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AQRU plc - Annual results


Announcement provided by

Supernova Digital Assets Plc · SOL

06/04/2023 07:00

AQRU plc - Annual results
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

Chief Executive

via Tancredi +44 207 887 7633

Tennyson Securities


Corporate Broker

Peter Krens

 

+44 207 186 9030

First Sentinel


AQSE Corporate Adviser

Brian Stockbridge

+44 203 989 2200

Tancredi Intelligent Communication

Media Relations


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

 

 

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
Year ended
31 October 2022

Audited
Year ended
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 from continuing operations


(5,735)

342

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
As at
31 October 2022

Restated
As at
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.

 

 

 

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
Year ended
31 October 2022

Restated
Year ended
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
Year ended
31 October 2022

Restated
Year ended
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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