TIDMQBIT
RNS Number : 0322N
Quantum Exponential Group PLC
18 January 2023
18 January 2023
Quantum Exponential Group plc
(the 'Company' or 'Quantum Exponential')
Interim Results
Quantum Exponential Group plc (AQUIS: QBIT), a company focused
on investing in quantum technology, is pleased to announce its
unaudited interim results for the six months ending 31 October
2022.
Highlights
-- Investment in Universal Quantum Limited ("Universal
Quantum"), a company focused on building the world's first million
qubit quantum computer.
-- Investment in QLM Technology Ltd ("QLM Technology"),
alongside lead investor and global oil services giant Schlumberger.
QLM is a UK based photonics hardware and technology development
company that has developed a cutting-edge gas imaging camera using
quantum technology.
-- Post period, investee company, Universal Quantum announced
that Universal Quantum Deutschland GmbH, its German subsidiary, had
won a EUR67 million contract by the German Aerospace Centre to
build a fully scalable trapped-ion quantum computer.
-- Working closer with the Institute of Physics and their qBIG
(Quantum Business, Innovation and Growth) strategy and Initiative
where post period we helped launch the qBIG award which aims at
supporting emerging early-stage quantum technology companies.
-- Strengthened our industry ties across the UK and Europe by
becoming members of several quantum technology programmes giving us
first mover advantage in finding viable start-ups.
-- Strong cash balance at 31 October 2022 of GBP2.48 million
Ian Pearson, Chairman, said:
"I am delighted to confirm that we are on target to create an
initial portfolio of eight to ten companies that we announced in
Quantum Exponential's Admission Document to trading on the AQSE
Growth Market. The board believes the quality of investments made
to date is extremely high, in companies with genuinely exponential
growth potential."
Commenting on the interim results Steven Metcalfe, Chief
Executive Officer, said:
"We have made excellent progress in the last six months,
cementing Quantum Exponential's status as the leading UK expert and
pure play quantum technology fund whilst also adding two new
investee companies to our growing portfolio, Universal Quantum and
QLM Technology. Like our other investments, Universal Quantum and
QLM Technology are using innovative technologies to address
everyday problems. During the period, we have been consciously
raising our own profile among industry bodies and partnering with
associations and academic organisations such as the Institute of
Physics, ICFO and UKBAA, where so many quantum start-ups emerge
from. Our aim is to support, emerging early-stage quantum
companies, and believe that these partnerships offer fantastic
long-term value and will ensure that Quantum Exponential has first
eyes on some of the most exciting and innovative quantum technology
start-ups coming out of the UK and further afield in other NATO and
NATO friendly countries.
"Post-period we were absolutely delighted to provide the market
with the news that our investee company, Universal Quantum, had
been awarded a EUR67 million contract by the German Aerospace
Centre to build a trapped-ion computer. We hope that this is the
first of many such positive news that we will be able to share
about our investee companies and I believe it is indicative of the
calibre of opportunities that we are seeing come through in the
sector. It is also a credit to our investment team and our Advisory
Board, who through their connections and our various partnerships
have been able to identify exciting, new investments which we
believe will, in the long term, create value for all
shareholders.
"In addition to the companies that we are currently invested in,
we have identified a strong pipeline of emerging companies that fit
our investment criteria and require further research. As part of
our investment strategy, we continue to support our portfolio
companies, who are helping to tackle some of the most relevant and
pressing issues that are occurring today, from climate change to
cybersecurity. We feel that our current portfolio is well
positioned to deliver robust growth to our shareholders as they
mature.
"Quantum Exponential has helped launch the Quantum Business
Innovate and Growth ("qBIG") award in collaboration with the
Institute of Physics which aims to find, and support, emerging
early-stage quantum companies and will enable Quantum Exponential
to further expand its reach when identifying suitable companies to
invest in.
"Whilst the current macro-economic turbulence has made the
general financial environment difficult, recent current events has
created a pressing realisation from governments and corporations
for the need to invest more into the quantum sector. Only recently,
the UK Government appointed five industry leading experts to help
accelerate development and deployment of emerging tech in the UK,
as the Chancellor has set out his vision to create "The Silicon
Valley of the 21(st) Century". With Quantum Exponential's
headquarters located in the UK and our investment strategy of
finding opportunities in the quantum technology sector focussing on
NATO friendly countries, Quantum Exponential is strategically
positioned to benefit from Governments policies on quantum
technology as we evolve and grow as a company.
Outlook
"Despite the current global economic difficulties, the outlook
for Quantum Exponential remains favourable. With increasing support
from the UK Government for the quantum technology sector, an
outstanding advisory board and growing network, the next 12 months
should prove to be a very exciting time for Quantum Exponential and
its shareholders.
I would like to thank shareholders for their continued support.
We go into the year ahead with a strong cash balance, and we look
forward to updating you in 2023 with what we believe to be a very
exciting year for Quantum Exponential."
For more information, visit the Company's website:
www.quantumexp.co.uk or contact:
Steven Metcalfe, Chief Executive Officer c/o quantum@stbridespartners.co.uk
Novum Securities (AQSE Corporate Adviser) Tel: +44 (0)20 7399 9400
David Coffman, George Duxberry
Oberon Capital (Broker) Tel: +44 (0)20 3179 5344
Mike Seabrook, Chris Crawford
St Brides Partners Limited (Financial PR) quantum@stbridespartners.co.uk
Catherine Leftley, Ana Ribeiro, Isabelle Morris
Investment Review
We monitor our portfolio regularly and we believe that all our
investees are developing their businesses broadly in line with the
plans they provided us at the time of investment.
Aegiq Limited
On 30 April 2022, the Company invested GBP406,050 in two
tranches in Aegiq Limited ("Aegiq"), a hardware photonics company
using quantum technologies to address the global cybersecurity
threat posed by the rise of quantum computing.
Following the investment, Quantum Exponential has a c.4.06%
stake in Aegiq's issued share capital on a fully diluted basis.
Aegiq raised close to GBP4 million in its investment funding
rounds. This is supplemented by a number of grants which have
recently been bolstered by further funding from Innovate-UK.
On 15 September 2022, Aegiq announced that it had received a
grant from Innovate UK to develop a field-deployable quantum light
source.
The system intends to underpin scalable applications in quantum
computing and quantum communications and is part of a GBP500,000
project in collaboration with Fraunhofer CAP.
For more information, visit https://www.aegiq.com/.
Arqit Quantum Inc.
Prior to listing, the Company secured an option to acquire
199,993 ordinary shares in Arqit Quantum Inc ("Arqit"). Arqit is a
UK-based Company listed on NASDAQ with a market capitalisation of
USD 553.54 million as at 31 October 2022.
A global leader in quantum encryption technology, Arqit has
successfully demonstrated a quantum safe communication channel to
secure data transmissions for both UK sensors and IoT as well as a
US manufacturer of military drones.
Subsequent to the period end the market capitalisation has
fallen to USD 338 million at close of business 13 January 2023
For more information, visit https://arqit.uk/.
Siloton Limited
On 1 March 2022, the Company led a c.GBP470,000 initial
financing round, investing c.GBP300,000 into Siloton Limited
("Siloton"). The Company holds 2,752 ordinary shares in Siloton
representing 12.79% of Siloton's enlarged issued share capital.
Siloton is a technology company that uses quantum techniques and
photonic integrated circuits ('PICs') for use in sub-surface
optical scanning devices with applications across healthcare, and
non-destructive testing.
Siloton continues to focus on advancing the development of a
technology called Optical Coherence Tomography ('OCT') for the
assessment of age-related macular degeneration ('AMD'), a condition
that if untreated can lead to blindness and is estimated to affect
approximately 288 million patients worldwide by 2042. Since our
investment Siloton has been awarded an Innovate-UK-funded grant.
This project sees Siloton working alongside the Macular Society to
understand whether the UK is suitable for a home-based monitoring
service for patients with wet AMD, allowing them to receive
specialist eye scans in the comfort of their own home.
For more information, visit https://www.siloton.com/news.
QLM Technology Ltd
On 4 August 2022, the Company invested GBP450,000 as part of a
GBP12,000,000 Series A funding round in QLM Technology Ltd ('QLM'),
a UK-based photonics hardware and technology development company
that has developed a cutting-edge gas imaging camera based on
quantum technology termed a Quantum Gas Imaging Lidar.
Beyond emissions monitoring for the oil and gas market, the QLM
solution is well-suited for use in tracking and reducing methane
emissions in other applications such as in biogas production,
landfills, wastewater treatment plants, and coal mines.
Following the Investment, Quantum Exponential holds 1,203,208 B
Ordinary Shares at a price of GBP0.374 in QLM representing 1.6% of
QLM's fully diluted share capital.
The funding round was led by Schlumberger and included new
investment from existing investors Green Angel Syndicate,
Enterprise 100 Syndicate, the Development Bank of Wales, Newable,
BritBots, and BPEC.
For more information, visit https://qlmtec.com.
Universal Quantum Limited
On 16 May 2022, the Company invested GBP450,000 through an
Advanced Subscription Agreement ("ASA") in Universal Quantum
Limited ("Universal Quantum"), a company focused on building the
world's first million quantum bit ("qubit") quantum computers. The
funds are being used to continue Universal Quantum's focus on its
integrated Quantum Processing Unit. The funds invested under the
ASA will convert into ordinary shares in Universal Quantum on the
earlier of a further financing round of at least GBP10m, a sale, a
liquidation event, or the first anniversary of the ASA.
The team at Universal Quantum has over 15 years of quantum
computing experience and is backed by a number of institutional
investors such as Hoxton Ventures, Village Global, FoundersX,
Luminous Ventures, and 7Percent. Its activity is further supported
by several grants.
For more information, visit https://universalquantum.com.
Stuart Nicol, Chief Investment Officer
INDEPENT REVIEW REPORT TO QUANTUM EXPONENTIAL GROUP PLC
Conclusion
We have been engaged by the Company to review the Condensed
Consolidated set of financial statements in the half-yearly
financial report for the six months ended 31 October 2022 which
comprises the Condensed Consolidated Statement of Comprehensive
Income, the Condensed Consolidated Statement of Financial Position,
the Condensed Consolidated Statement of Changes in Equity and the
Condensed Consolidated Statement of Cash Flows.
Based on our review, nothing has come to our attention that
causes us to believe that the Condensed set of Consolidated
financial statements in the half-yearly financial report for the
six months ended 31 October 2022 is not prepared, in all material
respects, in accordance with International Accounting Standard 34,
as adopted by the United Kingdom.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the United Kingdom. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting", as adopted
by the United Kingdom
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the directors.
In preparing the condensed set of financial statements in the
half-yearly financial report for the six months ended 31 October
2022, the directors are responsible for assessing the Company's
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative
but to do so.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the Condensed Consolidated set of financial statements in the
half-yearly financial report based on our review. Our conclusion,
including our Conclusions Relating to Going Concern, are based on
procedures that are less extensive than audit procedures, as
described in the Basis for Conclusion paragraph of this report.
Use of Our Report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting and for no other
purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of
and for the purpose of our terms of engagement or has been
expressly authorised to do so by our prior written consent. Save as
above, we do not accept responsibility for this report to any other
person or for any other purpose and we hereby expressly disclaim
any and all such liability.
Shipleys LLP
Chartered accountants
5 Godalming Business Centre
Woolsack Way
Godalming
Surrey
GU7 1XW
17 January 2023
Quantum Exponential Group plc
Unaudited Consolidated Statement of Comprehensive Income
For the 6 months ended 31 October 2022
6 months
ended
31 October
2022
Notes GBP
Revenue 2 8,030
Gross profit 8,030
Operating expenses (335,045)
Operating loss (327,015)
Finance income 1,431
Gain / (Loss) on fair value adjustments on
investments (506,707)
Loss before tax (832,291)
Taxation on operations 121,812
Loss for the period (710,479)
=============
Earning Per Share GBP (0.002)
Diluted Earnings Per Share GBP (0.002)
Quantum Exponential Group plc
Unaudited Consolidated Statement of Financial Position
As at 31 October 2022
At
31 October
2022
Notes GBP
Assets
Non-current assets
Investments 2,386,805
Total non-current assets 2,386,805
Current assets
Cash and cash equivalents 2,482,906
Other receivables 60,615
Total current assets 2,543,521
Total assets 4,930,326
Current liabilities
Trade payables and other payables (82,546)
Total current liabilities (82,546)
Provision for liabilities 0
Total liabilities (82,546)
Net assets 4,847,780
============
Equity
Share capital (3,283,750)
Share premium (2,114,610)
Merger reserve 261,810
Capital contributions (199,732)
Other reserves 144
Retained Loss 488,358
Total equity (4,847,780)
============
Quantum Exponential Group plc
Unaudited Consolidated Statement of Cash Flows
For the 6 months ended 31 October 2022
6 months
ended
31 October
2022
GBP
Operating Profit / (loss) for the period (710,479)
Adjustments for:
Interest income (1,431)
Decrease in trade and other receivables 11,285
Increase in trade and other payables 2,415
Provisions (121,812)
Net fair value adjustment loss 506,707
Cash (outflow)/inflow from operating activities (313,315)
Investing activities
Purchase of investments (900,000)
Net cash used in investing activities (900,000)
Financing activities
Interest income 1,431
Net inflow of cash generated from financing
activities 1,431
Net increase in cash and cash equivalents (1,211,884)
Cash and cash equivalents at beginning of period 3,694,790
Cash and cash equivalents at end of period 2,482,906
------------
Quantum Exponential Group plc
Unaudited Consolidated Statement of Changes in Equity
For the 6 months ended 31 October 2022
Retained
Share Merger Capital Other profits/
capital Share premium reserve contribution reserves (losses) Total equity
GBP GBP GBP GBP GBP GBP GBP
Balance at 1
May
2022 3,283,750 2,114,610 (261,810) 199,732 (144) 222,121 5,558,259
Loss for the
period (710,479) (710,479)
At 31 October
2022 3,283,750 2,114,610 (261,810) 199,732 (144) (488,358) 4,847,780
------------- -------------- ------------- -------------- ------------- ---------- -------------
Notes to the Interim Accounts
1. Accounting Policies
Corporate information
Quantum Exponential Group Plc is a public limited company,
incorporated and domiciled in England and Wales under the Companies
Act 2006. The address of its registered office is Fladgate LLP, 16
Great Queen Street, London, United Kingdom, WC2B 5DG. The Company's
ordinary shares are traded on the Aquis Stock Exchange (AQSE), a
primary and secondary market for equity and debt securities. The
financial statements of Quantum Exponential Group plc for the
period ended 30 April 2022 were authorised for issue by the Board
on 6 October 2022 and the balance sheets signed on the Board's
behalf on 6 October 2022. The interim results for the 6 months
ending 31 October 2022 were authorised for issue by the Board on 17
January 2023 and the balance sheets signed on the Board's behalf on
17 January 2023.
The nature of the Group's operations and its principal activity
is to assemble a portfolio of potential investments in leading
quantum technology companies globally.
2. Accounting Policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
New or amended Accounting Standards and Interpretations
The Company has adopted all of the new or amended Accounting
Standards and Interpretations issued by the International
Accounting Standards Board ('IASB') that are mandatory for the
current reporting period.
Any new or amended Accounting Standards or Interpretations that
are not yet mandatory have not been early adopted. The following
Accounting Standard and interpretations are most relevant to the
Company.
Basis of preparation
These interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the UK.
The consolidated financial statements have been prepared under
the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value
through profit and loss.
Comparative figures for the 6 months to 31 October 2022 have not
been included as this was wholly before the Company began trading
and the Company had not been admitted to trading on the AQSE Growth
Market stock market
The financial statements are presented in Pounds Sterling (GBP)
which is the functional currency of the Company and Group.
Basis of consolidation
The Group financial statements consolidate the results of
Quantum Exponential Group plc and its subsidiary undertakings.
The financial statements of subsidiaries are prepared for the
same reporting years using consistent accounting policies.
Subsidiaries are entities controlled by the Group. Control
exists when the Group has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control,
potential voting rights that are currently exercisable or
convertible are taken into account. The financial information of
subsidiaries is included from the date that control commences until
the date that control ceases. Intra-group balances and
transactions, and any unrealised income expenses arising from
intra-group transactions, are eliminated in preparing the
consolidated financial information.
Critical accounting estimates
The preparation of the financial statements requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, as disclosed in note
3.
Going concern
In determining the basis for preparing the financial statements,
management are required to consider whether the Group and Company
can continue in operational existence for the foreseeable future,
being a period of not less than twelve months from the date of the
approval of the financial statements. The Directors have prepared
forecasts of the Group's and Company's financial performance over
the next twelve months from the date of this report.
The forecasts include assumptions regarding the opportunity
funnel, growth plans, risks and mitigating actions. The Board are
exploring a number of such opportunities which are available to the
Group, and are confident that the required financing is
available.
The Group's forecasts, assumptions and projections, taking
account of sensitivities, support the conclusion that the Company
and the Group have adequate resources to continue in operational
existence for the foreseeable future, a period of not less than
twelve months from the date of this report. The Group and Company,
therefore, continues to adopt the going concern basis in preparing
the financial statements.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the
consideration to which the consolidated entity is expected to be
entitled in exchange for transferring services to a customer. For
each contract with a customer, the consolidated entity: identifies
the contract with a customer; identifies the performance
obligations in the contract; determines the transaction price which
takes into account the time value of money; allocates the
transaction price to separate performance obligations on the basis
of the relative standalone selling price of each distinct service
to be delivered; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to
the customer of the service provided.
Other revenue
Other revenue is recognised when it is received or when the
right to receive payment is established.
Income tax
The tax expense comprises current and deferred tax. Tax
currently payable, relating to corporation tax, is calculated on
the basis of the tax rates and laws that have been enacted or
substantively enacted as at the reporting date.
Deferred tax is recognised on all timing differences that have
originated but not reversed at the reporting date. Transactions or
events that result in an obligation to pay more tax in the future
or a right to pay less tax in the future give rise to a deferred
tax liability or asset. Timing differences are differences between
taxable profits and total comprehensive income as stated in the
financial statements that arise from the inclusion of income and
expenses in tax assessments in years different from those in which
they are recognised in the financial statements.
Deferred tax is measured using the tax rates and laws that have
been enacted or substantively enacted as at the reporting date, and
that are expected to apply to the reversal of the timing
difference. The tax expense is recognised in the same component of
comprehensive income or equity as the transaction, or other event,
that resulted in the tax expense.
Deferred income tax assets are recognised only to the extent
that, on the basis of all available evidence, it is deemed probable
that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Current and deferred tax assets and liabilities are offset only
when there is a legally enforceable right to set off the amounts,
and there is the intention either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at
call with financial institutions, and other short-term highly
liquid investments that are readily convertible into known amounts
of cash and which are subject to an insignificant risk of changes
in value. An investment with a maturity of three months or less is
normally classified as being short term. Bank overdrafts are shown
within borrowing in current liabilities.
Trade and other receivables
Trade receivables are measured at initial recognition at fair
value and are subsequently measured at amortised cost using the
effective interest rate method, less provision for impairment.
Other receivables are recognised at amortised cost, less any
allowance for expected credit losses.
Current and non-current classification
Assets and liabilities are presented in the statement of
financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to
be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected
to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled
within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at
least 12 months after the reporting period. All other liabilities
are classified as non-current
Investments and other financial assets
Investments and other financial assets, other than investments
in subsidiaries undertakings, are initially measured at fair value.
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.
Financial assets are derecognised when the rights to receive
cash flows have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
When there is no reasonable expectation of recovering part or all
of a financial asset, its carrying value is written off.
Investment in subsidiary undertakings are recorded at cost less
any provision for impairment.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value
through other comprehensive income are classified as financial
assets at fair value through profit or loss. Typically, such
financial assets will be either: (i) held for trading, where they
are acquired for the purpose of selling in the short-term with an
intention of making a profit, or a derivative; or (ii) designated
as such upon initial recognition where permitted. Fair value
movements are recognised in profit or loss.
Fair value measurement
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes
that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-
financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest
level of input that is significant to the fair value
measurement.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses
on financial assets which are either measured at amortised cost or
fair value through other comprehensive income. The measurement of
the loss allowance depends upon the Group's assessment at the end
of each reporting period as to whether the financial instrument's
credit risk has increased significantly since initial recognition,
based on reasonable and supportable information that is available,
without undue cost or effort to obtain.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount.
Recoverable amount is the higher of an asset's fair value less
costs of disposal and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset
using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a
cash-generating unit.
Trade and other payables
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost using the effective
interest rate method.
Provisions
Provisions are recognised when the Group has a present (legal or
constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. The
amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money is material,
provisions are discounted using a current pre-tax rote specific to
the liability. The increase in the provision resulting from the
passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits liabilities for wages and salaries,
including non-monetary benefits, annual leave and long service
leave expected to be settled wholly within 12 months of the
reporting date are measured at the amounts expected to be paid when
the liabilities are settled.
Issued shares
Ordinary shares are classified as equity.
Foreign currency translation
Monetary assets and liabilities denominated in foreign
currencies are translated into sterling at the rates of exchange
ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the
transaction. All differences are taken to the profit and loss
account.
3. Critical accounting judgements, estimates and assumptions
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:
Investment valuation
The Group has a number of investments in unlisted entities
whereby their valuation is determined in whole or in part using
valuation techniques based on assumptions that are not supported by
prices from observable market transactions in the same instrument
and not based on available observable data and therefore involves a
degree of judgement and estimation by Directors.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary
differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.
Impairment of non-financial assets other than goodwill and other
indefinite life intangible assets
The Group assesses impairment of non-financial assets other than
goodwill and other indefinite life intangible assets at each
reporting date by evaluating conditions specific to the Group and
to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is
determined. This involves fair value less costs of disposal or
value-in-use calculations, which incorporate a number of key
estimates and assumptions.
4. Financial instruments
IFRS 9 requires the Group to classify financial instruments at
fair value using a fair value hierarchy that reflects the
significance of the inputs used in making the measurement. The fair
value hierarchy has the following levels:
-- quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
-- inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2);
-- inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
Financial instruments classified as level 1
The fair value of financial instruments traded in active markets
is based on quoted market prices at the end of the reporting
period. A market is regarded as active if quoted prices are readily
and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an
arm's length basis. The quoted market price used for financial
assets held by the Group is the current bid price. These
instruments are included in Level 1. Instruments included in Level
1 comprise equity investments classified as trading securities or
available-for-sale
Financial instruments classified as level 2
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is
available and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in Level
2.
If one or more of the significant inputs is not based on
observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial
instruments include:
-- quoted market prices or dealer quotes for similar instruments;
-- the fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows based on
observable yield curves;
-- the fair value of forward foreign exchange contracts is
determined using forward exchange rates at the end of the reporting
period, with the resulting value discounted back to present
value;
-- other techniques, such as discounted cash flow analysis, are
used to determine fair value for the remaining financial
instruments.
Financial instruments classified as level 3
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) and
determined by using valuation techniques. which require significant
adjustment based on unobservable inputs are included in level
3.
The determination of what constitutes observable requires
judgement by the Group. The Group considers observable data to be
market data that is readily available, regularly distributed or
updated, reliable and verifiable, not proprietary, and provided by
independent sources that are actively involved in the relevant
market.
For financial instruments classified as level 3 the Group uses a
combination of internal and external valuations. Where management
determines an external valuation is appropriate the group engages
with professional service providers. Specific valuation techniques
include:
-- Market approach (utilising EBITDA or Revenue multiples,
industry value benchmarks and available market prices
approaches);
-- Net asset approach;
-- Income approach (utilising Discounted Cash Flow, Replacement Cost and Net Asset approaches);
-- Desktop valuations based on price of a recent transaction
when transaction price/cost is considered indicative of fair value;
and
-- Actuarial valuations using Monte Carlo, Black Scholes and adjusted binomial models.
The following table presents the Group's assets that are
measured at fair value at 31 October 2022:
Level 1 Level 3 Total
GBP GBP GBP
------------------ ------------------ ------------------
Held at fair value
At 1 May 2022 1,287,549 705,963 1,993,512
Additions during the
period 900,000 900,000
FV adjustment (506,707) - 506,707
Net book value
At 31 October 2022 780,842 1,605,963 2,386,805
------------------ ------------------ ------------------
There were no transfers between levels during the year.
5.Director's transactions
There were no transactions with Directors during the period.
6.Events after the balance sheet date
There have been no further events after the reporting date that
require adjustment or disclosure in line with IAS10 events after
the reporting period.
7.Ultimate controlling party
The company is quoted on the AQSE market and there is no single
controlling party.
Approval of Interim Financial Statements
The interim financial statements were approved by the Board of
Directors on 17 January 2023
**ENDS**
Notes to Editors
About Quantum Exponential Group plc
Quantum Exponential is a first of its kind, AQSE Growth Market
enterprise company, focused on opportunities in quantum technology
and the wider quantum computing sector, with an advisory board made
up of industry advisors, entrepreneurs, and technology investment
professionals with broad access to quantum opportunities and
markets. Quantum Exponential's investment strategy is to assemble a
portfolio of minority investments in early-stage global quantum
technology companies, in NATO friendly countries, offering
institutional and private investors access to revolutionising
technologies and industries.
Quantum Exponential trades on AQSE Growth Market under the
ticker symbol "QBIT'.
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END
NEXFLFERLTIDLIV
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