitalised development costs are amortised on a straight-line basis over a
period of 7 years from the date that the product is brought into first use.
All intangible assets are considered to have a finite useful life. If a
reliable estimate of the useful life cannot be made, the useful life shall not
exceed ten years.
At each reporting date the company assesses whether there is any indication of
impairment. If such indication exists, the recoverable amount of the asset is
determined which is the higher of its fair value less costs to sell and its
value in use. An impairment loss is recognised where the carrying amount
exceeds the recoverable amount.
The assets' residual values, useful lives and amortisation methods are
reviewed, and adjusted prospectively if appropriate, or if there is an
indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised in the Statement of Profit or Loss and
Other Comprehensive Income.
Crypto currencies
Non-stable crypto currencies held are accounted for as intangible assets with
an indefinite life.
These assets are initially recognized on the balance sheet at cost and are
remeasured at fair value at the end of each period.
Any gains or losses in the value of crypto currencies held as intangible
assets are recognised in the Statement of Profit and Loss and Other
Comprehensive Income and transferred to a separate Fair Value reserve under
equity.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated
depreciation and any accumulated impairment losses.
If significant parts of an item or property, plant and equipment have
different useful lives, then they are accounted for as separate items (major
components) of property, plant and equipment. Any gain or loss on disposal of
an item of property, plant and equipment is recognised in profit and loss.
Subsequent expenditure is capitalised only if it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Depreciation is provided on all other items of property, plant and equipment
so as to write off their carrying value over their expected useful economic
lives. It is provided for at:
Computer equipment 3 years straight line
Financial instruments
Recognition, derecognition and offsetting
Financial assets and financial liabilities are recognised when the group
becomes a party to the contractual provisions of the instrument.
The group derecognises financial assets when the contractual rights to cash
flows from the asset expire, or it transfers the rights to receive the
contractual cash flows in the transaction in which substantially all of the
risks and rewards of ownership does not regain control over the transferred
asset. The group derecognises a financial liability when its contractual
obligations are discharged, cancelled or expire.
Financial assets and financial liabilities are offset and the net amount
presented in the statement of financial position when, and only when, the
group has a legal right to offset the amounts and intends either to settle
them on a net basis or to realise the asset and settle the liability
simultaneously.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. These assets
are initially recognised at fair value plus any directly attributable costs.
Subsequent to initial recognition, they are measured at amortised cost using
the effective interest method less any impairment.
Other financial liabilities
Other financial liabilities are non-derivative financial liabilities initially
recognised at fair values less any directly attributable transaction costs.
Subsequent to initial recognition, these liabilities are measured at amortised
cost using the effective interest method.
Current and deferred taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The liability for current tax is calculated using tax rates and laws that
have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
group or parent company financial statements and the corresponding tax bases
used in the computation of taxable profit and is accounted for using the
balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be recognised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates and laws that are expected to
apply in the period when the liability is settled, or the asset is recognised
based on tax laws and rates that have been enacted at the reporting date.
Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited in other comprehensive income, in which
case the deferred tax is also dealt with in other comprehensive income.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at
the rates of exchange ruling at the statement of financial position date.
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of transaction. Exchange differences are taken
into account in arriving at the operating result.
Investments
Investments and other financial assets are initially measured at fair value.
Where shares are publicly traded or the fair value can otherwise be measured
reliably, any changes in fair value are recognised in profit or loss. When it
is not possible to measure their fair value reliably, these investments are
instead measured at cost less impairment.
Transaction costs are included as part of the initial measurement, except for
financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on
their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting mismatch is being
avoided.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, stable coin crypto currencies
pegged to a relatively stable underlying asset or commodity, deposits held at
call with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of
changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method, less any
allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
Trade and other payables
These amounts represent liabilities for goods and services provided to the
consolidated entity prior to the end of the financial year and which are
unpaid. Due to their short-term nature, they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within
30 days of recognition.
Share based payments
Equity-settled and cash-settled share-based compensation benefits are provided
to employees.
Equity-settled transactions are awards of shares, or options over shares, that
are provided to employees in exchange for the rendering of services.
Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions is measured at fair value on grant
date. Fair value is independently determined using the Black-Scholes option
pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option, together with non-vesting
conditions that do not determine whether the consolidated entity receives the
services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a
corresponding increase in equity over the vesting period. The cumulative
charge to profit or loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting
date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date
until vested, determined by applying the Black-Scholes option pricing model,
taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the
liability is calculated as follows:
- during the vesting period, the liability at each reporting date is the
fair value of the award at that date multiplied by the expired portion of the
vesting period.
- from the end of the vesting period until settlement of the award, the
liability is the full fair value of the liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate
cost of cash-settled transactions is the cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value.
Therefore, any awards subject to market conditions are considered to vest
irrespective of whether or not that market condition has been met, provided
all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised
as if the modification has not been made. An additional expense is recognised,
over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the consolidated entity
or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the consolidated
entity or employee and is not satisfied during the vesting period, any
remaining expense for the award is recognised over the remaining vesting
period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on
the date of cancellation, and any remaining expense is recognised immediately.
If a new replacement award is substituted for the cancelled award, the
cancelled and new award is treated as if they were a modification.
Interest receivable recognition
Interest receivable is recognised in the period in which it is earned.
Going concern
The Directors, having made due and careful enquiry, are of the opinion that
the group has adequate working capital to meet its obligations over the
assessed period to the end of April 2023. Having raised £11,200,000 before
expenses on 30 April 2021 at the Company's IPO, the Directors have made an
informed judgement, at the time of approving the financial statements, that
there is a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. As a result, the
Directors have adopted the going concern basis of accounting in the
preparation of the annual financial statements. The Directors have considered
the impact of Covid-19 on the Company, in the context of their operations. At
this stage, the Directors do not envisage a long-term impact to the Company
resulting from Covid-19, but will continue to monitor the situation.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including expectations of
future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus
(COVID-19) pandemic has had, or may have, on the consolidated entity based on
known information. This consideration extends to the nature of the products
and services offered, customers, supply chain, staffing and geographic regions
in which the consolidated entity operates. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact
upon the financial statements or any significant uncertainties with respect to
events or conditions which may impact the group unfavourably as at the
reporting date or subsequently as a result of the Coronavirus (COVID-19)
pandemic.
Share-based payment transactions
The group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using either the
Black-Scholes model taking into account the terms and conditions upon which
the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity.
Crypto currencies
As stated within the accounting policies, the Group has applied two different
accounting policies to what it determines to be two different types of
cryptocurrencies. The Group holds a variety of cryptocurrencies as at the
reporting date and these have been differentiated between non-stable-coins and
stable coins.
The Group has determined that most cryptocurrency assets are highly volatile
financial instruments which are most commonly recognised in accordance with
IAS 38 - Intangible Assets. The Group holds both Bitcoin (BTC) and Ethereum
(ETH). These non-stable coins will be held within Intangible Assets and
revalued at each reporting date through Other Comprehensive Income, as
explained within the accounting policies.
Furthermore, the Group has determined that some cryptocurrency assets are far
less volatile and could therefore demonstrate the following characteristics in
accordance with IAS 7 - Statement of Cashflows:
- highly liquid
- readily convertible to known amounts of cash
- subject to an insignificant risk of changes in value
These stable-coins are cryptocurrency assets that have a value which is pegged
to an internationally accepted and traded fiat currency. The Group holds
Tether (USDT) and USD Coin (USDC). The value of which is pegged on a 1:1 basis
against the US Dollar fiat currency.
However, it is important to note that this asset is a virtual currency and is
not guaranteed by tangible assets or backed by a government institution.
Investments
Investments are classified as listed or unlisted. The valuation of listed
investments is determined with reference to published share prices. The
valuation of unlisted investments is assessed by the group at each reporting
date using any available financial information or reports available to them at
that time. The group's assessment of these valuations is subjective and may
therefore impact profit and loss and equity in future periods.
Internally generated intangible assets
The group has determined the amounts of development expenditure be recognised
as intangible assets at each reporting date. In making their judgement, the
directors have considered the progress of each project and whether there is
sufficient certainty that the product under development will be economically
viable and that the economic benefits will flow to the group.
4. REVENUE
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Yield from staking 544,045 -
Transaction fee income 9,482 -
553,527 -
5. EMPLOYEES AND DIRECTORS
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Wages and salaries 372,747 18,000
Social security costs 23,902 1,334
Pension costs 2,760 -
399,409 19,334
The average number of employees during the period was as follows:
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Salaried directors 4 1
Key management personnel
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, including
the directors of the Group.
The Group considers its directors to be the key management personnel.
Directors' remuneration
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Directors' salaries 136,675 18,000
Directors' social security 14,231 1,334
Directors' pension contributions 10,012 -
Directors' fees 104,000 154,000
Share based payments 52,360 346,904
317,278 520,238
Information regarding highest paid director is as follows:
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Directors' salaries 53,500 -
Directors' social security 5,640 -
Directors' pension contributions 3,975 -
Directors' fees - 64,000
Share based payments 18,700 210,245
81,815 274,245
6. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
Reconciliations are set out below.
30.4.22
Weighted
average
number Per-share
Earnings of amount
£ shares Pence
Basic EPS
Earnings attributable to ordinary shareholders (2,316,031) 1,211,225,646 -0.19
Effect of dilutive securities
Options - 96,200,000 -
Diluted EPS
Adjusted earnings (2,316,031) 1,307,425,646 -0.18
31.10.21
Weighted
average
number Per-share
Earnings of amount
£ shares Pence
Basic EPS
Earnings attributable to ordinary shareholders 311,707 357,962,433 0.09
Effect of dilutive securities
Options - 40,600,000 -
Diluted EPS
Adjusted earnings 311,707 398,562,433 0.08
7. INTANGIBLE ASSETS
Group
Development Crypto
costs currencies Totals
£ £ £
COST OR VALUATION
At 1 November 2021 94,667 22,496 117,163
Additions 131,506 16,080,166 16,211,672
Revaluations - (70,077) (70,077)
At 30 April 2022 226,173 16,032,585 16,258,758
AMORTISATION
Amortisation for period 15,987 - 15,987
At 30 April 2022 15,987 - 15,987
NET BOOK VALUE
At 30 April 2022 210,186 16,032,585 16,242,771
At 31 October 2021 94,667 22,496 117,163
The internally generated capitalised software development costs comprise staff
costs and other costs directly related to developing the software platform.
This asset is not yet complete and is therefore not being amortised in this
financial year.
The crypto currencies held relate to non-stable crypto currencies such as
Bitcoin (BTC) and Ethereum (ETH) that are held for long term purposes.
Company
Crypto
currencies
£
COST
At 1 November 2021 18,205
Additions 5,971
At 30 April 2022 24,176
NET BOOK VALUE
At 30 April 2022 24,176
At 31 October 2021 18,205
8. PROPERTY, PLANT AND EQUIPMENT
Group
Computer
equipment
£
COST
At 1 November 2021 10,883
Additions 10,330
At 30 April 2022 21,213
DEPRECIATION
At 1 November 2021 1,671
Charge for period 2,217
At 30 April 2022 3,888
NET BOOK VALUE
At 30 April 2022 17,325
At 31 October 2021 9,212
Company
Computer
equipment
£
COST
At 1 November 2021 1,547
Additions -
At 30 April 2022 1,547
DEPRECIATION
At 1 November 2021 516
Charge for period 258
At 30 April 2022 774
NET BOOK VALUE
At 30 April 2022 773
At 31 October 2021 1,031
9. INVESTMENTS
Group
Listed Unlisted
investments investments Totals
£ £ £
COST OR VALUATION
At 1 November 2021 774,000 1,231,564 2,005,564
Revaluations 340,837 - 340,837
Reclassification/transfer 216,413 (216,413) -
At 30 April 2022 1,331,250 1,015,151 2,346,401
NET BOOK VALUE
At 30 April 2022 1,331,250 1,015,151 2,346,401
At 31 October 2021 774,000 1,231,564 2,005,564
Company
Shares in group
Listed Unlisted
undertakings investments investments Totals
£ £ £ £
COST OR VALUATION
At 1 November 2021 1,293,685 774,000 1,231,564 3,299,249
Revaluations - 340,837 - 340,837
Reclassification/transfer - 216,413 (216,413) -
At 30 April 2022 1,293,685 1,331,250 1,015,151 3,640,086
NET BOOK VALUE
At 30 April 2022 1,293,685 1,331,250 1,015,151 3,640,086
At 31 October 2021 1,293,685 774,000 1,231,564 3,299,249
Listed investments belonging to the Group comprise:
Cost Valuation
£ £
SportsX SAS 216,413 843,750
NFT Investments plc 210,000 487,500
426,413 1,331,250
Unlisted investments belonging to the Group comprise:
Cost Valuation
£ £
Sporting Icons - convertible debt 28,776 28,776
Defy1 SAS - shares 43,029 43,029
ePIC Blockchain Technologies Inc - shares 291,177 291,177
Big Head Club 130,149 130,149
Blimp Technologies 522,020 522,020
1,015,151 1,015,151
10. TRADE AND OTHER RECEIVABLES
Group Company
30.4.22 31.10.21 30.4.22 31.10.21
£ £ £ £
Amounts owed by group undertakings - - 1,505,160 -
Other debtors 4,048 250,051 - 250,000
VAT 18,286 18,596 26,788 -
Prepayments and accrued income 160,827 67,550 14,042 17,609
183,161 336,197 1,545,990 267,609
11. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid: Nominal 30.4.22 31.10.21
Number Class: value £ £
1,211,225,646 Ordinary £0.001 1,211,226 1,211,226
On the 31 October 2019, 1,000 Ordinary Shares of £0.001 were issued at par
value.
Between 20 February 2021 and 29 October 2021, a further 1,211,224,646 Ordinary
Shares of £0.001 were issued at par value.
12. RESERVES
Group
Fair
Retained Share Other value Total
Earnings Premium reserves reserve Equity
£ £ £ £ £
At 1 November 2021 311,707 9,816,612 853,593 30,967 11,012,879
Deficit for the period (2,316,031) - - - (2,316,031)
Share based payments - - 69,316 - 69,316
Crypto currencies - - - 176,962 176,962
At 30 April 2022 (2,004,324) 9,816,612 922,909 207,929 8,943,126
Company
Fair
Retained Share Other value Total
Earnings Premium reserves reserve Equity
£ £ £ £ £
At 1 November 2021 (600,486) 9,816,612 853,593 30,967 10,100,686
Deficit for the period (326,562) - - - (326,562)
Share based payments - - 69,316 - 69,316
Crypto currencies - - - 176,962 176,962
At 30 April 2022 (927,048) 9,816,612 922,909 207,929 10,020,402
Other reserves
Other reserves represent the fair value of warrants issued during the year,
including associated costs.
Fair Value reserve
The fair value reserve represents the fair value movements on crypto
currencies held as intangible assets or cash and cash equivalents.
13. TRADE AND OTHER PAYABLES
Group Company
30.4.22 31.10.21 30.4.22 31.10.21
£ £ £ £
Current:
Trade creditors 223,451 210,411 54,324 148,341
Crypto and fiat payable to customers 38,052,156 - - -
Social security and other taxes 29,527 13,480 7,010 -
Other creditors 504,727 - 2,423 -
Accrued expenses 58,042 60,202 17,353 29,250
Directors' current accounts 4,000 4,000 - -
38,871,903 288,093 81,110 177,591
14. RELATED PARTY DISCLOSURES
The company made payments to the following companies in relation to directors'
fees:
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Briarmount - TV Le Druillenec 18,000 28,000
Carraway Corp 18,000 24,000
Dark Peak Services Ltd - NJ Lyth 20,000 38,000
Marallo Holdings - MS Edwards 48,000 64,000
104,000 154,000
As at 30.4.22, the company owed £3,000 (31.10.21: £6,000) to Carraway Corp
and £16,000 (31.10.21: £8,000) to Marallo Holdings.
As at 30.4.22, there were director's loan outstanding to PJ Blows £2,000
(31.10.21: £2,000) and DG Try £2,000 (31.10.21: £2,000).
15. SHARE BASED PAYMENTS TRANSACTIONS
Details of the number of share warrants outstanding:
30.4.22 31.10.21
Outstanding at start of period 40,600,000 -
Granted during the period 55,600,000 40,600,000
Forfeited during the period - -
Exercised during the period 96,200,000 40,600,000
Exercisable at the end of the period 96,200,000 40,600,000
The share warrants outstanding at the end of the period have a weighted
average remaining contractual life of 3.1 years.
The fair value of the share warrant rights granted under the scheme are valued
using the Black-Scholes option pricing model with the following assumptions:
30.4.22 31.10.21
Risk free rate 81% 0.77% to 0.78%
Expected life 2.0 1.0 to 2.5
Volatility 45.35% 113% to 114%
Using the above calculation method, the weighted average fair value of
warrants at 30 April 2022 were assessed as £69,316 (31.10.21: £853,593).
16. RECONCILIATION OF (LOSS)/PROFIT/LOSS BEFORE INCOME TAX TO CASH
GENERATED FROM OPERATIONS
Group
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
(Loss)/profit before income tax (2,316,031) 311,707
Depreciation charges 18,204 516
Gain on revaluation of fixed assets (270,760) (564,000)
Movement in share based payment reserve 69,316 681,561
Negative goodwill generated from bargain - (912,192)
Finance income - (273)
(2,499,271) (482,681)
Decrease/(increase) in trade and other receivables 153,036 (267,608)
Increase in trade and other payables 38,583,810 177,592
Cash generated from operations 36,237,575 (572,697)
Company
Period
1.11.21
to Year ended
30.4.22 31.10.21
£ £
Loss before income tax (326,562) (600,486)
Depreciation charges 258 516
Gain on revaluation of fixed assets (340,837) (564,000)
Movement in share based payment reserve 69,315 681,561
Finance income - (273)
(597,826) (482,682)
Decrease/(increase) in trade and other receivables 226,779 (267,608)
(Decrease)/increase in trade and other payables (96,480) 177,591
Cash generated from operations (467,527) (572,699)
17. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statements of Cash Flows in respect of cash and
cash equivalents are in respect of these Statement of Financial Position
amounts:
Group Company
Period ended 30 April 2022
30.4.22 1.11.21 30.4.22 1.11.21
£ £ £ £
Cash and cash equivalents 30,236,597 10,044,062 6,101,713 7,903,409
Year ended 31 October 2021
31.10.21 1.11.20 31.10.21 1.11.20
£ £ £ £
Cash and cash equivalents 10,044,062 - 7,903,409 -
18. POST BALANCE SHEET EVENTS
On 23 June 2022 Aqru plc announced that the total Assets under Management had
reduced to US$13m (unaudited) as a result of adverse market conditions and
falls in the prices of certain crypto currencies
On 23 June 2022 the Company appointed Dr Philipp Kalerhoff as Executive
Director. On the same date both Timothy Le Druillenc and Misha Sher resigned
as Non-Executive Directors
On 4 July 2022 the Company announced the appointment of First Sentinel
Advisory Limited as financial advisors and Tennyson Securities as sole brokers
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