31 January 2024
Quantum Exponential Group
plc
(the 'Company' or
'Quantum Exponential')
Interim Results
Quantum Exponential Group plc (AQUIS: QBIT), a
company focused on investing in quantum technology, is pleased to
announce its unaudited interim results for the six months ending 31
October 2023.
Highlights
·
Investment in Delta g Limited ("Deltag"), a company focused on
gravity sensing hardware and technology.
· Award of
a UK Government DSIT contract
· Opened
European headquarters in Copenhagen.
·
Strengthened industry ties across the UK and Europe by becoming a
member of several quantum technology programmes giving us first
mover advantage in finding viable start-ups.
Ian Pearson,
Chairman, said:
"I am delighted to confirm that we have achieved
our intention of creating an initial portfolio of companies
that we set out in Quantum Exponential's Admission Document at the
time of its admission to trading on the AQSE Growth
Market.
The Board believes the quality of investments made to
date is extremely high, in companies with world leading quantum
technologies and genuinely exponential growth potential.
Through the hard work of a highly talented and
committed executive team, the Company is now positioned to exploit
this progress and move to the next stage of its development.
We are talking to a range of parties who share our
vision and recognise the opportunities that quantum science brings
to fuel advances in AI, medicines and material science.
It is disappointing to say the least that this
progress is not reflected in the Company's share price and I
believe strongly that the market is not currently correctly pricing
the value of the investments made to date together with the
potential of the platform that the Company has created."
Commenting on the
interim results Steven Metcalfe, Chief Executive Officer,
said:
During the period Quantum Exponential has cemented
its status as one of the leading players in the quantum technology
investment landscape with the ability to act as an accelerator and
be the conduit between academia, companies, and government. This
has been backed up by the award of the DSIT (Department of Science,
Innovation and Technology) contract from the UK Government.
We now have seven portfolio companies with our
investment into Delta G, a UK based gravity sensing company spun
out of the Quantum hub at the University of Birmingham.
We now feel that we have a very strong balanced
portfolio across the various verticals of quantum technology, and
with the help of the QE team, they really can prove to be strong,
value driven investments over time.
The opening of our European headquarters in
Copenhagen has proven to be a great strategic move for us, where we
feel there is an incredible quantum ecosystem that will show
Denmark to be a major player as the technology moves forward. We
have continued to grow our relationships within the Danish
community.
Whilst the general economy has been extremely
difficult and companies trading on junior markets are finding it
very difficult from a value perspective, the Company is pursuing
all opportunities that it feels will benefit shareholders in the
long term.
For more information, visit the Company's
website: www.quantumexp.co.uk
or contact:
Steven Metcalfe, Chief Executive
Officer
c/o quantum@stbridespartners.co.uk
Novum Securities (AQSE Corporate
Adviser) Tel: +44 (0)20 7399
9400
David Coffman, George
Duxberry
VSA
Capital (AQSE Corporate
Broker)
Tel: +44 (0)203 005 5000
Peter Mattsson, Simon
Barton
St
Brides Partners Limited (Financial PR)
quantum@stbridespartners.co.uk
Catherine Leftley, Ana Ribeiro,
Isabelle Morris
Investment
Review
We monitor our portfolio regularly and we believe
that all our investees are developing their businesses broadly in
line with the plans they provided us at the time of investment.
Aegiq
Limited
On 30 April 2022, the Company
invested £406,050 in two parts in Aegiq Limited, a
hardware photonics company using quantum technologies to address
the global cybersecurity threat posed by the rise of quantum
computing.
Following the investment, Quantum Exponential held
c.4.06% stake in Aegiq's issued share capital on a fully diluted
basis. Aegiq has raised c. £4m across its investment funding
rounds which has been supplemented by a number of grants.
For more information, visit https://www.aegiq.com/.
Arqit Quantum
Inc.
Prior to listing, the Company secured an option to
acquire 199,993 ordinary shares in Arqit Quantum Inc. Arqit
is a UK-based Company listed on NASDAQ with a market capitalisation
of USD 74M with a share price of $0.44 as at close of business on
31 October 2023.
A global leader in quantum encryption technology,
Arqit has successfully demonstrated a quantum safe communication
channel to secure data transmissions for both UK sensors and IoT as
well as a US manufacturer of military drones.
For more information, visit https://arqit.uk/.
Delta g
Ltd
On 5 July 2023 the Company announced that it had
invested £300,000 as part of a £1,500,000 pre seed funding
round in Delta g Ltd ('Delta g'). a UK based gravity sensing
hardware and technology development company that has developed a
cutting-edge underground imaging system that leverages quantum
technology to measure gravity gradients. The funding round was led
by Science Creates Ventures, with additional investment from
Newable Ventures, Bristol Private Equity Club and angel
investors.
Delta g is a UK based company that has recently spun
out of the UK Quantum Technology Hub Sensors and Timing at the
University of Birmingham. The company is focused on developing a
quantum gravity gradiometer for scanning beneath the earth's
surface for utility mapping, smart cities, smart mining, and
building information modelling (BIM). Its gravity gradiometer has
already received significant performance acclaim, demonstrated
within a paper published in Nature (https://doi.org/10.1038/s41586-021-04315-3),
and has attracted interest from large industrial end users across
many industrial verticals. Its technology will contribute to
effective monitoring of critical national infrastructure and ground
movement from climate change - both in the UK and internationally.
In addition to the equity investment Delta g has secured
significant grant funding via the ISCF Commercialising Quantum
Technologies: feasibility studies round 3. The funding is being
used to develop a commercial demonstrator of the existing research
system, perform trials with industrial end users, and build a
robust roadmap towards manufacturing and commercialisation.
Following the investment, Quantum Exponential holds
153,061 ordinary B shares in Delta g representing approximately
7.8% of Delta g's enlarged issued share capital on a fully diluted
basis.
For more information, visit https://www.delta-g.co.uk/.
Oxford Quantum
Circuits
On 3 Feb 2023 the Company
invested £299,997 into Oxford Quantum Circuits ('OQC'),
one of Europe's leading quantum companies. Quantum
Exponential holds 47,164 of Series A2 shares in OQC representing
0.34% on a fully diluted basis at the date of this funding
round.
Post period end on 27 November 2023 OQC that
SBI Investment, Japan's premier venture capital fund, is leading
its US$100 million Series B fundraise, and the launch of OQC
Toshiko, the world's first enterprise ready quantum computing
platform. The Company will not be participating in the current
funding round.
For more information, visit https://oxfordquantumcircuits.com/.
Siloton
Limited
On 1 March 2022, the Company led a c.£470,000 initial
financing round, investing c.£300,000 into Siloton Limited. The
Company holds 2,752 ordinary shares in Siloton representing 12.79%
of Siloton's enlarged issued share capital.
Siloton is a technology company that uses quantum
techniques and photonic integrated circuits ('PICs') for use in
sub-surface optical scanning devices with applications across
healthcare and non-destructive testing. Siloton has focussed on
advancing the development of a technology called Optical Coherence
Tomography ('OCT') for the assessment of age-related macular
degeneration ('AMD'), a condition that if untreated can lead to
blindness and is estimated to affect approximately 288 million
patients worldwide by 2042.
Since this investment Siloton has been awarded
various grants and awards most notably the Institute of Physics
Business Start-Up Award "for the development of a personal optical
coherence tomography system, capable of saving the NHS half a
billion pounds each year and reducing sight loss caused by
age-related macular degeneration".
Post period end in December 2023 Siloton announced it
was in the process of raising further funds and 50% of its funding
target was committed.
For more information, visit https://www.siloton.com/news.
QLM Technology
Ltd
On 4 August 2022, the Company invested £450,000 as
part of a £12,000,000 Series A funding round in QLM Technology Ltd
('QLM'), a UK-based photonics hardware and technology development
company that has developed a cutting-edge gas imaging camera based
on quantum technology termed a Quantum Gas Imaging Lidar.
Beyond emissions monitoring for the oil and gas
market, the QLM solution is well-suited for use in tracking and
reducing methane emissions in other applications such as in biogas
production, landfills, wastewater treatment plants, and coal
mines.
Following the Investment, Quantum Exponential holds
1,203,208 B Ordinary Shares at a price of £0.374 in QLM
representing 1.6% of QLM's fully diluted share capital.
In November 2023 QLM was awarded the Best
Breakthrough Company in the South-West at The Spectator 2023
Economic Innovator of the Year Awards. In December 2023 QLM started
to deploy their Quantum Gas Lidar for methane emissions monitoring
into Severn Trent Water's wastewater treatment and biogas
network.
For more information, visit https://qlmtec.com.
Universal Quantum
Limited
On 16 May 2022, the Company invested £450,000 through
an Advanced Subscription Agreement ("ASA") in Universal Quantum
Limited ("Universal Quantum/ UQ"), a company focused on building
the world's first million quantum bit ("qubit") quantum computers.
The funds enabled Universal Quantum's to continue to focus on its
integrated Quantum Processing Unit.
UQ continues to build a fully scalable trapped-ion
quantum computer for the German Government. UQ was awarded this
contract, valued at €67m, in November 2022.
In November 2023, the investment was converted to
84,000 Shares in UQ representing 0.507% of UQ's issued share
capital.
For more information, visit https://universalquantum.com.
Stuart Nicol, Chief
Investment Officer
INDEPENDENT REVIEW
REPORT TO QUANTUM EXPONENTIAL GROUP PLC
Conclusion
We have been engaged by the Company to review
the Condensed Consolidated set of financial statements in the
half-yearly financial report for the six months ended 31 October
2023 which comprises the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Changes
in Equity and the Condensed Consolidated Statement of Cash
Flows.
Based on our review, nothing has come to our
attention that causes us to believe that the Condensed set of
Consolidated financial statements in the half-yearly financial
report for the six months ended 31 October 2023 is not prepared, in
all material respects, in accordance with International Accounting
Standard 34, as adopted by the United Kingdom.
Basis for
Conclusion
We conducted our review in accordance with
International Standard on Review Engagements (UK and Ireland) 2410,
''Review of Interim Financial Information Performed by the
Independent Auditor of the Entity'', issued by the Financial
Reporting Council for use in the United Kingdom. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial
statements of the group are prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the United Kingdom. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, ''Interim
Financial Reporting'', as adopted by the United Kingdom
Conclusions
Relating to Going Concern
Based on our review procedures, which are less
extensive than those performed in an audit as described in the
Basis of Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
Directors'
Responsibilities
The half-yearly financial report is the
responsibility of and has been approved by the
directors.
In preparing the condensed set of financial
statements in the half-yearly financial report for the six months
ended 31 October 2023, the directors are responsible for assessing
the Company's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Our
Responsibility
Our responsibility is to express to the Company
a conclusion on the Condensed Consolidated set of financial
statements in the half-yearly financial report based on our review.
Our conclusion, including our Conclusions Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of Our
Report
Our report has been prepared in accordance with
the terms of our engagement to assist the Company in meeting its
responsibilities in respect of half-yearly financial reporting and
for no other purpose. No person is entitled to rely on this report
unless such a person is a person entitled to rely upon this report
by virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
Shipleys LLP
|
Chartered accountants
|
5 Godalming Business Centre
|
Woolsack Way
|
Godalming
Surrey
|
GU7 1XW
30 January 2024
|
Quantum Exponential Group plc
Unaudited Consolidated Statement of Comprehensive
Income
For
the 6 months ended 31 October 2023
|
|
6 months
ended
31 October 2023
|
6 months
ended
31 October 2022
|
|
|
|
|
|
Notes
|
£
|
£
|
|
|
|
|
Revenue
|
|
40,530
|
8,030
|
|
|
|
|
Gross profit
|
|
40,530
|
8,030
|
|
|
|
|
Operating expenses
|
|
(538,165)
|
(335,045)
|
|
|
|
|
Operating loss
|
|
(497,635)
|
(327,015)
|
|
|
|
|
Finance income
|
|
4,603
|
1,431
|
Gain / (Loss) on fair value
adjustments on investments
|
|
(106,634)
|
(506,707)
|
|
|
|
|
|
|
|
|
Loss before tax
|
|
(599,666)
|
(832,291)
|
|
|
|
|
Taxation on operations
|
|
0
|
121,812
|
|
|
|
|
Loss for the period
|
|
(599,666)
|
(710,479)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
|
|
GBP
(0.002)
|
GBP
(0.002)
|
Diluted Earnings Per
Share
|
|
GBP
(0.002)
|
GBP (0.002)
|
|
|
|
|
Quantum Exponential Group plc
Unaudited Consolidated Statement of Financial
Position
As
at 31 October 2023
|
|
At
31 October 2023
|
At
31 October 2022
|
|
Notes
|
£
|
£
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Investments
|
|
2,278,685
|
2,386,805
|
Total non-current assets
|
|
2,278,685
|
2,386,805
|
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
831,101
|
2,482,906
|
Other receivables
|
|
82,566
|
60,615
|
Total current assets
|
|
913,667
|
2,543,521
|
|
|
|
|
Total assets
|
|
3,192,352
|
4,930,326
|
|
|
|
|
Current liabilities
|
|
|
|
Trade payables and other
payables
|
|
(79,200)
|
(82,546)
|
Total current liabilities
|
|
(79,200)
|
(82,546)
|
|
|
|
|
Provision for liabilities
|
|
0
|
0
|
|
|
|
|
Total liabilities
|
|
(79,200)
|
(82,546)
|
|
|
|
|
Net assets
|
|
3,113,152
|
4,847,780
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
|
3,283,750
|
3,283,750
|
Share premium
|
|
2,114,610
|
2,114,610
|
Merger reserve
|
|
(261,810)
|
(261,810)
|
Capital contributions
|
|
199,732
|
199,732
|
Other reserves
|
|
(41,616)
|
(144)
|
Retained Loss
|
|
(2,181,514)
|
(488,358)
|
|
|
|
|
Total equity
|
|
3,113,152
|
4,847,780
|
Quantum Exponential Group plc
Unaudited Consolidated Statement of Cash
Flows
For
the 6 months ended 31 October 2023
|
|
6 months
ended
31 October 2023
|
6 months
ended
31 October 2022
|
|
|
£
|
£
|
|
|
|
|
Operating Profit / (loss) for the
period
|
|
(599,666)
|
(710,479)
|
|
|
|
|
Adjustments for:
|
|
|
|
Interest income
|
|
(4,603)
|
(1,431)
|
Decrease in trade and other
receivables
|
|
(31,241)
|
11,285
|
Increase in trade and other
payables
|
|
(10,088)
|
2,415
|
Provisions
|
|
0
|
(121,812)
|
Net fair value adjustment
loss
|
|
106,633
|
506,707
|
Cash (outflow)/inflow from operating
activities
|
|
(538,965)
|
(313,315)
|
|
|
|
|
Investing activities
|
|
|
|
Purchase of investments
|
|
(300,000)
|
(900,000)
|
Net cash used in investing
activities
|
|
(300,000)
|
(900,000)
|
|
|
|
|
Financing activities
|
|
|
|
Interest income
|
|
4,603
|
1,431
|
Net inflow of cash generated from
financing activities
|
|
4,603
|
1,431
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
(834,362)
|
(1,211,884)
|
Cash and cash equivalents at
beginning of period
|
|
1,665,463
|
3,694,790
|
|
|
|
|
Cash and cash equivalents at end of
period
|
|
831,101
|
2,482,906
|
Quantum Exponential Group plc
Unaudited Consolidated Statement of Changes in
Equity
For
the 6 months ended 31 October 2023
|
|
|
|
|
|
|
|
|
Share
capital
|
Share
premium
|
Merger
reserve
|
Capital
contribution
|
Other
reserves
|
Retained
profits/ (losses)
|
Total
equity
|
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
|
|
|
|
|
|
|
|
Balance at 1 May 2023
|
3,283,750
|
2,114,610
|
(261,810)
|
199,732
|
(41,616)
|
(1,581,848)
|
3,712,818
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
|
(599,666)
|
(599,666)
|
|
|
|
|
|
|
|
|
At 31 October 2023
|
3,283,750
|
2,114,610
|
(261,810)
|
199,732
|
(41,616)
|
(2,181,514)
|
3,113,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the financial statements
For
the 6 months ended 31 October 2023
1.
Accounting Policies
Corporate
information
Quantum Exponential Group Plc is a public limited
company, incorporated and domiciled in England and Wales under the
Companies Act 2006. The address of its registered office is
Fladgate LLP, 16 Great Queen Street, London, United Kingdom, WC2B
5DG. The Company's ordinary shares are traded on the Aquis Stock
Exchange (AQSE), a primary and secondary market for equity and debt
securities. The financial statements of Quantum Exponential Group
plc for the period ended 31 October 2023 were authorised for issue
by the Board on 30 January 2024 and the balance sheets signed on
the Board's behalf on 30 January 2024.
The nature of the Group's operations and its
principal activity is to assemble a portfolio of potential
investments in leading quantum technology companies globally.
The principal accounting policies adopted in the
preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
New or amended Accounting Standards and
Interpretations
The Company has adopted all of the new or amended
Accounting Standards and Interpretations issued by the
International Accounting Standards Board ('IASB') that are
mandatory for the current reporting period.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not been early
adopted. The following Accounting Standard and interpretations are
most relevant to the Company.
Basis of
preparation
These interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the UK.
The consolidated financial statements have been
prepared under the historical cost convention, except for, where
applicable, the revaluation of financial assets and liabilities at
fair value through profit and loss.
The financial statements are presented in Pounds
Sterling (£) which is the functional currency of the Company and
Group.
Basis of
consolidation
The Group financial statements consolidate the
results of Quantum Exponential Group plc and its subsidiary
undertakings.
The financial statements of subsidiaries are prepared
for the same reporting year using consistent accounting
policies.
Subsidiaries are entities controlled by the Group.
Control exists when the Group has the power, directly or
indirectly, to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that are currently exercisable or
convertible are taken into account. The financial information of
subsidiaries is included from the date that control commences until
the date that control ceases. Intra-group balances and
transactions, and any unrealised income expenses arising from
intra-group transactions, are eliminated in preparing the
consolidated financial information.
Critical accounting
estimates
The preparation of the financial statements requires
the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, as disclosed
in note 3.
Going
concern
In determining the basis for preparing the financial
statements, management are required to consider whether the Group
and Company can continue in operational existence for the
foreseeable future, being a period of not less than twelve months
from the date of the approval of the financial statements. The
Directors have prepared forecasts of the Group's and Company's
financial performance over the next twelve months from the date of
this report.
The forecasts include assumptions regarding the
opportunity funnel, growth plans, risks and mitigating actions. The
Board are exploring a number of such opportunities
The Group's forecasts, assumptions and projections,
taking account of sensitivities, support the conclusion that the
Company and the Group have adequate resources to continue in
operational existence for the foreseeable future, a period of not
less than twelve months from the date of this report. The Group and
Company, therefore, continues to adopt the going concern basis in
preparing the financial statements.
Revenue from
contracts with customers
Revenue is recognised at an amount that reflects the
consideration to which the consolidated entity is expected to be
entitled in exchange for transferring services to a customer. For
each contract with a customer, the consolidated entity: identifies
the contract with a customer; identifies the performance
obligations in the contract; determines the transaction price which
takes into account the time value of money; allocates the
transaction price to separate performance obligations on the basis
of the relative standalone selling price of each distinct service
to be delivered; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to
the customer of the service provided.
Other
revenue
Other revenue is recognised when it is received or
when the right to receive payment is established.
Income
tax
The tax expense comprises current and deferred tax.
Tax currently payable, relating to corporation tax, is calculated
on the basis of the tax rates and laws that have been enacted or
substantively enacted as at the reporting date.
Deferred tax is recognised on all timing differences
that have originated but not reversed at the reporting date.
Transactions or events that result in an obligation to pay more tax
in the future or a right to pay less tax in the future give rise to
a deferred tax liability or asset. Timing differences are
differences between taxable profits and total comprehensive income
as stated in the financial statements that arise from the inclusion
of income and expenses in tax assessments in years different from
those in which they are recognised in the financial statements.
Deferred tax is measured using the tax rates and laws
that have been enacted or substantively enacted as at the reporting
date, and that are expected to apply to the reversal of the timing
difference. The tax expense is recognised in the same component of
comprehensive income or equity as the transaction, or other event,
that resulted in the tax expense.
Deferred income tax assets are recognised only to the
extent that, on the basis of all available evidence, it is deemed
probable that there will be suitable taxable profits from which the
future reversal of the underlying timing differences can be
deducted. Current and deferred tax assets and liabilities are
offset only when there is a legally enforceable right to set off
the amounts, and there is the intention either to settle on a net
basis or to realise the asset and settle the liability
simultaneously.
Cash and cash
equivalents
Cash and cash equivalents include cash on hand,
deposits held at call with financial institutions, and other
short-term highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value. An investment with a
maturity of three months or less is normally classified as being
short term. Bank overdrafts are shown within borrowing in current
liabilities.
Trade and other
receivables
Trade receivables are measured at initial recognition
at fair value and are subsequently measured at amortised cost using
the effective interest rate method, less provision for
impairment.
Other receivables are recognised at amortised cost,
less any allowance for expected credit losses.
Current and
non-current classification
Assets and liabilities are presented in the statement
of financial position based on current and non-current
classification.
An asset is classified as current when: it is either
expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the
purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent
unless restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting period. All
other assets are classified as non-current.
A liability is classified as current when: it is
either expected to be settled in the Group's normal operating
cycle; it is held primarily for the purpose of trading; it is due
to be settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other
liabilities are classified as non-current
Investments and
other financial assets
Investments and other financial assets, other than
investments in subsidiaries undertakings, are initially measured at
fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through
profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification.
Classification is determined based on both the business model
within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting
mismatch is being avoided.
Financial assets are derecognised when the rights to
receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering
part or all of a financial asset, its carrying value is written
off.
Investment in subsidiary undertakings are recorded at
cost less any provision for impairment.
Financial assets at
fair value through profit or loss
Financial assets not measured at amortised cost or at
fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically,
such financial assets will be either: (i) held for trading, where
they are acquired for the purpose of selling in the short-term with
an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair
value movements are recognised in profit or loss.
Fair value
measurement
When an asset or liability, financial or
non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal
market, in the most advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-
financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are
classified into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the
measurements. Classifications are reviewed at each reporting date
and transfers between levels are determined based on a reassessment
of the lowest level of input that is significant to the fair value
measurement.
Impairment of
financial assets
The Group recognises a loss allowance for expected
credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income.
The measurement of the loss allowance depends upon the Group's
assessment at the end of each reporting period as to whether the
financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to
obtain.
Impairment of
non-financial assets
Non-financial assets are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair
value less costs of disposal and value-in-use. The value-in-use is
the present value of the estimated future cash flows relating to
the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a
cash-generating unit.
Trade and other
payables
Trade payables are initially measured at fair value
and are subsequently measured at amortised cost using the effective
interest rate method.
Provisions
Provisions are recognised when the Group has a
present (legal or constructive) obligation as a result of a past
event, it is probable the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of
the obligation. The amount recognised as a provision is the best
estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current
pre-tax rote specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a
finance cost.
Employee
benefits
Short-term employee benefits liabilities for wages
and salaries, including non-monetary benefits, annual leave and
long service leave expected to be settled wholly within 12 months
of the reporting date are measured at the amounts expected to be
paid when the liabilities are settled.
Issued
shares
Ordinary shares are classified as equity.
Foreign currency
translation
Monetary assets and liabilities denominated in
foreign currencies are translated into sterling at the rates of
exchange ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the
transaction. All differences are taken to the profit and loss
account.
2.
Critical accounting judgements, estimates and
assumptions
The preparation of the financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial
statements.
Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements,
estimates and assumptions on historical experience and on other
various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The
resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities (refer to the
respective notes) within the next financial year are discussed
below:
Investment
valuation
The Group has a number of investments in
unlisted entities whereby their valuation is determined in whole or
in part using valuation techniques based on assumptions that are
not supported by prices from observable market transactions in the
same instrument and not based on available observable data and
therefore involves a degree of judgement and estimation by
Directors.
Recovery of
deferred tax assets
Deferred tax assets are recognised for
deductible temporary differences only if the Group considers it is
probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Impairment of
non-financial assets other than goodwill and other indefinite life
intangible assets
The Group assesses impairment of non-financial
assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to
the Group and to the particular asset that may lead to impairment.
If an impairment trigger exists, the recoverable amount of the
asset is determined. This involves fair value less costs of
disposal or value-in-use calculations, which incorporate a number
of key estimates and assumptions.
3.
Financial instruments
IFRS 9 requires the Group to classify financial
instruments at fair value using a fair value hierarchy that
reflects the significance of the inputs used in making the
measurement. The fair value hierarchy has the following levels:
·
quoted prices (unadjusted) in active markets for
identical assets or liabilities (Level 1);
·
inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices) (Level 2);
·
inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs)
(Level 3).
Financial instruments classified as level 1
The fair value of financial
instruments traded in active markets is based on quoted market
prices at the end of the reporting period. A market is
regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing
service or regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm's length basis.
The quoted market price used for financial assets held by the Group
is the current bid price. These instruments are included in
Level 1. Instruments included in Level 1 comprise equity
investments classified as trading securities or
available-for-sale
Financial instruments classified as level 2
The fair value of financial
instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined by using valuation
techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity-specific estimates. If all significant
inputs required to fair value an instrument are observable, the
instrument is included in Level 2.
If one or more of the significant
inputs is not based on observable market data, the instrument is
included in Level 3.
Specific valuation techniques used
to value financial instruments include:
·
quoted market prices or dealer quotes for similar
instruments;
·
the fair value of interest rate swaps is
calculated as the present value of the estimated future cash flows
based on observable yield curves;
·
the fair value of forward foreign exchange
contracts is determined using forward exchange rates at the end of
the reporting period, with the resulting value discounted back to
present value;
·
other techniques, such as discounted cash flow
analysis, are used to determine fair value for the remaining
financial instruments.
Financial instruments classified as level 3
The fair value of financial
instruments that are not traded in an active market (for example,
over-the-counter derivatives) and determined by using valuation
techniques. which require significant adjustment based on
unobservable inputs are included in level 3.
The determination of what constitutes observable
requires judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
For financial instruments classified as level 3 the
Group uses a combination of internal and external valuations. Where
management determines an external valuation is appropriate the
group engages with professional service providers. Specific
valuation techniques include:
· Market
approach (utilising EBITDA or Revenue multiples, industry value
benchmarks and available market prices approaches);
· Net asset
approach;
· Income
approach (utilising Discounted Cash Flow, Replacement Cost and Net
Asset approaches);
· Desktop
valuations based on price of a recent transaction when transaction
price/cost is considered indicative of fair value; and
· Actuarial
valuations using Monte Carlo, Black Scholes and adjusted binomial
models.
The following table presents the
Group's assets that are measured at fair value at 31 October
2023:
|
|
|
|
|
Level
1
|
Level
3
|
Total
|
|
£
|
£
|
£
|
Held at fair value
|
|
|
|
At 1 May 2023
|
179,359
|
1,905,959
|
2,085,318
|
|
|
|
|
|
|
|
|
Additions during the
period
|
|
300,000
|
300,000
|
|
|
|
|
FV adjustment
|
(106,634)
|
|
- (106,634)
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
At 31 October 2023
|
72,725
|
2,205,959
|
2,278,684
|
There were no transfers between levels during the
year.
4.Director's transactions
There were no transactions with
Directors during the period.
5.Events after the balance sheet date
There have been no further events
after the reporting date that require adjustment or disclosure in
line with IAS10 events after the reporting period.
6.Ultimate controlling party
The company is quoted on the AQSE
market and there is no single controlling party.
Approval of Interim
Financial Statements
The interim financial statements were approved by the
Board of Directors on 30 January 2024