AQRU plc - Annual 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

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

Operational highlights

Post-period highlights

Outlook

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:

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:

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:

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:

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

The notes in the Company's Annual Report form an integral part of these consolidated financial statements

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.

The notes contained in the Company's Annual Report form an integral part of these consolidated financial statements

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

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