AQRU plc - Interim results

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 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
Gabriela Amaya Garcia Charlie Hobbs AQRU@tancredigroup.com	+44 7915 035 294 +44 7897 557 112

 

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

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