REG-Quantum Blockchain Technologies Plc: Final Results
30/06/2023 07:15
30 June 2023
Quantum Blockchain Technologies Plc
(“QBT” or “the Company”)
FINAL RESULTS
QBT (AIM: QBT), a research and development company focused on disruptive
Blockchain technologies, is pleased to announce its final results for the year
ended 31 December 2022.
HIGHLIGHTS
* Loss before Tax of €5.2m (FY 2021: €5.4m)
* Net Current Assets of €4.4m (FY 2021: negative €3.9m)
* Sipiem court ruling awarded €6,188,974 in damages (plus interest and
adjustments for inflation) and €85,499 in legal fees to CL17, which at the
date of the Annual Report remain unpaid
POST YEAR END HIGHLIGHTS
* QBT’s algorithm (“Method B”) theoretically increases the rate of
successful Bitcoin mining by 2.6 times
* Method B also theoretically reduces electricity consumption by 4.3% in
Bitcoin mining
* Early-stage work commenced for commercialisation of Bitcoin mining products
The Company’s Annual General Meeting (“AGM”) will be held at Company’s
registered address, 22 Great James Street London WC1N 3ES, at 12.00 pm on
Monday, 24 July 2023.
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.
This announcement contains inside information for the purpose of Article 7 of
the Market Abuse Regulation (EU) 596/2914 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 (“MAR”), and is
disclosed in accordance with the Company’s obligations under Article 17 of
MAR.
For further information please contact:
Quantum Blockchain Technologies
Plc
+39 335 296573
Francesco Gardin, CEO and Executive Chairman
SP Angel Corporate Finance (Nominated Adviser & Broker) +44 (0) 20
3470 0470
Jeff Keating, Kasia Brzozowska
Leander (Financial
PR)
+44 (0) 7795 168 157
Christian Taylor-Wilkinson
About Quantum Blockchain Technologies Plc
QBT (AIM: QBT) is a London Stock Exchange AIM listed Research & Development
and investing company focused on an intensive R&D programme to disrupt the
Blockchain Technologies sector and, which includes, cryptocurrency mining and
other advanced blockchain applications. The primary goal of the R&D programme
is to develop Bitcoin mining tools and techniques, via its technology-driven
approach, which the Company believes will significantly outperform existing
market practices.
CHAIRMAN’S STATEMENT
I am pleased to present the Group’s Final Results for the year ended 31
December 2022. The Group consists of Quantum Blockchain Technologies PLC
(“the Company” or “QBT”), running the Research and Development
(“R&D”) programme and holding the Legacy Assets, and its wholly owned
subsidiary Clear Leisure 2017 Ltd (“CL17”), which is focused on
litigation.
During 2022, the Company continued working on its R&D programme focused on
developing advanced disruptive proprietary mining technology, mainly for
Bitcoin (“BTC”) mining, but also applicable to other crypto currencies,
based on SHA-256 proof of work based blockchain.
During the year under review, the Company continued its R&D programme focused
on the following technologies:
* SHA-256 algorithm and gate level optimisation;
* Quantum programming of SHA-256;
* FPGA and ASIC SHA-256 implementation; and
* Machine Learning (“ML”) driven use of SHA-256.
QBT believes that the strategy of diversifying its R&D approach increases not
only the Company’s chance of achieving potentially disruptive results for
BTC mining, but also developing products and services potentially available
quicker to market during the R&D process. This can minimise “time to
market” risk.
Please see below for further details on the R&D activities.
While the main focus of the Company is the development of BTC mining
technology, the Board also continues to maintain its portfolio of Legacy
Assets remaining from Clear Leisure Plc, as the Company was called (before 7
May 2021). The litigation against Sipiem in Liquidazione SpA (“Sipiem”)
and Sosushi Srl (“Sosushi”) former management teams has been supervised
with care and prudence, while monitoring the formal closing of the Mediapolis
bankruptcy procedure as a final payment (c. €130k) will finally be due to
the Company. In late 2022 CL17 was awarded €6,274,473 in damages plus
interest and provision for inflation (“Award Payment”) in the claim
against Sipiem.
Finally, the Company holds a small portfolio of investments, comprising three
companies: PBV Monitor Srl (“PBV"), an Italian start-up which developed an
online international legal directory, Forcrowd Srl (“Forcrowd”), an
Italian crowdfunding licensed entity in the process of applying for a European
crowdfunding licence and a crowdlending extension of its license, and Geosim
Systems Ltd (“Geosim”), an Israeli company which has developed a
proprietary high resolution 3D mapping technology used to develop city and
airport realistic 3D models.
The Company has continued supporting its investees in pursuing the goal of a
stable growth within their respective markets.
R&D Programme
Each technology area has a dedicated team in charge of the R&D work, reporting
to the entire R&D effort coordinators. Please see below for a description of
each technology area’s approach:
The Machine Learning (“ML”) research group is split into three teams, all
focusing on the SHA-256 algorithm:
* ML#1 group focused on trying to bypass all three SHA-256 rounds involved in
each winning hash search.
* ML#2 group working on “Method A” (as announced on 15 November 2022),
aimed at reducing the SHA-256 search space, compared to the brute force method
used mainly by miners today. Current results of our optimisations compared to
brute force have shown potentially promising results. Further testing is
ongoing.
* ML#3 group applying ML and statistical optimisation to the analysis of the
SHA-256 algorithm, through the development of Method B (as per the 15 November
2022 announcement) basically another oracle, developed for reducing the
SHA-256 search space, but radically different from Method A. Current results
are very encouraging; ML#3 group has shown that the proprietary system
potentially increases the rate of successful Bitcoin mining by 2.6 times
compared to standard Bitcoin mining industry practices, while also reducing
the electricity consumption by 4.3%. Assuming continued successful progress
with testing, the Company believes that this approach has the potential to be
a significant improvement within the Bitcoin mining industry.
The findings of the Machine Learning groups #2 and #3 may represent the
Company’s more expedient commercial route to market. Once the Company
applies the optimisations to currently commercially available ASIC chips it is
hoped that hardware for BTC (and other altcoin) mining performance can be
improved with QBT’s developments.
QBT anticipates filing for patents in connection with the work product of each
of the Machine Leaning groups.
The Quantum Computing team, as announced by the Company on 11 March 2022, has
developed a quantum version of a BTC mining algorithm. This algorithm is
centered on qubit-based quantum computation, using quantum logic gates and
simulated on a reduced-sized SHA-256 algorithm (called “Quantum Mining”).
However, as there are currently no commercially available quantum computers
with sufficient qubits to sustain full SHA-256 computations, the Company has
continued working to refine its Quantum Mining algorithm. To achieve this,
the Company has retained the world-renowned pioneer in quantum computing, Dr.
Lov Kumar Grover. If the Company’s theoretical approach is confirmed
empirically, when powerful enough quantum computers become available, QBT
believes this method will potentially revolutionise the BTC industry.
With regards to the Cryptography team, the current focus is on the core of the
optimisation of the SHA-256 algorithm and gate level implementation. This team
has already delivered the Asic UltraBoost in September 2021 (and currently
under final review by the relevant patent office), the Company’s first
patent application. This has increased mining performance by circa 7%. Further
expected findings by the Cryptography team are anticipated to lead to
additional patent application filings which in some instances are already in
the drafting stage.
The main goal of the FPGA/ASIC Design team is to turn findings from the ML and
the Cryptography teams into efficient architectures, to be tested on FPGA
chips first, then moved into an ASIC version, prior to prototyping before
production.
A basic architecture for the final ASIC chips is available, while a large
number of variants are being tested, before choosing the final configuration
for the first prototype.
The Company’s objective is that the culmination of its R&D programme should
enable it to produce its own more efficient mining chips embedding most, if
not all, of the findings of the entire programme.
The full cost of the R&D programme and related infrastructural investments for
the year under review was approximately €948,000.
Litigations and Legacy Assets
During 2022, the Company continued to deal with its Legacy Assets, which
consist of pending court actions in Italy and investments in PBV, Forcrowd and
Geosim.
As previously announced on 1 November 2022 in relation to CL17’s claim
against the previous management and internal audit committee of Sipiem, the
Venice Court ruled in favour of CL17 and ordered the Sipiem defendants to pay
CL17 the Award Payment amounting to €6,188,974 in damages (exclusive of
interest and adjustments for inflation), and €85,499 in legal fees. The
Company, through CL17, has commenced the process to collect the Award Payment
from the main defendant, which remains, as at the date of the Annual Report,
unpaid.
CL17 also holds the c. €1 million claim against Sosushi’s previous
management in Italy, which is currently continuing via an arbitration process.
The process has, unfortunately, been subject to severe procedural delays
outside of CL17’s control and it is not expected to be concluded in the
short term.
Regarding the parallel claim by Sosushi’s previous management and
shareholders in the English Courts, the Company’s defence has been
successful. The Sosushi claimants discontinued their €1.7 million legal
claim against the Company and were ordered to pay the Company approximately
€77,000 towards legal costs. Further legal costs and damages may still be
awarded to the Company at the conclusion of the case.
During the year under review, the Company raised a total of £1.05 million
pursuant to the exercise of 52,500,000 warrants, in January and March 2022,
issued as part of the placing announced on 22 February 2021.
As announced on 20 December 2022, the Company granted 37,500,000 options to
certain consultants, members of the R&D team and in-house staff, over its new
ordinary shares of 0.25 pence each (“Ordinary Shares”), of which
25,000,000 carry an exercise price at 5p and 12,500,000 at 10p.
With regards to the Company’s bonds, on 6 April 2022, the Company announced
it had renegotiated the date of maturity of the €3.5 million Zero-Coupon
Bond issued in 2020 with the sole bondholder to 15 December 2024.
Additionally, at the Bondholder Meeting held on 21 April 2022, the Company
extended the maturity of the Zero-Coupon Bond to 15 December 2024 and amended
the conversion price from 15 pence to 5 pence. The extension of the maturity
date for both bonds improved the Net Current Asset position of the Group (see
Financial Review below).
Finally, during 2022 the Company unfortunately lost its Non-Executive Director
Reg Eccles, who passed away in August. Following this sad event, the Company
appointed two new Non-Executive Directors, Peter Fuhrman (in September 2022)
and Mark Trafeli (in November 2022).
In conclusion, the Company continues to focus on its novel and innovative R&D
activities, which have so far provided promising results. The Company is now
starting to assess the commercialisation of some of these improvements as they
could potentially have an immediate impact on the BTC mining market.
Financial Review
The Group reported a total comprehensive loss of €5,026,000 for the year
ended 31 December 2022 (2021: €5,396,000) and a loss before tax of
€5,252,000 (2021: €5,449,000). Operating losses for the period were
€4,547,000 (2021: €4,970,000).
Included within administrative expenses are charges relating to the
recognition of share options totalling €1,854,000 (2021: €2,622,000) and
within finance costs are charges for the revaluation of derivatives totalling
€324,000 (2021: €143,000). The movement in these items is dependent on the
volatility of the Company’s share price used for the calculation according
to the relevant accounting standards.
The undiluted Net Asset Value (“NAV”) of the Group decreased by €398,000
in 2022, compared to a decrease of €601,000 in 2021. The Group had Net
Current Assets of €4.4m as at 31 December 2022 (2021: negative €3.9m),
thanks to the rescheduling of the Company’s bonds’ maturity to December
2024.
For more details regarding the Audit Report, please refer to the Basis of
Preparation Section hereafter and to the Audit Report sections in the Annual
Report and Accounts.
Post-Balance Sheet Events
On 15 March 2023, the Company reported that, with regard to the Sipiem legal
claim, the Italian Appeals Court ruled in favour of CL17 thereby allowing it
to seek enforcement of the judgment without having to wait for the outcome of
the appellate proceedings against the main Sipiem defendant who is
individually liable for the full damages payable to CL17. The Appeals Court
did, however, grant the remaining Sipiem defendants’ request to temporarily
enjoin enforcement of the judgment against the members of the internal audit
committee and the main defendant’s family members that are also themselves
defendants in the case.
On 26 May 2023, the Company announced the appointment of Mr Vladimir (Vlad)
Kusznirczuk as Marketing and Business Development Manager, to address business
opportunities with large US and Canadian Bitcoin miners and mining rigs
manufacturers. Mr Kusznirczuk’s main focus is on developing strategic
partnerships and joint ventures with large Bitcoin mining businesses in the US
and Canada and with Bitcoin mining rig manufacturers in the US and China. As
announced the Company issued him 2,000,000 Options as follows:
* 1,000,000 Options exercisable at 5 pence between 1 November 2023 and 25 May
2025; and
* 1,000,000 Options exercisable at 10 pence between 1 November 2023 and 25 May
2025.
Furthermore, on 31 May 2023, the Company issued additional 5,000,000 Options
to existing members of the R&D team, with an exercise price of 10 pence and
exercisable at any time before 25 May 2025.
Additionally, the Company amended the maturity of 12,500,000 Options
exercisable at 5p and 5,000,000 Options exercisable at 10p (most of which had
already expired) to 25 May 2025.
On 1 June 2023, the Company raised £1,000,000 (before expenses) through the
placing of 71,428,571 new Ordinary Shares at a price of 1.4 pence per Placing
Share.
Outlook
The Board remains committed to return value to its stakeholders by:
1. Continuing to focus on its R&D programme, which is providing promising and
consistent results;
2. investing in the technology sector (both in a direct and an indirect
manner);
3. managing the legacy portfolio assets, where positive outcomes are expected
from the Company’s claims; and
4. 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.
Francesco Gardin
Executive Chairman
29 June 2023
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Note 2022 2021
€’000 €’000
Revenue - 9
- 9
Administrative expenses 7 (4,547) (4,985)
Other income - 6
Operating loss (4,547) (4,970)
Share of loss from equity-accounted associates 8 (69) (33)
Finance costs 9 (636) (446)
Loss before tax (5,252) (5,449)
Tax 12 226 53
Loss for the year (5,026) (5,396)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (5,026) (5,396)
Earnings per share:
Basic loss per share (cents) 13 €0.508 €0.621
Diluted loss per share (cents) 13 €0.312 €0.354
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 31 DECEMBER 2022
Notes Group 2022 Group 2021 Company 2022 Company 2021
€’000 €’000 €’000 €’000
Non-current assets
Property, plant and equipment 14 226 164 - -
Financial assets at fair value through profit and loss 15 677 664 115 288
Investments held at cost - - 10 10
Investments in equity-accounted associates 8 60 211 - -
Total non-current assets 963 1,039 125 298
Current assets
Trade and other receivables 16 4,626 4,905 1,056 665
Cash and cash equivalents 17 463 1,039 449 1,035
Total current assets 5,089 5,944 1,505 1700
Total assets 6,052 6,983 1,630 1,998
Current liabilities
Trade and other payables 18 (465) (329) (577) (354)
Borrowings 19 - (8,365) - (8,365)
Derivative financial instruments 20 - (1,113) - (1,113)
Provisions 21 (210) - (210) -
Total current liabilities (675) (9,807) (787) (9,832)
Net current (liabilities)/assets 4,414 (3,863) 718 (8,132)
Total assets less current liabilities 5,377 (2,824) 843 (7,834)
Non-current liabilities
Borrowings 19 (8,131) - (8,131) -
Derivative financial instruments 20 (468) - (468) -
Total non-current liabilities (8,599) - (8,599) -
Total liabilities (9,274) (9,807) (9,386) (9,832)
Net liabilities (3,222) (2,824) (7,756) (7,834)
Equity
Share capital 22 8,378 8,221 8,378 8,221
Share premium account 22 50,541 49,442 50,541 49,442
Other reserves 24 13,812 11,409 5,487 3,084
Retained losses (75,953) (71,896) (72,162) (68,581)
Total equity (3,222) (2,824) (7,756) (7,834)
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 €4,550,000
(2021: loss of €5,517,000).
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Group Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total equity €’000
At 1 January 2021 7,397 47,124 8,787 (65,531) (2,223)
Total present loss and comprehensive loss for the year - - - (5,396) (5,396)
Grants of warrants - - - 1,447 1,447
Exercise of warrants 119 831 - (2,416) (1,466)
Issue of shares 705 1,487 - - 2,192
Grant of share options - - 2,622 - 2,622
At 31 December 2021 8,221 49,442 11,409 (71,896) (2,824)
Total comprehensive loss for the year - - - (5,026) (5,026)
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)
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 23, 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 31 DECEMBER 2022
Company Share capital €’000 Share premium account €’000 Other reserves €’000 Retained losses €’000 Total €’000
At 1 January 2021 7,397 47,124 462 (62,095) (7,112)
Total present loss and comprehensive loss for the year - - - (5,517) (5,517)
Grant of warrants - - - 1,447 1,447
Exercise of warrants 119 831 - (2,416) (1,466)
Issue of shares 705 1,487 - - 2,192
Grant of share options - - 2,622 - 2,622
At 31 December 2021 8,221 49,442 3,084 (68,581) (7,834)
Total comprehensive loss for the year - - - (4,550) (4,550)
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)
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 two reserves, as detailed in Note 23, see below:
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 31 DECEMBER 2022
Note Group 2022 €’000 Group 2021 €’000 Company 2022 €’000 Company 2021 €’000
Cash used in operations
Loss before tax (5,252) (5,449) (4,753) (5,570)
Impairment of investments 15 154 167 154 200
Share of post-tax losses of equity accounted associates 8 69 33 69 -
Non cash foreign exchange movements 15 (35) (41) - -
Finance charges 9 637 305 635 305
Depreciation expense 14 49 - - -
Decrease /(increase) in receivables 16 474 340 (196) 230
(Decrease) /increase in payables 18 346 (5) 433 27
Impairment of intercompany receivables 33 - 12 -
Loss /(gain) on derivatives - 143 - 143
Share based payments 1,854 2,694 1,854 2,694
Net cash outflow from operating activities (1,671) (1,813) (1,792) (1,971)
Cash flows from investing activities
Purchase of investments 15 (50) (54) (50) (64)
Purchase of property, plant and equipment 14 (111) (164) - -
Net cash outflow from investing activities (161) (218) (50) (64)
Cash flows from financing activities
Proceeds from capital issue - 1,951 - 1,951
Proceeds from exercise of warrants 1,256 1,119 1,256 1,119
Net cash (outflow)/inflow from financing activities 1,256 3,070 1,256 3,070
Net (decrease) /increase in cash for the year (576) 1,039 (586) 1,035
Cash and cash equivalents at beginning of year 1,039 - 1,035 -
Cash and cash equivalents at end of year 17 463 1,039 449 1,035
The accounting policies and notes form part of these financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1.General Information
Quantum Blockchain Technologies plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The Company’s ordinary shares are
traded on AIM of the London Stock Exchange. The address of the registered
office is given on the Company Information page. The nature of the Group’s
operations and its principal activities are set out in the Directors’ report
on page 13.
2.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 Quantum Blockchain Technologies plc
have been prepared in accordance with United Kingdom adopted International
Financial Reporting Standards ("UK adopted IFRS") and the parts of Companies
Act 2006 applicable to companies reporting under IFRS.
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 basis of preparation should reflect the requirements for the publication
of non-statutory accounts (s435 Companies Act 2006
(https://www.legislation.gov.uk/ukpga/2006/46/section/435)) so therefore we
would suggest wording is required as follows:
The financial information in this financial results announcement have been
prepared by the directors using the recognition and measurement principles of
United Kingdom adopted International Financial Reporting Standards ("UK
adopted IFRS").
The financial information for the year ended 31 December 2022 do not
constitute the statutory accounts of the company but are extracted from the
audited accounts. The statutory accounts will be delivered to the Registrar of
Companies following the annual general meeting.
The independent auditor’s report on the accounts for the year ended 31
December 2022 was qualified on the basis that they were unable to obtain
sufficient and appropriate audit evidence about the carrying amount of the
investment in GeoSim Systems Limited, as disclosed in note 15 to the accounts,
which had been valued by the directors at €622,000 based on the share price
of another investee that took place 42 months before the year end, rather than
using a valuation at 31 December 2022 based on an appropriate valuation
technique in accordance with IFRS 13 Fair Value Measurement.
Except for the qualification noted above the independent auditor’s on the
accounts for the year ended 31 December 2022 did not contain a statement under
section 498(2) of the Companies Act 2006 or section 498(3).
The independent auditor’s report on the accounts for the year ended 31
December 2022 also drew attention by way of emphasis to the use of the going
concern basis but without qualifying the report in that respect.
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 May 2020) in the current year. This has not had a material impact
on the Group financial statements.
The Group has adopted the amendments to IAS 16 IAS 37 Provisions, Contingent
Liabilities and Contingent Assets (issued in May 2020) in the current year.
This has not had a material impact on the Group financial statements.
Going Concern
The Group’s activities generated a loss of €5,026,000 (2021: loss of
€5,396,000) and had net current assets of €4,414,000 as at 31 December
2022 (2021: net current liabilities of €3,863,000). The Group’s
operational existence is still dependent on the ability to raise further
funding either through an equity placing on AIM, or through other external
sources, to support the on-going working capital requirements.
After making due enquiries, the Directors have formed a judgement that there
is a reasonable expectation that the Group can secure further adequate
resources to continue in operational existence for the foreseeable future and
that adequate arrangements will be in place to enable the settlement of their
financial commitments, as and when they fall due.
For this reason, the Directors continue to adopt the going concern basis in
preparing the financial statements. Whilst there are inherent uncertainties in
relation to future events, and therefore no certainty over the outcome of the
matters described, the Directors consider that, based upon financial
projections and dependant on the success of their efforts to complete these
activities, the Group will be a going concern for the next twelve months. If
it is not possible for the Directors to realise their plans, over which there
is significant uncertainty, the carrying value of the assets of the Group is
likely to be impaired.
Notwithstanding the above, the Directors note the material uncertainty in
relation to the Group being unable to realise its assets and discharge its
liabilities in the normal course of business.
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 January 2020)
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 1 January
2024 and is not yet adopted in the United Kingdom.
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 August 2020)
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 February 2021)
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 1 January
2023 and is not yet adopted in the United Kingdom.
Amendments to IAS 8 Definition of Accounting Estimates (issued in February
2021)
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 1 January
2023 and is not yet adopted in the United Kingdom.
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (issued in May 2021)
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 1 January 2023, with early application permitted and is not yet adopted
in the United Kingdom.
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
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.
Financial instruments
Classification and measurement
The Company 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 Company’s policy with regard to financial risk management
is set out in Note 20. Generally, the Company does not acquire financial
assets for the purpose of selling in the short term.
The Company’s business model is primarily that of “hold to collect”
(where assets are held in order to collect contractual cash flows). When the
Company 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.
(d) how the intangible asset will generate probable future economic benefits. 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 15, along with sensitivities in Note 20.
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 Quantum
Blockchain Technologies plc.
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
2022 €’000 2021 €’000 2022 €’000 2021 €’000
Staff costs during the period including directors comprise:
Wages and salaries 188 555 188 555
Social security costs and pension contributions 228 3 228 3
Share options expense 1,854 2,622 1,854 2,622
2,270 3,180 2,270 3,180
1. Directors’ emoluments
2022 €’000 2021 €’000
Aggregate emoluments 116 525
Share options expense 1,728 2,444
1,844 2,969
Remuneration of the highest paid Director was €57,000 (2021: €327,000).
There are no retirement benefits accruing to the Directors. Details of
directors’ remuneration are included in the Directors’ Report.
1. Expenses by nature
2022 €’000 2021 €’000
Directors’ emoluments 1,844 2,969
Employee emoluments 378 210
Professional and legal fees 509 441
Audit fees 86 50
Administrative expenditure 216 156
Impairment of assets 618 769
Fundraising fees 75 192
Research and development costs 821 198
4,547 4,985
1. Investments in associates
The Group has a 41.17% equity interest in ForCrowd Srl.
Summarised financial information of the Group’ share in this associate is as
follows:
2022 €’000 2021 €’000
Loss from continuing operations (69) (33)
Impairment (82) -
Total comprehensive loss (151) (33)
Aggregate carrying amount of the Group’s interests in this associate 60 211
1. Finance (costs)/income
2022 €’000 2021 €’000
(Loss)/gain on derivatives (324) (143)
Interest on convertible bonds (325) (305)
Interest credit on modification of convertible bonds 9 -
Other gains or losses - (4)
Interest received 6 6
Bank fees (2) -
(636) (446)
1. Auditor’s remuneration
2022 €’000 2021 €’000
Group Auditor’s remuneration:
Fees payable to the Group’s auditor for the audit of the Company and consolidated financial statements: 56 50
Non audit services:
Other services (tax) - -
Subsidiary Auditor’s remuneration
Other services pursuant to legislation - -
56 50
1. Employee numbers
Group Company
2022 Number 2021 Number 2022 Number 2021 Number
The average number of Company’s employees, including directors during the period was as follows:
Management and administration 4 3 4 3
1. Taxation
2022 €’000 2021 €’000
Corporation tax - current period (117) (53)
Corporation tax - prior period underprovision (86) -
Foreign tax (23) -
Deferred taxation - -
Tax charge for the year (226) (53)
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.
The Group's unutilised losses are as follows: 2022 €’million 2021 €’million
Trading losses 2 2
Management expenses 19 19
Non trade loan relationship deficits 2 2
Capital losses 8 8
The standard rate of tax for the current year, based on the UK effective rate
of corporation tax is 19% (2020: 19%). The standard rate of Research and
Development Tax credit is 14.5% of the enhanced R&D expenditure. The actual
rate for the current and previous year varies from the standard rate for
reasons set out in the
Continuing operations 20 22 €’000 2021 €’000
Loss for the year before tax (5,252) (5,449)
Tax on ordinary activities at standard rate (998) (1,035)
Effects of:
Expenses not deductible for tax purposes 595 751
R&D enhancement (153) (39)
R&D losses surrendered 270 70
R&D Foreign Tax losses surrendered 11 -
Losses brought forward claimed - (10)
Tax losses available for carry forward against future profits 275 263
Total tax payable - -
Enhanced R&D expenditure 804 368
Total tax repayable – current year 117 53
Corporation tax - prior period underprovision 86 -
Foreign tax 23 -
Total tax repayable 226 53
The UK government has announced that the corporation tax rate will increase
from 19% to 25% with effect from 1 April 2023.
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
t14he period.
The loss and weighted average number of shares used in the calculation are set
out below:
2022 2021
Profit/ (Loss) €’000 Weighted average no. of shares 000’s Per share amount Euro Cent Profit/ (Loss) €’000 Weighted average no. of shares 000’s Per share amount Euro Cent
Basic earnings per share
Continuing operations (5,026) 989,497 (0.508) (5,396) 869,339 (0.621)
Total operations (5,026) 989,497 (0.508) (5,396) 869,339 (0.621)
Fully diluted earnings per share
Continuing operations (5,091) 1,632,694 (0.312) (5,328) 1,503,440 (0.354)
Total operations (5,091) 1,632,694 (0.312) (5,328) 1,503,440 (0.354)
See note 27 for details of share option transactions and share issues that
have occurred since the end of the reporting period.
1. Property, plant and equipment
Group Computers €’000 Total €’000
Cost
At 1 January 2022 164 164
Additions 111 111
At 31 December 2022 275 275
Depreciation and impairment
At 1 January 2022 - -
Depreciation charged in the year 49 49
At 31 December 2022 49 49
Carrying amount
At 31 December 2022 226 226
At 31 December 2021 164 164
The tangible fixed assets relate in full to the Group’s IT infrastructure
dedicated to the R&D programme.
The Parent Company held no tangible fixed assets during the years ended 31
December 2021 and 2022.
1. Investments
The significant entities for which the Group owns shares, held at 31 December
2022, were as follows:
Group Companies Ownership Country Company Status Net Assets/ (Liabilities) €,000 Date of latest accounts Treatment
Brainspark Associates Ltd 100.00% UK Trading (36,204) 2021 Consolidated
Clear Leisure 2017 Ltd 100.00% UK Trading (96) 2021 Consolidated
QBT R&D Srl 100.00% Italy Trading (26) 2021 Consolidated
Milan Digital Twin Ltd 100.00% UK Dormant Nil 2021 Consolidated
London Digital Twin Ltd 100.00% UK Dormant Nil 2021 Consolidated
Miner One Ltd 100.00% UK Dormant Nil 2021 Consolidated
Clear Holiday Srl 100.00% Italy Dormant 10 2014 Not Consolidated
Mediapolis Investment S.A 71.72% Luxembourg Inactive (6,648) 2010 Not Consolidated
Sosushi Company Srl 99.30% Italy In liquidation 654 2013 Not Consolidated
Fallimento Mediapolis Srl 84.04% Italy Liquidated 1,204 2016 Not Consolidated
Sipiem S.P.A 50.17% Italy In liquidation 645 2014 Not Consolidated
ForCrowd Srl 41.17% Italy Investment (43) 2021 Equity-accounting
ClassFinance in Liquidazione Srl 20.00% Italy Investment (104) 2018 Held at fair value
PBV Monitor 10.00% Italy Investment 471 2021 Held at fair value
Geosim Systems 4.53% Israel Investment (330) 2018 Held at fair value
Beni Immobili Srl 15.05% Italy Investment 14 2014 Held at fair value
TLT S.P.A 0.25% Italy Investment (2,476) 2016 Held at fair value
The registered office of all UK companies is: 22 Great James Street, London,
WC1N 3ES, England.
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,
Milano (MI), 20124.
The registered office for Mediapolis Investment S.A is Rue Val des Bons
Malades 231, 2121, Luxembourg-Kirchberg.
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 SPA is Via Mazzini 38, Rovigo (RO), 45100.
The registered office for Forcrowd Srl is Via Vincenzo Monti 52, Milano (MI),
20123.
The registered office for Class Finance Srl is Via Conservaorio 30, 20122,
Milan.
The registered office for PBV Monitor Srl is Via Matteotti 13, Brebbia (VA),
21020.
The registered office for Geosim Systems Limited is Granit St. Petach-Tikva
4951446, Israel.
The registered office for Beni Immobili Srl is Via Torino 58, Biella (BI),
13900.
The registered office for TLT SPA is Via Trento 5, Biella (BI), 13900.
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
below. Please see the note narrative for additional information on an entity
by entity basis.
Quantum Blockchain Technologies PLC
This entity is the UK based group parent.
Brainspark Associates Limited
This entity is a 100% owned UK incorporated subsidiary of Quantum Blockchain
Technologies PLC and has been included in the consolidation.
Clear Leisure 2017 Limited
This entity is a 100% owned UK incorporated subsidiary of Quantum Blockchain
Technologies PLC and has been included in the consolidation.
QBT R&D Srl
This entity is a 100% owned subsidiary of the group incorporated in Italy and
has been included in the consolidation.
Milan Digital Twin Limited
This entity is a 100% owned UK incorporated subsidiary of Quantum Blockchain
Technologies PLC. This entity only includes unpaid share capital and has not
begun operating. It has been included in the consolidation with an overall
impact of nil.
London Digital Twin Limited
This entity is a 100% owned UK incorporated subsidiary of Quantum Blockchain
Technologies PLC. This entity only includes unpaid share capital and has not
begun operating. It has been included in the consolidation with an overall
impact of nil.
Clear Holiday Srl
Clear Holiday Srl is a 100% owned subsidiary of the group incorporated in
Italy. Although QBT hold all of the shares, they do not have control of the
company. Therefore, this entity has not been consolidated on the basis that
QBT do not have control. The balances held within the company are not with
external third parties and therefore the overall impact on the accounts would
be trivial.
Miner One Limited
Miner One Limited is a 100% owned UK based entity. The entity itself was
initially set up with the hope of transferring certain assets, notably a data
centre located in Serbia into its possession. However, due to disputes with
the previous joint venture partner this did not materialise. In 2021 this
entity remained dormant and did not trade during the year. This entity only
includes unpaid share capital and has not begun operating, it has been
included in the consolidation with an overall impact of nil.
Mediapolis Investment S.A.
Mediapolis Investment S.A. is a 71.72% owned subsidiary incorporated in
Luxembourg. The company itself is inactive and is not trading. Previous
management failed to pay accountants and local directors for the previous six
years and no financial statements have been filed for over seven years.
Although this entity is inactive and
71.72% of the shares are held by the group, there is no active management in
Luxembourg, and this has led to a difficulty in finalizing a liquidation.
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 EUR6.6m and has been impaired to nil in
previous years. Therefore, the non-consolidation of this entity is deemed to
be immaterial to the group.
On 6 May 2021 Mediapolis Investment S.A. had entered a liquidation process and
the Group does not expect any further assets or liabilities to arise from
these proceedings.
Sosushi Company Srl
Sosushi Company Srl was a 99.3% owned entity incorporated in Italy. On 24 June
2021, the Company received notification that Sosushi had been declared
bankrupt. Sosushi has not been consolidated as the fair value has been
determined as nil and all receivables from the company have been fully
impaired. The litigation is held via Clear Leisure 2017.
Fallimento Mediapolis Srl
Fallimento Mediapolis Srl was an 84.04% equivalent owned entity incorporated
in Italy. Quantum Blockchain Technologies Plc held directly 74.67% of the
capital of the company whilst a 13% stake was held via Mediapolis Investment
S.A as noted above. The company was liquidated in 2017 and therefore this is
the date from which control is deemed to have been lost. There is ongoing
bankruptcy litigation however, the investment has been fully impaired.
Therefore, the financial information for Fallimento Mediapolis Srl has not
been consolidated into the group financial statements.
Sipiem S.P.A
Sipiem S.P.A was a 50.17% owned entity incorporated in Italy. The entity had
not been trading for a number of years and was maintained due to ongoing legal
matters with the former directors. The company entered into liquidation in
2015. Therefore, this is the date from which control is deemed to have been
lost. Therefore, the financial information for Sipiem S.P.A has not been
consolidated into the group financial statements. The investment in Sipiem
S.P.A is accounted at fair value through profit or loss. Furthermore, in
August 2022 the company was declared bankrupt by the Court of Rovigo,
following a petition filed by Sipiem’s liquidator with the support of its
main shareholder (Quantum Blockchain Technologies). Sipiem’s bankruptcy does
not impact the Company’s balance sheet, as the litigation is held via Clear
Leisure 2017.
In November 2022, the Venice Court issued its final judgement in respect of
the Company’s legal claim against the previous management in which it ruled
in favour of QBT and ordered the defendants to pay an aggregate amount of
€6,188,974 (plus interest and adjustments for inflation to accrue from
different dates until the date of payment) in damages, plus €85,499 in legal
expenses (together the “Award Payment”). The Award Payment is subject to
tax duties in Italy. It is worth noting that the exact amount of the Award
Payment that will be collected by the Company and the timing of receipt of any
such funds have not yet been finalised.
Eight of the ten defendants have appealed against the Venice Court’s
judgment. The appealing defendants have requested the Venice Court of Appeal
to set aside the Venice’s Court’s judgment, and enjoin the enforceability
of the Award Payment, until the ruling of the appeals. The hearings for the
defendants’ appeals are tentatively set to commence in March 2023. The Court
of Appeal will set a final date for the first hearing in the coming weeks.
ForCrowd Srl
ForCrowd Srl is a 41.17% owned investment of the group incorporated in Italy.
The group has determined that it holds significant influence over this
associate given the voting rights arising from its shareholding. Consequently,
this investment has been categorised in the accounts within "Investments in
equity-accounted associates" and is carried in the accounts at the Group's
share of the associate's net assets, with the Group’s share of the profit or
loss and other comprehensive income of the associate being brought into the
Group's results for the year.
Previously, this investment was categorised in the financial statements within
"Investments" and hence was re-categorised in the year ended 31 December 2021.
ClassFinance in Liquidazione Srl
ClassFinance in Liquidazione Srl is a 20% owned investment of the group
incorporated in Italy. The company was placed into liquidation in 2015. The
investment in ClassFinance in Liquidazione Srl is accounted at fair value
through profit or loss. The fair value is assessed to be nil and fair value
loss has been fully recognised.
1. Investments (continued)
PBV Monitor Srl
PBV Monitor Srl is a 10% owned investment in an entity incorporated in Italy.
The investment has been recognised in the accounts at fair value through
profit or loss. The Fair Value of PBV Monitor (€55,000, 2021: €77,000) has
decreased during the year due to an impairment.
There were additional rounds of equity funding in January and February 2022,
in which the entire post money valuation of the company was €1,429,000, with
Quantum Blockchain Technologies directly holding 10% of such amount.
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.
Geosim Systems Limited
Geosim Systems Limited is a 4.53% owned investment in an entity incorporated
in Israel. The investment has been recognised in the accounts through its fair
value and is held via Brainspark Associates Limited.
The Fair Value of Geosim (€622,000, 2021: €587,000) 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 $1.25
each. The difference in the valuation between 2022 and 2021, attributable to
the variance in the EUR/USD exchange rate.
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 Italy. The shares in this company are held via Sipiem S.P.A.
No fair value is recognised for this investment as the entity has minimal net
assets and the valuation would be trivial to the consolidated financial
statements. Moreover, as the investment is held via Sipiem S.P.A, which is in
liquidation, the investment has not been recognised as an asset.
TLT S.P.A
TLT S.P.A is a 0.25% owned investment based in Italy. No fair value is
recognised for this investment as the entity has a large net liability
position and due to the small shareholding, any potential valuation would be
trivial to the consolidated financial statements. Moreover, as the investment
is held via Sipiem S.P.A, there has been a complete fair value loss and the
investment amount has been derecognised.
Carrying value of investments Group Company
2022 €’000 2021 €’000 2022 €’000 2021 €’000
At as 1 January 664 848 298 434
Additions 50 - 50 64
Fair value decrease (72) (225) (223) (200)
Foreign exchange 35 41 - -
Carrying value at 31 December 677 664 125 298
An amount of €622,000 (2021: €587,000) included within Group investments
held for trading is a level 3 investment and represents the fair value of
533,990 shares in GeoSim Systems Ltd. GeoSim Systems Ltd is an Israeli company
seeking to establish itself as the world leader in building complete and
photorealistic 3D virtual cities and in delivering them through the Internet
for use in local searches, real estate and city planning, homeland security,
tourism and entertainment. Quantum Blockchain Technologies owns 4.53% of
GeoSim Systems Ltd.
An amount of €55,000 (2021: €77,000) 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. Quantum Blockchain Technologies acquired 10% of PBV
in December 2018 and has purchased more shares in January and February 2022 to
maintain their 10% shareholding. As part of the initial investment
agreement, Quantum Blockchain Technologies was granted a seat on the board of
PBV and was appointed as exclusive advisor to PBV regarding the possible sale
of PBV from 1 January 2020 for a period of four years and will be entitled to
a 4% commission fee on the proceeds of any sale.
1. Trade and other receivables
Group Company
2022 €’000 2021 €’000 2022 €’000 2021 €’000
Trade receivables 14 58 - -
Other receivables 4,537 4,769 280 144
Amounts owed by related parties 75 78 776 521
4,626 4,905 1,056 665
Group other receivables includes an amount of €132,000 (2021: €132,000)
due in relation to the Fallimento Mediapolis Srl bankruptcy procedure; and an
amount of €4,037,000 (2021: €4,445,000) due in relation to the ongoing
Sipiem legal claim, which is unsecured, interest free and does not have fixed
terms of repayment.
The Directors consider that the carrying value of trade and other receivables
approximates to their fair value.
1. Cash and cash equivalents
Group Company
2022 €’000 2021 €’000 2022 €’000 2021 €’000
Bank current accounts 463 1,039 449 1,035
463 1,039 449 1,035
The Directors consider the carrying amounts of cash and cash equivalents
approximates to their fair value.
1. Trade and other payables
Group Company
2022 €’000 2021 €’000 2022 €’000 2021 €’000
Trade payables 147 128 122 126
Other payables 183 91 320 91
Accruals 135 110 135 137
Trade and other payables 465 329 577 354
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
2022 €’000 2021 €’000 2022 €’000 2021 €’000
Zero rate convertible bond 2015 5,148 5,100 5,148 5,100
Zero rate convertible bond 2020 2,983 3,265 2,983 3,265
8,131 8,365 8,131 8,365
Disclosed as:
Current borrowings - 8,365 - 8,365
Non-current borrowings 8,131 - 8,131 -
8,131 8,365 8,131 8,365
Interest on the bonds is payable annually on 31 March each year. The bonds at
31 December 2022 include all unpaid interest and interest accrued to that
date.
On 25 March 2013 the Company issued €3,000,000 nominal value of zero rate
convertible bonds at a discount of 22%. The bonds are convertible at 15p per
share and have a redemption date of 15 December 2015.
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 15 December 2015 the bondholders meeting approved the amendments on the
Zero Rate Convertible Bond 2015, originally due on 15 December 2015; Under new
terms the final maturity date of the Bond is 15 December 2017 and the interest
has been reduced from 9.5% to 7%.
On 15 December 2016 the bondholders meeting approved the amendments on the
Zero Rate Convertible Bond 2015, originally due on 15 December 2017; Under new
terms the final maturity date of the Bond is 15 December 2018 and the interest
has been reduced from 7% to 1%.
On 19 June 2018, the holders of its €9.9m Bonds agreed to extend the final
maturity date of the Bonds from 15 December 2018 to 15 December 2022. The
Company is now able to convert the Bonds into new ordinary shares of 0.25p
each.
On 28 December 2018, bonds with a face value of €2,100,000 plus cumulative
interest were converted into 50,992,826 new ordinary shares of 0.25 pence at a
price of 3.76 pence per share.
On 5 October 2020, Eufingest SA agreed to extend the repayment date of all
loans advanced to the company amounting to €3,375,000 and £30,000 to 31
October 2020.
On 9 November 2020 Eufingest SA agreed to convert all outstanding loans and
accrued interest amounting to €3,423,707 into Zero rate convertible bond
2020. The Zero Coupon Bonds 2020 accrue interest at a rate of 2% per annum.
Bondholders can convert at any time up to 15 December 2022 at a conversion
price of £0.01 per share.
In April 2022, QBT agreed with the sole bondholder of the €3.5m 2020 Zero
Coupon Bond to extend the maturity date from December 2022 to December 2024.
Also, with regard to the 2015 Zero Coupon Bond, via a Bondholders’ meeting
held on 21 April 2022, the Company extended the maturity date from 15 December
2022 to 15 December 2024 and amended the conversion price into Company’s new
ordinary shares from 15p to 5p.
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
2022 2021
Share price 1.125p 3.100p
Expected life 2 years 1 year
Volatility 136% 130%
Dividend yield 0% 0%
Risk free interest rate 3.58% 0.76%
Fair value 0.5p 0.4p
1. Financial instruments
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:
2022 2021
€’000 €'000
Financial assets:
Financial assets held at fair value through profit and loss 677 664
Investments in equity-accounted associates 60 211
Trade and other receivables 4,284 4,862
Cash and cash equivalents 463 1,039
5,484 6,776
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:
2022 2021
€'000 €'000
Financial liabilities at amortised cost:
Trade and other payables 465 329
Provisions 210 -
Borrowings 8,131 8,365
Derivative 468 1,113
9,274 9,807
Financial instruments measured at fair value:
Level 1 Level 2 Level 3
€’000 €’000 €’000
As at 31 December 2022
Investments at fair value through profit or loss - - 677
- - 677
As at 31 December 2021
Investments at fair value through profit or loss - - 664
- - 664
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.
Financial Instruments Valuation technique used Significant unobservable inputs (Level 3 only) Inter – relationship between key unobservable inputs and fair value (level 3 only)
Investments Based on issue of shares in the investments held by the Group and directors assessment on the recoverability of loans. Assessment of recoverability of loan. If loan was considered not to be recoverable this would result in the reduction in the fair value of the 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 GeoSim Systems Ltd and PBV
Monitor Srl.
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 €102,000 (2021: €97,000).
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
minimal cash balances at the reporting date (refer to Note 2 – Basis of
preparation and going concern). The Group continues to secure future funding
and cash resources from disposals as and when required in order to meet its
cash requirements. This is an on-going process and the directors are confident
with their cash flow models.
The following are the undiscounted contractual maturities of financial
liabilities:
Carrying Amount Less than 1 year Between 1 and 5 years Total
€’000 €’000 €’000 €’000
As at 31 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
As at 31 December 2021
Trade and other payables 329 329 - 329
Borrowings 8,365 8,365 - 8,365
Derivative financial instruments 1,113 1,113 - 1,113
9,807 9,807 - 9,807
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 and Company manage the interest rate risk associated with the Group
cash assets by ensuring that interest rates are as favourable as possible,
whilst managing the access the Group requires to the funds for working capital
purposes.
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
2022 2021 2022 2021
€’000 €’000
Fixed rate instruments
Financial assets 5,021 4,845 222 605
Financial liabilities 8,528 8,718 8,503 8,743
Change in interest rates will affect the Group’s income statement as
follows:
Gain / (loss)
Group 2022 2021
€’000 €’000
Euribor +0.5% / -0.5% +2 / -2 +5 / -5
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 £435,000 (2021: £208,000) 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 £44,000 (2021: £21,000). 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 €4,626,000 (2021: €4,905,000) comprising receivables during the period.
About 87% (2021: 91%) of total receivables are due from a single company. The
ageing profile of trade receivables was:
2022 2021
Total book value Allowance for impairment Total book value Allowance for impairment
Group €’000 €’000 €’000 €’000
Current 4,626 - 4,905 -
4,626 - 4,905 -
Company
Current 1,056 - 665 -
1,056 - 665 -
1. Provisions
Group Company
2022 €’000 2021 €’000 2022 €’000 2021 €’000
Provision for potential payroll tax liability 210 - 210 -
Provisions 210 - 210 -
The above provision estimates a potential employment tax liability deriving
from consultancy payments to directors between 2015 and 2022.
1. Share capital and share premium
ISSUED AND FULLY PAID: Number of ordinary shares Number of deferred shares Ordinary share capital €’000 Deferred share capital €’000 Share premium €’000 Total €’000
At 1 January 2021 662,371,447 199,409,377 1,930 5,467 47,124 54,521
Issue of shares 282,680,404 - 824 - 2,318 3,142
At 31 December 2021 945,051,851 199,409,377 2,754 5,467 49,442 57,663
Issue of shares 52,500,000 - 157 - 1,099 1,256
At 31 December 2022 997,551,851 199,409,377 2,911 5,467 50,541 58,919
All ordinary shares carry equal rights.
The deferred shares have restricted rights such that they have no economic
value.
1. Share based payments
On 20 December 2022, Peter Fuhrman, a director, was granted options to
subscribe for 2,500,000 new ordinary shares in the Company at an exercise
price of 5 pence per share. The options are exercisable for the period between
12 September 2022 and 15 December 2024. Peter Fuhrman was also granted options
to subscribe for 2,500,000 new ordinary shares in the Company at an exercise
price of 10 pence per share. The options are exercisable for the period
between 12 September 2022 and 15 December 2024.
On 20 December 2022, Mark Trafeli, a director, was granted options to
subscribe for 2,500,000 new ordinary shares in the Company at an exercise
price of 5 pence per share. The options are exercisable for the period between
1 September 2022 and 15 December 2024.
On 20 December 2022, a consultant was granted options to subscribe for
2,500,000 new ordinary shares in the Company at an exercise price of 5 pence
per share. The options are exercisable for the period between 20 December 2022
and 31 March 2023. Another consultant was granted options to subscribe for
2,500,000 new ordinary shares in the Company at an exercise price of 5 pence
per share. The options are exercisable for the period between 20 December 2022
and 31 March 2023. A third consultant was granted options to subscribe for
5,000,000 new ordinary shares in the Company at an exercise price of 5 pence
per share. The options are exercisable for the period between 20 December 2022
and 31 March 2023. The third consultant was also granted options to subscribe
for 5,000,000 new ordinary shares in the Company at an exercise price of 10
pence per share. The options are exercisable for the period between 1 January
2023 and 30 June 2023. A fourth consultant was granted options to subscribe
for 5,000,000 new ordinary shares in the Company at an exercise price of 5
pence per share. The options are exercisable for the period between 20
December 2022 and 22 May 2025. The fourth consultant was also granted options
to subscribe for 5,000,000 new ordinary shares in the Company at an exercise
price of 10 pence per share. The options are exercisable for the period
between 23 May 2023 and 22 May 2025. On 20 December 2022, a fifth consultant
was granted options to subscribe for 5,000,000 new ordinary shares in the
Company at an exercise price of 5 pence per share. The options are exercisable
for the period between 20 December 2022 and 31 October 2023.
The total share-based payment expense recognised in the income statement for
the year ended 31 December 2022 in respect of the share options granted was
€1,854,000 (2021: €2,622,000).
The significant inputs to the model in respect of the options granted during
the 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 the year.
Number of options at 1 Jan 2022 Granted in the year Exercised in the year Lapsed in the year Number of options at 31 Dec 2022 Exercise Price, pence Expiry date
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
On 14 April 2021, Francesco Gardin, a director, was granted options to
subscribe for 100,000,000 new ordinary shares in the Company at an exercise
price of 5 pence per share. The options are exercisable for the period between
6 May 2022 and 6 May 2026. Francesco Gardin was also granted options to
subscribe for 100,000,000 new ordinary shares in the Company at an exercise
price of 10 pence per share. The options are exercisable for the period
between 6 May 2023 and 6 May 2026.
On 2 June 2021, a consultant was granted options to subscribe for 10,000,000
new ordinary shares in the Company at an exercise price of 5 pence per share.
The options are exercisable for the period between 15 May 2022 and 15 August
2022. During the year, these options lapsed.
On 27 September 2021, an employee was granted options to subscribe for
5,000,000 new ordinary shares in the Company at an exercise price of 5 pence
per share. The options are exercisable for the period between 6 May 2022 and 6
May 2025. The same employee was also granted options to subscribe for
5,000,000 new ordinary shares in the Company at an exercise price of 10 pence
per share. The options are exercisable for the period between 6 May 2023 and 6
May 2025. Another employee was granted options to subscribe for 5,000,000 new
ordinary shares in the Company at an exercise price of 5 pence per share. The
options are exercisable for the period between 6 May 2022 and 6 May 2026.
The second employee was also granted options to subscribe for 5,000,000 new
ordinary shares in the Company at an exercise price of 10 pence per share. The
options are exercisable for the period between 6 May 2023 and 6 May 2026. A
third employee was granted options to subscribe for 2,500,000 new ordinary
shares in the Company at an exercise price of 5 pence per share. The options
are exercisable for the period between 6 May 2022 and 6 May 2024.
On 15 December 2021, Reginald Eccles, a director, was granted options to
subscribe for 5,000,000 new ordinary shares in the Company at an exercise
price of 10 pence per share. The options are exercisable for the period
between 1 December 2021 and 1 December 2026.
The total share-based payment expense recognised in the income statement for
the year ended 31 December 2021 in respect of the share options granted was
€2,622,000 (2020: €Nil).
The significant inputs to the model in respect of the options granted during
the year were as follows:
5p 10p
Share price 1.175p - 3.100p 1.175p - 3.050p
Expected life 1 - 3 years 3 years
Volatility 130% 130%
Dividend yield 0% 0%
Risk free interest rate 0.76% 0.76%
Fair value 0.4p – 2.1p 0.5p – 1.7p
The table below discloses the movements in share options during 2021.
Number of options at 1 Jan 2021 Granted in the year Exercised in the year Lapsed in the year Number of options at 31 Dec 2021 Exercise Price, pence Expiry date
- 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
- 237,500,000 - - 237,500,000
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.
Group Merger reserve €’000 Loan note equity reserve €’000 Share option reserve €’000 Capital redemption reserve €’000 Total other reserves €’000
At 1 January 2021 8,325 462 - - 8,787
Grant of share options - - 2,622 - 2,622
At 31 December 2021 8,325 462 2,622 - 11,409
Grant of share options - - 1,854 - 1,854
Modification of bond - - - 549 549
At 31 December 2022 8,325 462 4,476 549 13,812
Company Loan note equity reserve €’000 Share option reserve €’000 Capital redemption reserve €’000 Total other reserves €’000
At 1 January 2021 462 - - 462
Grant of share options - 2,622 - 2,622
At 31 December 2021 462 2,622 - 3,084
Grant of share options - 1,854 - 1,854
Modification of bond - - 549 549
At 31 December 2022 462 4,476 549 5,487
1. Warrants
On 22 February 2021, the Company raised £1,000,000 (before expenses) through
the placing of 100,000,000 Ordinary Shares at a price of 1 pence per share to
an individual investor, Mr John Story. Mr Story was also granted 100,000,000
warrants over 100,000,000 new Ordinary Shares exercisable at a price of 2
pence per Ordinary Shares until 26/02/2023.
In October 2021, QBT issued 17,500,000 new Ordinary Shares at a price of 2
pence per share, following the exercise of 17,500,000 warrants of the
100,000,000 warrants granted to Mr John Story, raising £350,000 (before
expenses).
In December 2021, the Company issued 30,000,000 new Ordinary Shares at a price
of 2 pence per share, following the exercise of 30,000,000 warrants of the
100,000,000 warrants granted to Mr John Story, raising £600,000 (before
expenses).
In January 2022, QBT issued 35,000,000 new Ordinary Shares at a price of 2
pence per share, following the exercise of 35,000,000 warrants of the
100,000,000 warrants granted to Mr John Story, raising £700,000 (before
expenses).
In March 2022, the Company issued 17,500,000 new Ordinary Shares at a price of
2 pence per share, following the exercise of 17,500,000 warrants of the
100,000,000 warrants granted to Mr John Story, raising £350,000 (before
expenses).
At the year-end date, there were no outstanding warrants held by Mr Story.
1. Ultimate controlling party (null)
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:
2022 2021 2022 2021
Related party Group Group Company Company
Clear Leisure 2017 Limited - - 255,575 132,067
QBT R&D Srl - - 448,655 311,389
PBV Monitor Srl - 22,609 - 22,609
Geosim Systems Limited 49,605 55,156 49,605 55,156
ForCrowd Srl 25,000 - 22,500 -
74,605 77,765 776,335 521,221
During the year, Quantum Blockchain Technologies Limited made sales totalling
€10,000 (2021: €4,000) to QBT R&D Srl.
During the year, QBT R&D Srl made sales totalling €109,000 (2021: €28,000)
to Quantum Blockchain Technologies Plc.
During the year, Metals Analysis Limited, a company in which R Eccles was a
Director, charged Quantum Blockchain Technologies Plc €32,000 (2021:
€66,000) for consultancy fees. The amount owed to Metals Analysis Limited at
year end is €21,000 (2021: €3,000).
During the year, Infusion 2009 Limited, a company in which F Gardin is a
Director, charged Quantum Blockchain Technologies Plc €200,000 (2021:
€nil) for consultancy fees as Chief Research Officer. The amount owed to
Infusion 2009 Limited at year end is €34,000 (2021: €nil).
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 2023, the Company has been involved in the
following:
On 15 March the Company reported that, with regard to the Sipiem legal claim,
the Venice Court of Appeals ruled in favour of CL17 thereby allowing it to
seek enforcement of an aggregate amount of €6,188,974 (plus interest and
adjustments for inflation) in damages, plus €85,499 in legal expenses the
“Award Payment” against the main Sipiem defendant, who is an individual
and is liable for the full amount of the Award Payment. The Court of Appeal
did, however, grant the remaining Sipiem defendants’ request to temporarily
enjoin enforcement of the judgment against the members of the internal audit
committee and the main defendant’s family member pending outcome of the
appeal presently before that court.
On 26 May, the Company announced the appointment of Mr Vladimir (Vlad)
Kusznirczuk as Marketing and Business Development Manager, to address business
opportunities with large US and Canadian Bitcoin miners and mining rigs
manufacturers. Mr Kusznirczuk’s main focus is on developing strategic
partnerships and joint ventures with large Bitcoin mining businesses in the US
and Canada and with Bitcoin mining rig manufacturers in the US and China. As
announced the Company issued him 2,000,000 Options as follows:
* 1,000,000 Options exercisable at 5 pence between 1 November 2023 and 25 May
2025; and
* 1,000,000 Options exercisable at 10 pence between 1 November 2023 and 25 May
2025.
On 31 May, the Company announced it issued additional 5,000,000 Options to
existing members of the R&D team, with an exercise price of 10 pence and
exercisable at any time before 25 May 2025.
Additionally, the Company amended the maturity of 12,500,000 Options
exercisable at 5p and 5,000,000 Options exercisable at 10p (most of which had
already expired) to 25 May 2025.
On 1 June, the Company raised £1,000,000 (before expenses) through the
placing of 71,428,571 new ordinary shares of 0.25 pence each in the Company at
a price of 1.4 pence per Placing Share.
-ends-
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