Quantum Blockchain Technologies Plc - Final Results
(”QBT” or ”the Company”)
FINAL RESULTS
QBT (AIM: QBT), is pleased to announce its final results for the year ended
The Company’s Annual General Meeting (“AGM”) will be held at Company’s registered address, 1
st
Floor,
The Annual Report and Accounts together with the AGM Notice and Form of Proxy (together the “Documents”) are available on the Company’s website under the “Investor Relations – Annual Reports and Circulars” section. The Documents will be posted shortly to those shareholders who have requested to receive printed documents.
For further information please contact:
SP Angel Corporate Finance
(Nominated Adviser & Broker)
Leander
(Financial PR)
About
QBT (AIM: QBT) is an AIM listed investment company which has recently realigned its strategic focus to technology related investments, with special regard to Quantum computing, Blockchain, Cryptocurrencies and AI sectors. The Company has commenced an aggressive R&D and investment programme in the dynamic world of Blockchain Technology, which includes cryptocurrency mining and other advanced blockchain applications.
CHAIRMAN’S STATEMENT
I am pleased to present the Group’s Final Results for the year ended
During 2023, the main focus of the Company has been the R&D Programme, launched in 2021, which aims to develop a proprietary disruptive technology for mining Bitcoin through the development of Artificial Intelligence (AI), Quantum Computing and a special architecture for ASIC chips design for mining rigs. The capitalisation of the Bitcoin market as at the date of this report exceeds
The Company has several independent R&D teams working on each of the above technologies, based in
The first goal of QBT’s R&D Programme is to create AI software to improve the mining power of existing Bitcoin mining rigs. By applying AI and Machine Learning (ML) technologies, three different R&D teams have independently achieved very promising results from internal laboratory tests for the Company’s three proprietary methods, called “A”, “B” and “C”. While they are materially different, each method has substantiated the Company’s initial assumption, i.e ., that SHA-256, the core algorithm for mining of Bitcoin, is to some extent predictable. Hence calculations can be limited only to those cases where the chance of successfully mining Bitcoin is higher, resulting in better overall performance of the mining process.
The Company is now working on adapting its three Bitcoin mining methods to existing mining rigs in order to launch the first commercial QBT products, as Software as a Service (“SaaS”) for Bitcoin miners.
A second goal, which has a mid to long term timeframe, is the development of a proprietary mining chip which includes all the internal R&D results, as per the two patent applications filed in 2021 and 2023.
Finally, the third objective will be the implementation of “Quantum Mining”, which is a proprietary quantum version of SHA-256 algorithm for Bitcoin mining. A patent application for this implementation is in the process of being drafted at the time of publication of this report.
In order to use QBT’s proprietary quantum algorithm for Bitcoin mining, a quantum computer with more qubits than is currently commercially available is required. Therefore, the Company is planning ahead to be in a position to use this opportunity when such quantum computer is available.
During 2023, the Company continued to deal with its Legacy Assets, with special focus on the litigation against the former management and internal audit committee of Sipiem in
The Company also continued to deal with its other Legacy Assets, such as the Sosushi Srl (“Sosushi”) €1m litigation, and Company’s investments in PBV, Forcrowd and Geosim, although there are no specific updates available at this time.
During the period under review, as announced on
On
As disclosed on
In conclusion, the Company believes that exciting times are ahead, as it expects that its products, once available, could truly energise the cryptocurrency mining industry, while eventually being able to monetise its Legacy Assets through legal settlements.
Financial Review
The Group reported a total comprehensive loss of €4,206,000 for the year ended
Post-Balance Sheet Events
In
With regards to the Company’s Zero-Coupon Bond originally issued in 2013, at the Bondholders meeting held on
In
At the same time, QBT announced that it had commenced development of a proprietary ASIC chip. A working prototype is about to undergo development to confirm performance levels, and the Company entered into early-stage exploratory discussions with Bitcoin rig manufacturers and US Bitcoin mining companies. Also in March, the Company noted that the porting of Method A and Method B into commercial rigs had proven to be very challenging.
The R&D team engaged in testing different solutions for the final stage in order to deliver a fully reliable product. Finally, per the same announcement, QBT disclosed that its first two patent applications (ASIC UltraBoost and ASIC EnhancedBoost) were making positive headway and that a third patent application was being drafted concerning the proprietary quantum version of SHA-256.
In
At the same time, CL17 also reached an agreement with the Sipiem’s receiver, acquiring its right to receive 30% of any sums collected (net of legal and other costs) from the Sipiem litigation, as envisaged in the 2019 claim purchase agreement (through which CL17 acquired the Sipiem litigation) for an amount of €170,000, giving CL17 rights to all funds recovered, namely the €700,000 of the above agreement and the balance amounting to €5.575 million plus interest and augmentation for inflation, together (the “Settlement”)
As announced on
In June, QBT confirmed that the payment of €700,000 had been completed, and that €170,000 has been paid by CL17 to Sipiem’s Receiver with respect to the acquisition by CL17 of the Receiver’s right to receive 30% of any further sums collected in connection with the claim (net of legal fees).
Subsequently, in
Outlook
The Board remains committed to return value to its stakeholders by:
i. continuing to focus on its R&D Programme, which is providing promising and consistent results for the disruption of the Bitcoin market; ii. investing in the technology sector (both in a direct and an indirect manner); iii. managing the legacy portfolio assets, where positive outcomes are expected from the Company’s legal claims; and iv. further reduction of the debt position (if and when the conditions are deemed appropriate).
The Board remains positive as the technology investments are deemed sound and promising, while the legal claims have strong merit and against defendants that are expected to remain solvent, thereby enhancing the prospect of collection of the judgment debts.
Chairman
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED
Note 2023 2022 €’000 €’000 Revenue - - - - Administrative expenses 7 (4,025) (4,547) Other income - - Operating loss (4,025) (4,547) Other gains and losses 32 - Share of loss from equity-accounted associates 8 (59) (69) Finance costs 9 (296) (636) Loss before tax (4,348) (5,252) Tax 12 142 226 Loss for the year (4,206) (5,026) TOTAL COMPREHENSIVE LOSS FOR THE YEAR (4,206) (5,026) Earnings per share: Basic loss per share (cents) 13 €0.382 €0.508 Diluted loss per share (cents) 13 €0.256 €0.312
There was no other comprehensive income during the year.
The accounting policies and notes form an integral part of these financial statements.
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT
Group Group Company Company Notes 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Non-current assets Intangible assets 15 2 - - - Property, plant and equipment 14 169 226 - - Financial assets at fair value through 16 396 677 76 115 profit and loss Investments held at cost 16 - - 11 10 Investments in equity-accounted 8 7 60 7 - associates Total non-current assets 574 963 94 125 Current assets Trade and other receivables 17 3,243 4,626 946 1,056 Cash and cash equivalents 18 2,057 463 2,041 449 Total current assets 5,300 5,089 2,987 1,505 Total assets 5,874 6,052 3,081 1,630 Current liabilities Trade and other payables 19 (413) (465) (390) (577) Borrowings 20 (7,451) - (7,451) - Derivative financial instruments 21 (459) - (459) - Provisions 22 (98) (210) (98) (210) Total current liabilities (8,421) (675) (8,398) (787) Net current (liabilities)/assets (3,121) 4,414 (5,411) 718 Total assets less current liabilities (2,547) 5,377 (5,317) 843 Non-current liabilities Borrowings 20 - (8,131) - (8,131) Derivative financial instruments 21 - (468) - (468) Total non-current liabilities - (8,599) - (8,599) Total liabilities (8,421) (9,274) (8,398) (9,386) Net liabilities (2,547) (3,222) (5,317) (7,756) Equity Share capital 23 9,219 8,378 9,219 8,378 Share premium account 23 54,165 50,541 54,165 50,541 Other reserves 25 14,228 13,812 5,903 5,487 Retained losses (80,159) (75,953) (74,604) (72,162) Total equity (2,547) (3,222) (5,317) (7,756)
An income statement for the parent company is not presented in accordance with the exemption allowed by S408 of the Companies Act 2006. The parent company’s comprehensive loss for the financial year amounted to €2,442,000 (2022: loss of €4,550,000).
The financial statements were approved by the board of directors and authorised for issue on
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
Share Share Other premium Retained losses Total equity Group capital reserves account €’000 €’000 €’000 €’000 €’000 At 1 January 2022 8,221 49,442 11,409 (71,896) (2,824) Total present loss and comprehensive loss for - - - (5,026) (5,026) the year Exercise of warrants 157 1,099 - 969 2,225 Grant of share options - - 1,854 - 1,854 Modification of bond - - 549 - 549 At 31 December 2022 8,378 50,541 13,812 (75,953) (3,222) Total comprehensive loss - - - (4,206) (4,206) for the year Issue of shares 841 3,624 - - 4,465 Grant of share options - - 416 - 416 At 31 December 2023 9,219 54,165 14,228 (80,159) (2,547)
The following describes the nature and purpose of each reserve:
Share capital represents the nominal value of equity shares.
Share premium amount subscribed for share capital in excess of the nominal value.
Retained losses cumulative net gains and losses less distributions made and items
of other comprehensive income not accumulated in another
separate reserve. Included within retained losses are movements
relating to the grant, exercise, and fair value movement of the
warrants issued during the year.
Other reserves consist of three reserves, as detailed in Note 25, see below:
Merger reserve relates to the difference in consideration and nominal value of
shares issued during a merger and the fair value of assets
transferred in an acquisition of 90% or more of the share capital of
another entity.
Loan note equity reserve relates to the equity portion of the convertible loan notes.
Share option reserve fair value of the employee and key personnel equity settled share
option scheme as accrued at the reporting date.
The accounting policies and notes form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
Share Share Other premium Retained losses Total Company capital reserves account €’000 €’000 €’000 €’000 €’000 At 1 January 2022 8,221 49,442 3,084 (68,581) (7,834) Total present loss and - - - (4,550) (4,550) comprehensive loss for the year Exercise of warrants 157 1,099 - 969 2,225 Grant of share options - - 1,854 - 1,854 Modification of bond - - 549 - 549 At 31 December 2022 8,378 50,541 5,487 (72,162) (7,756) Total comprehensive loss - - - (2,442) (2,442) for the year Issue of shares 841 3,624 - - 4,465 Grant of share options - - 416 - 416 At 31 December 2023 9,219 54,165 5,903 (74,604) (5,317)
The following describes the nature and purpose of each reserve:
Share capital represents the nominal value of equity shares.
Share premium amount subscribed for share capital in excess of the nominal value.
Retained losses cumulative net gains and losses less distributions made and items
of other comprehensive income not accumulated in another
separate reserve. Included within retained losses are movements
relating to the grant, exercise, and fair value movement of the
warrants issued during the year.
Other reserves consist of three reserves, as detailed in Note 25, see below:
Merger reserve relates to the difference in consideration and nominal value of
shares issued during a merger and the fair value of assets
transferred in an acquisition of 90% or more of the share capital of
another entity.
Loan note equity reserve relates to the equity portion of the convertible loan notes.
Share option reserve fair value of the employee and key personnel equity settled share
option scheme as accrued at the reporting date.
The accounting policies and notes form part of these financial statements.
GROUP AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
Group Group Company Company Note 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Cash used in operations Loss before tax (4,348) (5,252) (2,585) (4,753) Impairment of investments 16 303 154 - 154 Share of post-tax losses of equity 8 59 69 59 69 accounted associates Non cash foreign exchange movements 16 - (35) - - Finance charges 9 296 637 295 635 Depreciation expense 14 55 49 - - Decrease /(increase) in receivables 17 1,383 474 110 (196) (Decrease) /increase in payables 19 (164) 346 (298) 433 Impairment of intercompany receivables - 33 - 12 Share based payments 416 1,854 416 1,854 R&D tax credit received 154 - 154 - Net cash outflow from operating activities (1,846) (1,671) (1,849) (1,792) Cash flows from investing activities Purchase of investments 16 (22) (50) (22) (50) Purchase of other investments (5) - (6) - Purchase of property, plant and equipment 14 - (111) - - Purchase of intangible assets 15 (2) - - - Net cash outflow from investing activities (29) (161) (28) (50) Cash flows from financing activities Proceeds from capital issue 3,465 - 3,465 - Proceeds from exercise of warrants - 1,256 - 1,256 Net interest paid (9) - (9) - Net cash (outflow)/inflow from financing 3,456 1,256 3,456 1,256 activities Net (decrease) /increase in cash for the 1,581 (576) 1,579 (586) year Cash and cash equivalents at beginning of 463 1,039 449 1,035 year Exchange differences 13 - 13 - Cash and cash equivalents at end of year 18 2,057 463 2,041 449
The accounting policies and notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
1. General Information
1. Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently throughout the period covered by these consolidated financial statements.
Basis of preparation
The consolidated Financial Statements of
The financial statements have been prepared under the historical cost convention as modified by the revaluation of assets and liabilities held at fair value.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated Financial Statements are disclosed in Note 3.
The Consolidated Financial Statements are presented in Euros (€), the functional and presentation of the entity rounded to the nearest €’000.
The Group has adopted the amendments to IAS 16 Property, Plant and Equipment (issued in
The Group has adopted the amendments to IAS 16 IAS 37 Provisions, Contingent Liabilities and Contingent Assets (issued in
Going Concern
In 2023 the
Group incurred
a loss of €4,206,000 (2022: €5,026,000) and had net current
liabilities
as at
After making due enquiries, the Directors have formed a judgement that there is a reasonable expectation that, in the next twelve months, there should be no need to secure further resources, but in case of new investment opportunities the Group can secure further funds to sustain such expenses and that adequate arrangements will be in place to enable the settlement of their financial commitments, as and when they fall due.
On this note, the Directors continue to adopt the going concern basis in preparing the financial statements.
Notwithstanding the above, the Directors believe that due to the little headroom existing within our budget at
New standards, interpretations and amendments not yet adopted
The Group decided not to early adopt the following amendments to standards which are not yet mandatory.
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
(issued
The amendments clarify that the classification of a liability as current or non-current is based only on rights existing at the end of the reporting period and the classification is not affected by expectations about whether rights to settle or defer a liability will be exercised. Further, the amendments clarify that the settlement of a liability refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. This amendment only affects presentation.
The amendment is effective for financial years beginning on or after
The Group does not expect a material impact on its consolidated financial statements from these amendments.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2
(issued in
The amendments are aimed at helping companies to provide investors with useful information about the effects of the reform of interest rate benchmarks on those companies’ financial statements.
The amendments complement those issued in 2019 and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform. The Phase 2 amendments relate to:
-- changes to contractual cash flows—a company will not have to derecognise or adjust the carrying amount of financial instruments for changes required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate; -- hedge accounting—a company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and -- disclosures—a company is required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.
The Group does not expect a material impact on its consolidated financial statements from these amendments.
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies
(issued in
The amendments enhance the disclosure requirements relating to an entity’s accounting policies and clarify that the notes to a complete set of financial statements are required to include material accounting policy information. Material accounting policy information, when considered with other information included in the financial statements, can reasonably be expected to influence decisions that the primary users of financial statements make on the basis of the financial statements. The amendments help preparers determine what constitutes material accounting policy information and notes that accounting policy information which focuses on how IFRS has been applied to its own circumstances is more useful for users of financial statements than standardised information or information duplicating the requirements of IFRS.
The amendment also states that immaterial accounting policy information need not be disclosed but when it is disclosed it shall not obscure material accounting policy information. Further, if accounting policy information is not deemed material this does not affect the materiality of related disclosure requirements of IFRS.
The disclosure of judgements made in applying accounting policies should reflect those that have had the most significant effect on items recognised in the financial statements.
The amendment is effective for financial years beginning on or after
Amendments to IAS 8 Definition of Accounting Estimates
(issued in
The amendments define accounting estimates as monetary amounts in financial statements that are subject to measurement uncertainty. An accounting policy may require an item in financial statements to be measured at a monetary amount that cannot be observed directly so that in order to achieve the objective of an accounting policy, an estimation is required.
The amendments state that the development of an accounting estimate requires the use of judgement or assumptions based on the latest available reliable information and involve the use of measurement techniques and inputs. Accounting estimates might then need to change as a result of new information, new developments or more experience.
A change in input or measurement technique is a change in accounting estimate which is applied prospectively unless the change results from the correction of prior period errors.
The amendment is effective for financial years beginning on or after
Amendments to IAS 12
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(issued in
The amendments specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations.
In specified circumstances, companies are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. Previously, there had been some uncertainty about whether the exemption applied to transactions such as leases and decommissioning obligations—transactions for which companies recognise both an asset and a liability.
The amendments clarify that the exemption does not apply and that companies are required to recognise deferred tax on such transactions. The aim of the amendments is to reduce diversity in the reporting of deferred tax on leases and decommissioning obligations.
The amendments are effective for annual reporting periods beginning on or after
Basis of consolidation
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. All subsidiaries have a reporting date of December.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
There is alignment of accounting polices across all Group entities by using uniform accounting policies for like transactions and other events in similar circumstances.
The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.
On consolidation, the results of overseas operations are translated into euros at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any impairment loss.
Investments in associates
Investments in associates are accounted for using the equity method less any impairment loss.
The carrying amount of the investment in associates is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate, adjusted where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.
Foreign currency
The functional currency is Euro. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. This is applicable to non-monetary items. Exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within ‘finance income or costs’. All other exchange gains and losses are presented in the income statement within ‘other (losses)/gains – net’.
Changes in the fair value of monetary securities denominated in foreign currency are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
Current taxes are based on the results of the Group companies and are calculated according to local tax rules, using the tax rates and laws that have been enacted or substantially enacted by the reporting date.
Deferred tax is provided in full using the financial position liability method for all taxable temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax is measured using currently enacted or substantially enacted tax rates and laws. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets are recognised to the extent the temporary difference will reverse in the foreseeable future and that it is probable that future taxable profit will be available against which the asset can be utilised. Deferred tax is recognised for all deductible temporary differences arising from investments in subsidiaries and associates, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
Revenue
The Group provides consultancy services.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer 2. Identifying the performance obligations 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations, and then 5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised at the point of the provision of the service. Revenue is recognised as earned at a point in time on the unconditional supply of these services, which are received and consumed simultaneously by the customer. The Group measures revenues at the fair value of the consideration received or receivable for the provision of consultancy services net of Value Added Tax.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value. The following useful lives are applied:
Computers 5 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset and is recognised in the profit or loss.
Impairment of property, plant and equipment
At each reporting end date, the company reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Financial instruments
Classification and measurement
The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value through profit or loss (FVPL) and those to be held at amortised cost.
Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial recognition. The Group’s policy with regard to financial risk management is set out in Note 21. Generally, the Group does not acquire financial assets for the purpose of selling in the short term.
The Group’s business model is primarily that of “hold to collect” (where assets are held in order to collect contractual cash flows). When the Group enters into derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm commitments or anticipated transactions.
Financial Assets held at amortised cost
The classification applies to debt instruments which are held under a hold to collect business model, and which have cash flows that meet the “solely payments of principal and interest” (SPPI) criteria.
At initial recognition, trade receivables that do not have a significant financing component, are recognised at their transaction price. Other financial assets are initially recognised at fair value plus related transaction costs, they are subsequently measured at amortised costs using the effective interest method. Any gain or loss on derecognition or modification of a financial asset held at amortised cost is recognised in the income statement .
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the income statement.
-- Debt instruments that do not meet the criteria of amortised costs or fair value through other comprehensive income. These receivables are generally held to collect but do not meet the SPPI criteria and as a result must be held at FVPL. Subsequent fair value gains or losses are taken to the income statement. -- Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains or losses and related dividend income are recognised in the income statement. -- Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised in the income statement.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. For trade receivables, where there is no significant financing component, fair value is normally the transaction price.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value with maturities of three months or less from inception.
Impairment of financial assets
A forward-looking expected credit loss (ECL) review is required for: debt instruments measured at amortised costs are held at fair value through other comprehensive income; loan commitments and financial guarantees not measured at fair value through profit or loss; lease receivables and trade receivables that give rise to an unconditional right to consideration.
As permitted by IFRS9, the Company applies the “simplified approach” to trade receivable balances and the “general approach” to all other financial assets. The general approach incorporates a review for any significant increase in counter party credit risk since inception. The ECL reviews including assumptions about the risk of default and expected loss rates. For trade receivables, the assessment takes into account the use of credit enhancements, for example, letters of credit. Impairments for undrawn loan commitments are reflected as a provision.
Financial liabilities
Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised costs.
Convertible bonds
Convertible bonds are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.
Borrowings costs
Interest-bearing borrowings are initially recorded at fair value net of attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between proceeds and redemption value being recognised in the profit or loss over the period of the borrowings on an effective interest basis.
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Provisions, contingent assets and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that 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 year-end date, taking into account the risks and uncertainties surrounding the obligation.
No liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.
Contingent assets are possible assets whose existence will be confirmed by the occurrence or non-occurrence of uncertain future events that are not wholly within the control of the Group. Contingent assets are not recognised, but they are disclosed when it is more likely than not that an inflow of benefits will occur. When the inflow of benefits is virtually certain an asset is recognised.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.
Share capital account represents the nominal value of the shares issued.
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Retained losses include all current and prior period results as disclosed in the statement of comprehensive income.
Other reserves consist of the merger reserve, share option reserve and loan equity reserve.
-- the merger reserve represents the premium on the shares issued less the nominal value of the shares, being the difference between the fair value of the consideration and the nominal value of the shares. -- the share option reserve represents the cumulative amounts charged to the profit or loss in respect of employee share option arrangements where the scheme has not yet been settled by means of an award of shares to an individual. -- the loan equity reserve represents the value of the equity component of the nominal value of the loan notes issued.
Government Grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received, and the group will comply with all attached conditions. Government grants which are revenue in nature are recognised in profit or loss over the period in which the group recognises as expenses the related costs for which the grants are intended to compensate.
Research and development costs
Development costs are recognised as an asset only when all of the following criteria are met:
(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale. (b) its intention to complete the intangible asset and use or sell it. (c) its ability to use or sell the intangible asset. how the intangible asset will generate probable future economic benefits. (d) Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset. (e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. (f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.
The research and development expenditure that does not meet the recognition criteria are not capitalised and are recognised as an expense as incurred, as shown in Note 7.
1. Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below and in other relevant notes in the financial statements.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.
In order to arrive at the fair value of investments a significant amount of judgement and estimation has been adopted by the Directors as detailed in the investments accounting policy. Where these investments are un-listed and there is no readily available market for sale the carrying value is based upon future cash flows and current earnings multiples for which similar entities have been sold. The nature of these assumptions and the estimation uncertainty as a result is outlined in Note 16, along with sensitivities in Note 21.
1. Segment information
In identifying its operating segments, management generally follows the Group's service lines, which represent the main products and services provided by the Group. The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements. The disclosure is based on the information that is presented to the chief operating decision maker, which is considered to be the board of
The Directors are of the opinion that under IFRS 8 - "Operating Segments" there are no identifiable business segments that are subject to risks and returns different to the core business of developing cheaper and faster bitcoin mining. The information reported to the Directors, for the purposes of resource allocation and assessment of performance is based wholly on the overall activities of the Group. Therefore, the Directors have determined that there is only one reportable segment under IFRS 8.
The Group has not generated a material level of income and has no major customers.
1. Staff costs
Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Staff costs during the period including directors comprise: Wages and salaries 217 188 217 188 Social security costs and pension contributions (90) 228 (90) 228 Share options expense 416 1,854 416 1,854 543 2,270 543 2,270
In 2022 the social security costs and pension contributions included a provision relating to the directors national insurance of €210,000. Of this provision, €113,000 was subsequently reversed in 2023 contributing to the credit balance for the year.
1. Directors’ emoluments
2023 2022 €’000 €’000 Aggregate emoluments 142 116 Share options expense 416 1,728 558 1,844
Remuneration of the highest paid Director was €69,000 (2022: €57,000).
There are no retirement benefits accruing to the Directors. Details of directors’ remuneration are included in the Directors’ Report.
1. Expenses by nature
2023 2022 €’000 €’000 Directors’ emoluments 462 1,844 Employee emoluments 99 378 Professional and legal fees 722 509 Audit fees 56 86 Administrative expenditure 201 216 Impairment of assets (excluding investment) 1,527 618 Fundraising fees - 75 Research and development costs 781 821 3,848 4,547
1. Investments in associates
The Group has a 41.17% equity interest in ForCrowd Srl.
Summarised financial information of the Group’s share in this associate is as follows:
2023 2022 €’000 €’000 Loss from continuing operations (59) (69) Impairment - (82) Total comprehensive loss (59) (151) Aggregate carrying amount of the Group’s interests in this associate 7 60
1. Finance (costs)/income
2023 2022 €’000 €’000 (Loss)/gain on derivatives 9 (324) Interest on convertible bonds (320) (325) Bank revaluations 5 - Interest credit on modification of convertible bonds - 9 Other gains or losses - - Interest received 12 6 Bank fees (2) (2) (296) (636)
1. Auditor’s remuneration
2023 2022 €’000 €’000 Group Auditor’s remuneration: Fees payable to the Group’s auditor for the audit of the Company and 56 56 consolidated financial statements: Non audit services: Other services (tax) - - Subsidiary Auditor’s remuneration Other services pursuant to legislation - - 56 56
1. Employee numbers
Group Company 2023 2022 2023 2022 Number Number Number Number The average number of Company’s employees, including directors during the period was as follows: Management and administration 3 4 3 4
1. Taxation
2023 2022 €’000 €’000 Corporation tax - current period (100) (117) Corporation tax - prior period under provision (41) (86) Foreign tax (1) (23) Deferred taxation - - Tax charge for the year (142) (226)
The Group has a potential deferred tax asset arising from unutilised trading losses and management expenses available for carry forward and relief against future taxable profits. The deferred tax asset has not been recognised in the financial statements in accordance with the Group's accounting policy for deferred tax.
2023 2022 The Group's unutilised losses are as follows: €’million €’million Trading losses 4 2 Management expenses 19 19 Non trade loan relationship deficits 2 2 Capital losses 9 8
The standard rate of tax for the current year, based on the
2023 2022 Continuing operations €’000 €’000 Loss for the year before tax (4,348) (5,252) Tax on ordinary activities at standard rate (1,022) (998) Effects of: Expenses not deductible for tax purposes 497 595 R&D enhancement (168) (153) R&D losses surrendered 344 270 R&D Foreign Tax losses surrendered 11 11 Losses brought forward claimed - - Tax losses available for carry forward against future profits 338 275 Total tax payable - - Enhanced R&D expenditure 1,273 804 Total tax repayable – current year 100 117 Corporation tax - prior period under provision 41 86 Foreign tax 1 23 Total tax repayable 142 226
The
1. Earnings per share
The basic earnings per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share is computed using the weighted average number of shares during the period adjusted for the dilutive effect of share options, warrants and convertible loans outstanding during the period.
The loss and weighted average number of shares used in the calculation are set out below:
2023 2022 Weighted Weighted Profit/ Per share Per share (Loss) average no. Profit/ (Loss) average no. amount amount €’000 of shares €’000 of shares Euro Cent Euro Cent 000’s 000’s Basic earnings per share Continuing (4,206) 1,102,309 (0.382) (5,026) 989,497 (0.508) operations Total (4,206) 1,102,309 (0.382) (5,026) 989,497 (0.508) operations Fully diluted earnings per share Continuing (4,424) 1,727,130 (0.256) (5,091) 1,632,694 (0.312) operations Total (4,424) 1,727,130 (0.256) (5,091) 1,632,694 (0.312) operations
1. Property, plant and equipment
Computers Total Group €’000 €’000 Cost At 1 January 2023 275 275 Additions - - At 31 December 2023 275 275 Depreciation and impairment At 1 January 2023 49 49 Depreciation charged in the year 57 57 At 31 December 2023 106 106 Carrying amount At 31 December 2023 169 169 At 31 December 2022 226 226
The tangible fixed assets relate in full to the Group’s IT infrastructure dedicated to the R&D Programme.
1. Intangible assets
Formation Expenses Total Group €’000 €’000 Cost At 1 January 2023 - - Additions 2 2 At 31 December 2023 2 2 Amortisation At 1 January 2023 - - Amortisation charged in the year - - At 31 December 2023 - - Carrying amount At 31 December 2023 2 2 At 31 December 2022 - -
The intangible assets relate in full to formation expenses.
1. Investments
The significant entities for which the Group owns shares, held at
Group Company Net Assets/ Date of Companies Ownership Country Status (Liabilities) latest Treatment €,000 accounts Brainspark Associates 100.00% UK Trading (36,169) 2022 Consolidated Ltd Clear Leisure 2017 100.00% UK Trading (537) 2022 Consolidated Ltd QBT R&D Srl 100.00% Italy Trading (69) 2022 Consolidated Milan Digital Twin 100.00% UK Dormant Nil 2022 Consolidated Ltd London Digital Twin 100.00% UK Dormant Nil 2022 Consolidated Ltd Miner One 100.00% UK Dormant Nil 2022 Consolidated Ltd Clear 100.00% Italy Dormant 10 2014 Not Consolidated Holiday Srl Mediapolis Investment 71.72% Luxembourg Inactive (6,648) 2010 Not Consolidated S.A Sosushi 99.30% Italy In 654 2013 Not Consolidated Company Srl liquidation Fallimento Mediapolis 84.04% Italy Liquidated 1,204 2016 Not Consolidated Srl Sipiem in In Liquidazione 50.17% Italy liquidation 645 2014 Not Consolidated Srl ForCrowd Srl 41.17% Italy Investment (8) 2022 Equity-accounting ClassFinance in 20.00% Italy Investment (104) 2018 Held at fair Liquidazione value Srl PBV Monitor 10.00% Italy Investment 471 2022 Held at fair value Geosim 4.53% Israel Investment (330) 2018 Held at fair Systems value Beni 15.05% Italy Investment 14 2014 Held at fair Immobili Srl value TLT S.P.A 0.25% Italy Investment (2,476) 2016 Held at fair value
The registered office of all
The registered office for QBT R&D Srl is Via Mazzini 38, Rovigo (RO), 45100.
The registered office for Clear Holiday Srl is Viale Francesco Restelli 1/3,
The registered office for Mediapolis Investment S.A is
The registered office for Sosushi Company Srl is Via Parravicini 40, Monza (MB), 20900.
The registered office for Fallimento Mediapolis Srl is Via Friuli 10, Burtolo (TO), 10010.
The registered office for Sipiem in Liquidazione Srl is Via Mazzini 38, Rovigo (RO), 45100.
The registered office for Forcrowd Srl is Via
The registered office for Class Finance Srl is Via Conservaorio 30, 20122,
The registered office for PBV Monitor Srl is Via Matteotti 13, Brebbia (VA), 21020.
The registered office for
The registered office for Beni Immobili Srl is Via Torino 58,
The registered office for TLT SPA is Via Trento 5,
The directors have assessed the group’s interests in other entities on an individual basis and come to the overall conclusions as detailed in the table above. Please see the note narrative for additional information on an entity by entity basis.
This entity is the
This entity is a 100% owned
This entity is a 100% owned
QBT R&D Srl
This entity is a 100% owned subsidiary of the group incorporated in
This entity is a 100% owned
This entity is a 100% owned
Clear Holiday Srl
Clear Holiday Srl is a 100% owned subsidiary of the group incorporated in
Miner
Miner
The most recent accounts available were produced in 2010 and the main asset held by the entity is the investment of 13% of the capital in another former group company, Fallimento Mediapolis Srl, which has been liquidated. This investment is carried at approximately
On
Sosushi Company Srl
Sosushi Company Srl was a 99.3% owned entity incorporated in
Fallimento Mediapolis Srl
Fallimento Mediapolis Srl was an 84.04% equivalent owned entity incorporated in
Sipiem In Liquidazione Srl
Sipiem in Liquidazione Srl, previously Sipiem S.P.A., (“Sipiem”) was a 50.17% owned entity incorporated in
In
In
In
On
While the above matter is currently being assessed by the Company’s legal team, the Company still hold the above Settlement funds, minus the €170,000 paid to the Receiver for the 30% rights. In the meantime, all the parties involved, namely the Receiver, the Sipiem’s statutory auditor’s lawyers and the insurer’s lawyers are being contacted to discuss the contractual implications of the voided Settlement.
The post money valuation at which the Company invested in 2018 was €340,000, which also represented the Company’s valuation of PBV in Pre Covid-19 conditions. The difference between this original value and the current Fair Value is not attributable to a change of fundamentals to the business. Similarly, the progress made since 2020 has not highlighted any significant divergence from the original business plan.
The difference in the valuation is therefore attributable to lower value attributed to the company during the 2022 equity round. The key assumptions underpinning the equity round at the start of 2022 remain applicable.
The Fair Value assessment of PBV Monitor, is directly related to the company’s valuation in future rounds.
The Fair Value of Geosim (€320,000, 2022: €622,000) has been assessed in relation to the last equity round of the company in 2018, in which Quantum Blockchain Technologies’ 533,990 Geosim shares have been valued at
The Fair Value assessment of Geosim is directly related to the company’s valuation in future rounds and to the EUR/USD exchange rate.
Beni Immobili Srl
Beni Immobili Srl is a 15.05% equivalent owned investment in an entity incorporated in
TLT S.P.A
TLT S.P.A is a 0.25% owned investment based in
Carrying value of investments Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 At as 1 January 677 664 65 298 Additions 22 50 22 50 Fair value decrease (303) (72) - (283) Foreign exchange - 35 - - Carrying value at 31 December 396 677 87 65
An amount of €320,000 (2022: €622,000) included within Group investments held for trading is a level 3 investment and represents the fair value of 533,990 shares in
An amount of €76,000 (2022: €55,000) included within Company investments held for trading is a level 3 investment and represents the fair value of a 10% interest in PBV Monitor Srl
(“PBV”).
PBV is an Italian company specialising in the acquisition and dissemination of data for the legal services industry, utilising proprietary market intelligence tools and dedicated search software.
Investments held at cost Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 At as 1 January - - 10 10 Additions - - 1 - Fair value decrease - - - - Foreign exchange - - - - Carrying value at 31 December - - 11 10
The value of the investment at cost represents €10,000 for QBT R&D and €1,000 for BAL which was not previously recognised.
1. Trade and other receivables
Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Trade receivables 14 14 - - Other receivables 3,154 4,537 189 280 Amounts owed by related parties 75 75 757 776 3,243 4,626 946 1,056
Group other receivables includes an amount of €132,000 (2022: €132,000) due in relation to the Fallimento Mediapolis Srl bankruptcy procedure; and an amount of €2,818,000 (2022: €4,037,000) due in relation to the ongoing Sipiem legal claim, which is unsecured, interest free and does not have fixed terms of repayment. The balance also includes an amount of -€112,000 (2022: €0) in CL17 to record the guarantee made against fellow group entity debtors. An intercompany balance of €4,445,000 was fully impaired in the year.
The Directors consider that the carrying value of trade and other receivables approximates to their fair value.
1. Cash and cash equivalents
Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Bank current accounts 2,057 463 2,041 449 2,057 463 2,041 449
The Directors consider the carrying amounts of cash and cash equivalents approximates to their fair value.
1. Trade and other payables
Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Trade payables 85 147 64 122 Other payables 138 183 138 320 Accruals 190 135 188 135 Trade and other payables 413 465 390 577
The Directors consider that the carrying value of trade and other payables approximates to their fair value.
Included within other payables are intercompany balances that are not eliminated on consolidation, PAYE, national insurance and pension liabilities outstanding as at the year end, and unpaid salary balances.
Accruals relate to R&D, consulting and accountancy costs incurred by the Group that had not been invoiced by the year end.
1. Borrowings
Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Zero rate convertible bond 2015 5,202 5,148 5,202 5,148 Zero rate convertible bond 2020 2,249 2,983 2,249 2,983 7,451 8,131 7,451 8,131 Disclosed as: Current borrowings 7,451 - 7,451 - Non-current borrowings - 8,131 - 8,131 7,451 8,131 7,451 8,131
Interest on the bonds are accrued on a monthly basis. Presented in the bonds line item above is the principal amount plus all interest accrued as at
On
During 2014 the Company issued €1,885,400 zero bonds in settlement of £1,563,000 7% bonds (see above). Also €600,000 zero bonds were issued in settlement of a debt of €518,000 and €450,000 bonds were issued for cash realising €412,000 before expenses.
On
On
On
On
On
On
In
Also, with regard to the 2015 Zero Coupon Bond, via a Bondholders’ meeting held on
On
1. Financial instruments
Key Assumptions
The derivative element of the Zero Coupon Bonds 2015 were valued at each year end using the Black Scholes option pricing model. The following assumptions were used at each period end.
Zero Coupon Bonds 2015
2023 2022 Share price 1.575p 1.125p Expected life 1 year 2 years Volatility 146.2% 136% Dividend yield 0% 0% Risk free interest rate 3.46% 3.58% Fair value 0.45p 0.5p
The Group’s financial instruments comprise cash, investments at fair value through profit or loss, investments in equity-accounted associates, trade receivables, trade payables that arise from its operations and borrowings. The main purpose of these financial instruments is to provide finance for the Group’s future investments and day to day operational needs.
The Group does not enter into any derivative transactions such as interest rate swaps or forward foreign exchange contracts, as the Group’s exposure to movements in foreign exchange rates is not considered significant (see foreign currency risk management). The main risks faced by the Group are limited to interest rate risk on surplus cash deposits and liquidity risk associated with raising sufficient funding to meet the operational needs of the business.
The Board reviews and agrees policies for managing these risks and they are summarised below.
FINANCIAL ASSETS BY CATEGORY
The categories of financial assets included in the statement of financial position and the headings in which they are included are as follows:
2023 2022 €’000 €'000 Financial assets: Financial assets held at fair value through profit and loss 396 677 Investments in equity-accounted associates 7 60 Trade and other receivables 3,243 4,284 Cash and cash equivalents 2,057 463 5,703 5,484
FINANCIAL LIABILITIES BY CATEGORY
The categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:
2023 2022 €'000 €'000 Financial liabilities at amortised cost: Trade and other payables 413 465 Provisions 98 210 Borrowings 7,451 8,131 Derivative 459 468 8,421 9,274
Financial instruments measured at fair value:
Level 1 Level 2 Level 3 €’000 €’000 €’000 As at31 December 2023 Investments at fair value through profit or loss - - 396 - - 396 As at31 December 2022 Investments at fair value through profit or loss - - 677 - - 677
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of level 2 and level 3 financial instruments, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below.
___________________________________________________________________________ | | | |Inter – relationship | |Financial |Valuation technique |Significant |between key | |Instruments|used |unobservable inputs|unobservable inputs | | | |(Level 3 only) |and fair value (level| | | | |3 only) | |___________|_____________________|___________________|_____________________| | |Based on issue of | |If loan was | | |shares in the | |considered not to be | | |investments held by |Assessment of |recoverable this | |Investments|the Group and |recoverability of |would result in the | | |directors assessment |loan. |reduction in the fair| | |on the recoverability| |value of the | | |of loans. | |investment. | |___________|_____________________|___________________|_____________________|
The Group has adopted fair value measurements using the IFRS 7 fair value hierarchy.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:
Level 1: valued using quoted prices in active markets for identical assets;
Level 2: valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1;
Level 3: valued by reference to valuation techniques using inputs that are not based on observable markets criteria.
The Level 3 investment refers to an investment in
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through optimisation of the debt and equity balance. The capital structure of the Group consists of debt attributable to convertible bondholders, borrowings, cash and cash equivalents, and equity attributable to equity holders of the Group, comprising issued capital, reserves and retained earnings, all as disclosed in the Statement of Financial Position.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument disclosed in Note 2 to the financial statements.
Financial risk management objectives
The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Group’s risk management is coordinated by the board of directors and focuses on actively securing the Company’s short and medium-term cash flows by raising liquid capital to meet current liability obligations.
Market price risk
The Company’s exposure to market price risk mainly arises from movements in the fair value of its investments held for trading. The Group manages the investment price risk within its long-term investment strategy to manage a diversified exposure to the market. If the investments were to experience a rise or fall of 15% in their fair value, this would result in the Group’s net asset value and statement of comprehensive income increasing or decreasing by €60,000 (2022: €102,000).
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which monitors the Group’s short, medium and long-term funding and liquidity management requirements on an appropriate basis. The Group has adequate cash balances at the reporting date (refer to Note 2 – Basis of preparation and going concern) to sustain the operational existence over the next twelve months. The Group expects to continue securing resources from disposals and realisation of the “Legacy Assets”. Furthermore, the Company expect to be able to start it commercial activity in the coming months, although prudentially, no significant revenues have been included in the short-term financial projections. This is an on-going ongoing process and the directors are confident with their cash flow models.
The following are the undiscounted contractual maturities of financial liabilities:
Carrying Between Less than 1 year Total Amount 1 and 5 years €’000 €’000 €’000 €’000 As at31 December 2023 Trade and other payables 413 413 - 413 Provisions 98 98 - 98 Borrowings 7,451 7,451 - 7,451 Derivative financial instruments 459 459 - 459 8,421 8,421 - 8,421 As at31 December 2022 Trade and other payables 465 465 - 465 Provisions 210 210 - 210 Borrowings 8,131 - 8,131 8,131 Derivative financial instruments 468 - 468 468 9,274 675 8,599 9,274
Management believes that based on the information provided in Note 2 – in the ‘ Basis of preparation ’ and ‘ Going concern ’, that future cash flows from operations will be adequate to support these financial liabilities.
Interest rate risk
The Group’s cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk. The borrowings are at fixed interest rates.
Group Company 2023 2022 2023 2022 €’000 €’000 Fixed rate instruments Financial assets 3,472 5,021 194 222 Financial liabilities 7,830 8,528 7,808 8,503
Change in interest rates will affect the Group’s income statement as follows:
Gain / (loss) Group 2023 2022 €’000 €’000 Euribor +0.5% / -0.5% +10 / -10 +2 / -2
The analysis was applied to cash and cash equivalents based on the assumption that the amount of asset as at the reporting date was available for the whole year.
Foreign currency risk management
The Group undertakes certain transactions denominated in currencies other than Euro, hence exposures to exchange rate fluctuations arise. Amounts due to fulfil contractual obligations of £387,000 (2022: £435,000) are denominated in sterling. An adverse movement in the exchange rate will impact the ultimate amount payable, a 10% increase or decrease in the rate would result in a profit or loss of £39,000 (2022: £44,000). The Group’s functional and presentational currency is the Euro as it is the currency of its main trading environment, and most of the Group’s assets and liabilities are denominated in Euro. The parent company is located in the sterling area.
Credit risk management
The Group’s financial instruments, which are subject to credit risk, are considered to be trade and other receivables. There is a risk that the amount to be received becomes impaired. The Group’s maximum exposure to credit risk is €3,243,000 (2022: €4,626,000) comprising receivables during the period. About 87% (2022: 87%) of total receivables are due from a single company. The ageing profile of trade receivables was:
2023 2022 Total book value Allowance for Total book value Allowance for impairment impairment Group €’000 €’000 €’000 €’000 Current 3,243 - 4,626 - 3,243 - 4,626 - Company Current 946 - 1,056 - 946 - 1,056 -
1. Provisions
Group Company 2023 2022 2023 2022 €’000 €’000 €’000 €’000 Provision for potential payroll tax liability 98 210 98 210 Provisions 98 210 98 210
The above provision relates to a potential tax liability owed on the directors’ remuneration from previous years.
1. Share capital and share premium
Ordinary Deferred Number of ISSUED AND Number of share share Share premium Total FULLY PAID: ordinary deferred capital shares capital €’000 €’000 shares €’000 €’000 At 1 January 945,051,851 199,409,377 2,754 5,467 49,442 57,663 2022 Issue of 52,500,000 - 157 - 1,099 1,256 shares At 31 December 997,551,851 199,409,377 2,911 5,467 50,541 58,919 2022 Issue of 293,761,904 - 841 - 3,624 4,465 shares At 31 December 1,291,313,755 199,409,377 3,752 5,467 54,165 63,384 2023
All ordinary shares carry equal rights.
The deferred shares have restricted rights such that they have no economic value.
1. Share based payments
On
On
On
_____________________________________________________________________________ |Number of Options|Exercise Price|Previous End of Exercise|New End of Exercise| | | |Period |Period | |_________________|______________|________________________|___________________| |2,500,000 |5p |06/05/2024 |25/05/2025 | |_________________|______________|________________________|___________________| |2,500,000 |5p |28/02/2023 |25/05/2025 | |_________________|______________|________________________|___________________| |7,500,000 |5p |31/03/2023 |25/05/2025 | |_________________|______________|________________________|___________________| |5,000,000 |10p |30/06/2023 |25/05/2025 | |_________________|______________|________________________|___________________|
The total share-based payment expense recognised in the income statement for the year ended
The significant inputs to the model in respect of the options granted during the year were as follows:
5p 10p Share price 1.125p - 3.100p 1.175p - 3.050p Expected life 2 months - 3 years 6 months - 3 years Volatility 130% - 137% 130% - 137% Dividend yield 0% 0% Risk free interest rate 0.76% – 4.27% 0.76% - 4.27% Fair value 0.0p – 2.1p 0.0p – 1.7p
The table below discloses the movements in share options during the year.
Number of Number of Exercise Granted Exercised Lapsed Expiry options at options at Price, in the year in the year in the year pence date 1 Jan 2023 31 Dec 2023 105,000,000 105,000,000 5.00 06.05.2026 105,000,000 105,000,000 10.00 06.05.2026 5,000,000 5,000,000 5.00 06.05.2025 5,000,000 5,000,000 10.00 06.05.2025 2,500,000 2,500,000 5.00 25.05.2025 5,000,000 5,000,000 10.00 01.12.2026 2,500,000 2,500,000 5.00 15.12.2024 2,500,000 2,500,000 10.00 15.12.2024 2,500,000 2,500,000 5.00 15.12.2024 2,500,000 2,500,000 5.00 25.05.2025 2,500,000 2,500,000 5.00 25.05.2025 5,000,000 5,000,000 5.00 25.05.2025 5,000,000 5,000,000 10.00 25.05.2025 5,000,000 5,000,000 5.00 22.05.2025 5,000,000 5,000,000 10.00 22.05.2025 5,000,000 5,000,000 5.00 31.10.2023 1,000,000 1,000,000 5.00 25.05.2025 1,000,000 1,000,000 10.00 25.05.2025 5,000,000 5,000,000 10 25.05.2025 265,000,000 7,000,000 5,000,000 267,000,000
On
On
On
The total share-based payment expense recognised in the income statement for the year ended
The significant inputs to the model in respect of the options granted during the prior year were as follows:
5p 10p Share price 1.175p - 3.100p 1.175p - 3.050p Expected life 2 months - 3 years 6 months - 3 years Volatility 130% - 136% 130% - 136% Dividend yield 0% 0% Risk free interest rate 0.76% – 3.58% 0.76% - 3.58% Fair value 0.0p – 2.1p 0.0p – 1.7p
The table below discloses the movements in share options during 2022.
Number of Number of Exercise Granted Exercised Lapsed Expiry options at options at Price, in the year in the year in the year pence date 1 Jan 2022 31 Dec 2022 105,000,000 105,000,000 5.00 06.05.2026 105,000,000 105,000,000 10.00 06.05.2026 10,000,000 10,000,000 5.00 15.08.2022 5,000,000 5,000,000 5.00 06.05.2025 5,000,000 5,000,000 10.00 06.05.2025 2,500,000 2,500,000 5.00 06.05.2024 5,000,000 5,000,000 10.00 01.12.2026 2,500,000 2,500,000 5.00 15.12.2024 2,500,000 2,500,000 10.00 15.12.2024 2,500,000 2,500,000 5.00 15.12.2024 2,500,000 2,500,000 5.00 31.03.2023 2,500,000 2,500,000 5.00 31.03.2023 5,000,000 5,000,000 5.00 31.03.2023 5,000,000 5,000,000 10.00 30.06.2023 5,000,000 5,000,000 5.00 22.05.2025 5,000,000 5,000,000 10.00 22.05.2025 5,000,000 5,000,000 5.00 31.10.2023 237,500,000 37,500,000 10,000,000 265,000,000
1. Other reserves
The Group considers its capital to comprise ordinary share capital, share premium, retained losses and its convertible bonds. In managing its capital, the Group’s primary objective is to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, through new share issues, the Group considers not only their short-term position but also their long-term operational and strategic objectives.
Loan note Share option Capital Total other Merger reserve equity reserve reserve redemption reserves Group reserve €’000 €’000 €’000 €’000 €’000 At 1 January 8,325 462 2,622 - 11,409 2022 Grant of share - - 1,854 - 1,854 options Modification - - - 549 549 of bond At 31 December 8,325 462 4,476 549 13,812 2022 Grant of share - - 416 - 416 options Modification - - - - - of bond At 31 December 8,325 462 4,892 549 14,228 2023
Loan note equity Share option Capital redemption Total other Company reserve reserve reserve reserves €’000 €’000 €’000 €’000 At 1 January 2022 462 2,622 - 3,084 Grant of share - 1,854 - 1,854 options Modification of - - 549 549 bond At 31 December 2022 462 4,476 549 5,487 Grant of share - 416 - 416 options Modification of - - - - bond At 31 December 2023 462 4,892 549 5,903
1. Ultimate controlling party
The Group considers that there is no ultimate controlling party.
1. Related party transactions
Transactions between the company and its subsidiaries, which are related parties have been eliminated on consolidation, but are disclosed where they relate to the parent company. These transactions along with transactions between the company and its investment holdings are disclosed in the table below, with all amounts being presented in Euros and being owed to the Group:
2023 2022 2023 2022 Related party Group Group Company Company Clear Leisure 2017 Limited - - 265,631 255,575 QBT R&D Srl - - 410,881 448,655 Geosim Systems Limited 49,874 49,605 55,386 49,605 ForCrowd Srl 55,000 25,000 55,000 22,500 104,874 74,605 786,898 776,335
During the year,
During the year, QBT R&D Srl made sales totalling €109,000 (2022: €109,000) to
During the year, Infusion 2009 Limited, a company in which F Gardin is a Director, charged
Remuneration of key management personnel
The remuneration of the directors, who are the key personnel of the group, is included in the Directors
Report and within note 6. Under “IAS 24: Related party disclosures”, all their remuneration is in relation to short-term employee benefits.
1. Events after the reporting date
During the first months of 2024, the Company has been involved in the following:
In January the Company reported an extension of the maturity of the €3.5m 2020 Zero Coupon Bond from
In February a meeting was held on
In
In
At the same time, CL17 also reached an agreement with the Sipiem’s receiver, acquiring its right to receive 30% of any sums collected (net of legal and other costs) from the Sipiem litigation, as envisaged in the 2019 claim purchase agreement (through which CL17 acquired the Sipiem litigation) for an amount of €170,000, giving CL17 rights to all funds recovered, namely the €700,000 of the above agreement and the balance amounting to €5.575 million plus interest and augmentation for inflation.
In June, QBT confirmed that the payment of €700,000 had been completed, and that €170,000 has been paid by CL17 to Sipiem’s Receiver with respect to the acquisition by CL17 of the Receiver’s right to receive 30% of any further sums collected in connection with the claim (net of legal fees).
Subsequently, in
the Company still hold the above Settlement funds, minus the €170,000 paid to the Receiver for the 30% rights. In the meantime, all the parties involved, namely the Receiver, the Sipiem’s statutory auditor’s lawyers and the insurer’s lawyers are being contacted to discuss the contractual implications of the voided Settlement.
-ends-