Quantum Exponential - Interim Results
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 €67 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 £2.48 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 €67 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 21st 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 £406,050 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 £4 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 £500,000 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.£470,000 initial financing round, investing c.£300,000 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 £450,000 as part of a £12,000,000 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 £0.374 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 £450,000 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 £10m, 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

INDEPENDENT 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

£




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

   £

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



£




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

 










Share capital

Share premium

Merger reserve

Capital
contribution

Other reserves

Retained
profits/ (losses)

Total equity


£

£

£

£

£

£

£









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 (£) 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


£

£

£

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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