Managing Directors' Report 2021

“2021 has been the best performing year in KR1 plc’s history, bringing the Company’s net assets to £185,030,165 by year-end (2020: £37,866,475). It has also been one of the busiest years in terms of investments, in which the Company was able to add a selection of impressive projects to the portfolio. In parallel, the Company continued to strengthen its corporate governance, with further additions to the board of directors as well as continuing to engage with a broader set of professional service providers, with the results of much of this work expected to come to fruition over the next year.

The past period has undoubtedly been a watershed period for crypto, with many major technological advances and sustained heightened interest in the asset class across mainstream media, institutional investors and, most certainly, regulators. As demonstrated by the recent downturn, the crypto economy has once again shown its volatile character, but the success of 2021 has placed KR1 plc in a favourable position, and well prepared for a potentially lengthy period of stagnant crypto markets. Despite the recent market turmoil, the Directors are in no doubt that 2022 and the years to come will see the unstoppable growth of this technology, some of which may be concealed under the shadows of market uncertainty, drawing parallels to previous ‘crypto winters’. It also seems likely that there are going to be further high-risk projects or investors finding that they may have rolled the dice one too many times. However, more importantly, the Directors believe that projects and participants that have firm structures and sustainable roadmaps in place will prove resilient to market conditions. While the current market sentiment has impacted valuations, the number of well-funded, innovative projects in the Company’s portfolio is stronger than it has ever been.

Bitcoin’s recent record decline after topping out at just above £50,000 in November 2021 has seen the sentiment change drastically and, as ever, with the high correlation in crypto markets, many other crypto assets followed suit. Understandably, this can be a difficult time to navigate for shareholders and, if we judge the outlook on the basis of previous crypto winters, it may take the market some time to return to a positive footing. As a Company, we will endeavour to not only weather this latest storm, but continue to build on all areas of the business, with the intention of emerging out of this period stronger than ever.

KR1 plc’s strong view is that decentralised technologies and ‘Web3’ are here to stay and that these technologies will arise to form the backbone of a future digital society and financial system. The Company will continue to build its portfolio by seeking out the most attractive projects and opportunities that decentralised technologies have to offer in order to drive shareholder value over the long term. KR1 plc has always invested through the various market cycles and the current circumstances present many attractive opportunities.

Some of the Company’s 2021 investment highlights were further investments into projects building ‘base-layer’ blockchains, decentralised finance products, crypto infrastructure and privacy technologies. Another important activity of the year was the Company’s contributions to several Polkadot and Kusama crowdloans, kicking off ‘Dotsama’ season alongside projects including Moonbeam, Acala and many more. Our early exposure to investments such as Lido and the emerging Polkadot ecosystem, combined with the positive market sentiment towards crypto throughout 2021, led to significant growth of KR1 plc’s balance sheet.

Another component that has cemented itself firmly into KR1 plc’s long-term strategy is its revenue stream from staking activities, as well as from rewards originating from contributions to Polkadot and Kusama parachain auctions. This led to a total income from digital assets of £20,959,934 for 2021 (2020: £978,639).

Just as 2021 saw an influx of investment opportunities, it also saw a growing interest in the asset class among both retail and institutional investors, demonstrated by the penetration of crypto assets into many of today’s fintech applications, brokerage accounts and large inflows of capital into funds and financial products with crypto exposure. KR1 plc also had more investors joining as shareholders, becoming one the most actively traded stocks on the AQSE market with an increasing number of institutional investors and family offices starting to participate.

KR1 plc remains at the very heart of the crypto ecosystem, fully focused and taking advantage of the disruption that this technology will bring to society.”

Excerpt taken from the Audited Final Results of KR1 plc for the twelve months ended 31 December 2021, published on the Company’s website and available as an announcement here.