Company Registration No. 03926192
Quantum Blockchain
Technologies PLC
Annual Report and Financial
Statements for the year ended
31 December 2022
Contents
Company Information
Chairman’s statement
Director profiles
Strategic report
Directors’ report
Independent auditor’s report to the members of Quantum Blockchain Technologies Plc
Group statement of comprehensive income
Group and Company statements of financial position
Group statement of changes in equity
Company statement of changes in equity
Group and Company statements of cash flows
Notes to the financial statements
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COMPANY INFORMATION
Directors
Company Secretary
Company number
Registered office
Auditor
Italian Solicitors
UK Solicitors
Nominated Adviser & Broker
Registrar
Francesco Gardin
Peter Fuhrman (appointed 12 September 2022)
Mark Trafeli (appointed 25 November 2022)
Reginald Eccles (deceased 13 August 2022)
James Gordon
03926192 (England and Wales)
22 Great James Street
London
WC1N 3ES
MHA
Statutory Auditor
Chartered Accountants
2 London Wall Place
Barbican
London
EC2Y 5AU
Ferrari Pedeferri Boni
Studio Legale Associato
Via Fatebenefratelli, 22
20121
Milan
Italy
Gordons Partnership LLP
22 Great James Street
London
WC1N 3ES
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Share Registrars Ltd
The Courtyard
17 West Street
Farnham
GU9 7DR
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 the 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 license and a
crowdlending extension of its licence, 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
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CHAIRMAN’S STATEMENT (continued)
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 regard 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 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.
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CHAIRMAN’S STATEMENT (continued)
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.
Post-Balance Sheet Events
On 15 March 2023, the Company reported that, with regards 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:
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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.
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CHAIRMAN’S STATEMENT (continued)
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:
Continuing to focus on its R&D programme, which is providing promising and consistent results;
investing in the technology sector (both in a direct and an indirect manner);
i.
ii.
iii. managing the legacy portfolio assets, where positive outcomes are expected from the Company’s
claims; and
further reduction of the debt position (if and when the conditions are deemed appropriate).
iv.
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
Chairman
29 June 2023
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DIRECTORS’ PROFILES
Francesco Gardin
Chief Executive Officer & Chairman
Francesco Gardin (aged 68), born in Rovigo, Italy, graduated in Theoretical Physics at Padova University in 1979,
before undertaking a UK Government research project at University of Exeter, UK from 1980 to 1982. In 1983,
Francesco founded AISoftw@re SpA to develop and distribute Artificial Intelligence systems within Italy, which
he took public on NASDAQ Europe in 1999 and the Milan Stock Exchange in 2000. He sold the company in 2005
but agreed to remain Non-Executive Chairman until March 2008. When he left, the company employed more
than 1,400 people and had revenues in excess of £70m. In December 2008, he was appointed Executive Director
of London Asia Capital plc, a UK company investing in Asia, he resigned in July 2013. In October 2013 he was
appointed to the board of Pan European Terminals PLC, listed on AIM of the London Stock Exchange. He resigned
in July 2014 following the sale of the company. In December 2014, he co-founded First IPO Capital Ltd, a UK
company aiming at financing IPO costs to companies listing on the London AIM market. During the last twenty
years, he has been a director of almost fifty companies in Italy, UK, USA, Israel, Hong Kong, China, Singapore,
Mauritius and Jersey. From 1984 to 2014, he was a Research Associate Professor at Udine, Milano and Siena
University lecturing in Artificial Intelligence, Theory and Application of Computation, and Virtual Reality. His
academic papers include more than 50 individual and joint publications and three books on the subject of
Artificial Intelligence as editor.
Peter Fuhrman
Non-Executive Director
Peter Fuhrman (aged 64) has extensive experience in High-Technology, Semiconductors, Finance and Investment
industries.
He graduated summa cum laude from Tufts University in 1980 and also holds an M.Phil degree in International
Relations from Cambridge University. He did additional postgraduate studies at Nanjing University, and as a Yale-
in-China Fellow at the Chinese University of Hong Kong.
Peter is currently:
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Chairman and CEO at China First Capital, among China’s older specialist international investment banks in
the technology sector, with deep experience and expertise in China's semiconductor industry, advanced
manufacturing, robotics, precision automation, nano-positioning, photonics and breakthrough energy
technologies, and
Strategic Advisor on advanced technologies and market expansion for CEOs of one of China's largest listed
high-technology manufacturing companies as well as one of Germany's and Europe's largest market-leading
semiconductor technology companies
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He previously was the CEO of Awareness Technologies, a Los Angeles based Cloud-based enterprise security
software company (which was successfully sold in 2008) and, in London, Peter was Head of Europe at Forbes
Inc., publisher of Forbes Magazine, one of the world’s largest and most successful business publications.
Peter is an “Industry Thought Leader” who has been published in The Wall Street Journal, The New York Times,
The Economist, The Financial Times, Bloomberg, CNBC, The Washington Post, China Daily, The South China
Morning Post. He speaks English, Mandarin Chinese and Italian.
Peter has also given guest lectures and has been a speaker on China- and technology-related topics and
innovation at the University of Chicago’s Business School, the University of Michigan Ross School of Business and
Harvard Business School’s global alumni.
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DIRECTORS’ PROFILES (continued)
Mark Michael Trafeli
Non-Executive Director
Mark Trafeli (aged 56) is a lawyer qualified in England and Wales, California and New York. Based in London, he
has extensive expertise in regulation, compliance and corporate governance. He is currently General Counsel for
an enterprise in the online gaming sector with operations in multiple countries and licences from the Gambling
Commission of Great Britain. He also maintains a private law practice that he established in 2008 advising on UK
and USA-related financial services, stock exchange regulation, commercial contracts, M&A, corporate
governance, compliance, and litigation.
Previously, Mark served as General Counsel and Interim Head of Compliance at RJ O’Brien Europe Limited, a
London based FCA regulated clearing firm with multiple exchange memberships and General Counsel to First
World Trader (Pty) Limited, a leading South African global fintech company best known for its Easy Equities
platform.
Mark holds a Bachelor of Arts degree in History and Political Science and a Juris Doctor (JD) in law, both from the
University of Michigan.
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STRATEGIC REPORT
The Directors present their Strategic Report on Quantum Blockchain Technologies plc and its subsidiary
undertakings (“the Group") for the year ended 31 December 2022.
Review of the business and developments during the year
During the year under review the Company provided regular updates to its stakeholders regarding the business.
With regard to the R&D programme:
•
•
•
•
In March 2022, the Company reported that the Quantum Computing R&D team had developed a
quantum version of the BTC mining algorithm, based on Quantum Bit (“qubit”) based quantum
computation, using quantum logic gates.
In March 2022, the Company announced it was working with two independent partners to conduct
verification tests on the final performance of QBT’s prototype ASIC, and that its proprietary IT
infrastructure to support the R&D activities was fully operational.
Further in March 2022, the Company announced that it was working on several patent applications
that were expected to be filed.
In May 2022, the Company announced the Company commenced live experimental BTC mining testing
in real time using two knowledge-based algorithms (called Method A and Method B) developed by the
Machine Learning team.
• Also, in May 2022 the Company reported a significant milestone when it achieved positive results using
a scaled-down quantum version of the SHA256 algorithm.
• Additionally, the Company announced it was working on a second patent for the SHA-256 optimisation
•
whilst exploring extreme silicon energy optimisation techniques.
In November 2022, the Company announced that its Machine Learning and AI teams had obtained
interesting preliminary laboratory results which suggested a statistical improvement of up to 30% over
commercially available ASIC chip-based BTC miners. This was achieved using a machine learning
method, known as Method B. If successful, the goal is to run the algorithms on existing commercial
miners with the aim of improving their performance by replacing the native control software with
QBT's own control software.
• QBT appointed Dr. Rita Pizzi as its Chief Research Officer on 15 November 2022.
Regarding the new Ordinary Shares issued by the Company during the financial year under review:
•
•
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, QBT issued 17,500,000 new Ordinary Shares at a price of 2 pence per share, following
the exercise of the last remaining 17,500,000 warrants of the 100,000,000 warrants granted to Mr
John Story, raising £350,000 (before expenses).
Furthermore, in December, the Company had awarded staff and consultants of the R&D Team the following
share Options:
• Options over 25,000,000 Ordinary Shares exercisable at 5 pence per new Ordinary Share, and
• Options over 12,500,000 Ordinary Shares exercisable at 10 pence per new Ordinary Share
of which, 5,000,000 Options were issued to the Company’s Non-Executive Director Mr Peter Fuhrman,
as follows:
-
-
- Options over 2,500,000 Ordinary Shares exercisable at 5 pence at any time up to 15
December 2024 issued to the Company’s Non-Executive Director Mr Mark Trafeli.
2,500,000 exercisable at 5 pence at any time up to 15 December 2024;
2,500,000 exercisable at 10 pence at any time up to 15 December 2024; and
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STRATEGIC REPORT (continued)
About the Company’s Bond:
•
•
In March 2022, QBT announced the call of a Bondholders Meeting with regards to the 2015 Zero
Coupon Bond (previously 2013 Zero Coupon Bond) to be held on 21 April, to seek bondholders’
approval to extend the maturity date of the bond from December 2022 to December 2024 and change
the conversion price into the Company’s new Ordinary Shares from 15p to 5p. On 21 April, at the
Bondholder’s meeting all resolutions were passed.
In April 2022, QBT also announced it had agreed with MC Strategy S.A. (an Eufingest S.A. demerged
Company), the sole bondholder of the €3.5m 2020 Zero Coupon Bond to extend the maturity date of
from December 2022 to December 2024.
Regarding the Company’s Board of Directors:
• On 16 August 2022, the Company notified with great sadness the death of Mr Reginald Eccles,
•
independent non-executive director of the Company.
Consequently, QBT announced that trading in the Company's Ordinary Shares had been temporarily
suspended from trading on AIM, which was a result of the Company having only one remaining
director.
• On 12 September 2022, the Company announced it had appointed a new independent non-executive
director, Mr Peter Fuhrman. Following this appointment, trading in the Company’s AIM securities
resumed on 13 September.
• On 25 November 2022, the Company announced the appointment of an additional independent non-
executive director, Mr Mark Trafeli.
About the legacy assets:
• Regarding Sipiem in Liquidazione S.p.a., the Company maintained the stakeholders informed in regard
to the two procedural hearings that took place during the year under review in the Venice Court (on
12 January 2022 and on 4 May 2022).
• On 1 November 2022, the Company announced that the Venice Court had ruled in favour of CL17 and
ordered the defendants to pay CL17 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.
• On 1 December 2022, the Company communicated to shareholders that the defendants had appealed
•
the ruling of the Venice Court.
The Company announced that the legal case for a €1.03m claim against the former management of
Sosushi, also held via CL17, was to continue through an arbitration process. The arbitration process
commenced in 2021 and it is being managed by Monza Guild of Accountants. Regrettably, the
arbitration has been subject to severe procedural delays which are out of the Company’s control, and
it is not expected to be concluded in the short term.
• With regards to the Sosushi defence and parallel claim in the English courts, as announced on 2 August
2022, the defence of the claim has been successful and the claimants in the English proceedings have
abandoned the €1.7m claim against the Company and have paid €77,000 towards legal costs sustained
in defence of the claim. Further legal costs and damages may still be awarded to the Company following
a final hearing to assess the Company’s counterclaim for, amongst other things, loss of profit in the
English Courts (which remains ongoing).
Sale of investments
The Company did not dispose of any assets during 2022 (2021: nil).
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STRATEGIC REPORT (continued)
Section 172(1) Statement – Promotion of the Company for the benefit of members as a whole:
The Directors believe they have acted in the way they considered in good faith, that would most likely to promote
the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act
2006, and in doing so have had regard to:
•
•
•
•
•
•
the likely consequences of any decision in the long term;
the need to act fairly between the members of the Company;
the desirability of maintaining the Company’s reputation for high standards of business conduct;
consider the interests of the Company’s employees;
the need to foster the Company’s relationships with suppliers, customers and others; and
the impact of the Company’s operations on the community and the environment.
In order to fulfil their duties under section 172 and promote the success of the Group for the benefit of all its
stakeholders, the directors need to ensure that they not only act in accordance with the legal duties but also
engage with, and have regard for, all its stakeholders when taking decisions. The Group has a number of key
stakeholders that it is committed to maintaining a strong relationship with. Understanding the Group’s
stakeholders and how they and their interests will impact on the strategy and success of the Group over the
long term is a key factor in the decisions that the Board may make.
Shareholders The promotion of the success of the Group is ultimately for the benefit of the Company’s
shareholders who provide the Company’s permanent capital. As a company listed on the AIM Market of the
London Stock Exchange, the Company is responsible for ensuring that it is aware of shareholder needs and
expectations. The Directors attach great importance to maintaining good relationships with all of its shareholders
and interested parties and seeks to ensure that they have access to correct and adequate information in a timely
fashion. The Directors are aware that as stakeholders, its shareholders play a vital role in the fabric of the
Company and therefore regularly engages in dialogue with the Company’s shareholders and is available for
meetings with institutional and major shareholders following the release of the Group’s Annual and Interim
Results. The Directors welcome all shareholders to make contact with the Company and provide any feedback
or comments that they may have, and contact details are available on the Company’s website. The Company’s
Annual General Meeting is also an important opportunity for shareholders to meet and engage with Directors
and put questions to the Company regarding its business, operations and performance.
Employees Our employees are key to the success of the Group and recruiting, retaining and developing our team
is one of the Group’s most important priorities. The Directors expect a high standard of integrity and
accountability from the Group’s employees. In return, they reward and incentivise the staff on the basis of merit,
ability and performance. Employee engagement is a key factor of this performance, and the Directors encourage
an open communication forum amongst all members of staff, aided by the Group’s small size and relatively flat
hierarchical structure. The Directors are committed to promoting diversity and equal opportunities and consider
the Group to be a supportive employer, providing training and development where required.
Investee Companies Engagement with the Group’s portfolio of investee companies is critical to delivering the
Company’s long-term strategy of delivering shareholder return. Whilst the Group does not involve itself in the
day-to-day operations of its investee companies, it does retain formal oversight by being part of the board of
each investee.
Regulatory Bodies Although the Company is not itself directly regulated, it operates within a regulated markets
environment (e.g., AIM rules) and therefore actively engages with various regulatory bodies and advisory firms
to ensure that compliance standards are maintained and that the Company continues to act with the high
standards of business conduct that have established its reputation thus far.
TCFD (Task Force on Climate-related Financial Disclosures) We recognize the importance of climate change as
a material financial risk and opportunity. As part of our commitment to transparency and accountability, we have
aligned our disclosure practices with the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). Our disclosures aim to provide investors and stakeholders with relevant information on our
climate-related risks, opportunities, and performance. By doing so, we seek to support the transition to a low-
carbon and resilient economy while enhancing long-term value for our shareholders.
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STRATEGIC REPORT (continued)
Suppliers and Advisors The Company’s suppliers and advisors are integral to the day to day operation of the
Group. Relationships with suppliers are carefully managed to ensure that the Group is always obtaining value for
money. The Group seeks to ensure that good relationships are maintained with its suppliers and advisors through
regular contact and the prompt payment of invoices.
Other stakeholders and the wider community The Directors are committed to ensuring that none of its activities
have a detrimental impact on the wider community and the environment. The Group actively encourages its
employees to participate in charitable work and community projects.
Decision making and section 172 of the Companies Act 2006 The Group’s primary strategy is to deliver
shareholder value. The key driver of this growth is the investment of the Group’s resources into businesses with
experienced management teams that have excellent growth potential and where the Group can offer its
expertise and add value to. During the year, the Group continued to fund its existing portfolio of investee
companies as well as provide investment into a new investee company. Historically the Group has used funds
from past realisations and external fundraising to fund future opportunities both within its current portfolio and
to new investments.
Board changes
On 22 July 2022, Mr Francesco Gardin was re-elected as Director of the Company.
On 13 August 2022 Reginald Eccles has passed away.
On 12 September 2022, Peter Fuhrman was appointed as Non-Executive Director.
On 25 November 2022, Mark Trafeli was appointed as Non-Executive Director.
Events after the reporting date
During the first months of 2023 the Company has been involved in the following:
With respect to the Company’s R&D programme:
• On 6 January 2023, the Company announced that it had appointed Mr Lov Kumar Grover, an
international expert in the field of Machine Learning to its Machine Learning Research Team, following
the initial studies of the Company on the use of AI techniques (mainly Machine Learning) to speed up
the successful mining of BTC.
• On 18 January 2023, QBT informed its stakeholders that the SHA-256 based optimisations can be
applied not only to bitcoin but to other cryptocurrencies within the Bitcoin “family” deriving from the
two bitcoin’s ‘hard forks’, namely, Bitcoin Cash (“BCH”) and Bitcoin SV (“BSV”).
• On 10 May 2023 the Company announced that QBT’s algorithm, known as Method B, has theoretically
increased the rate of successful bitcoin mining by 2.6 times while reducing the electricity consumption
by 4.3% when compared to standard bitcoin mining industry practices widely used over the same time
period.
With regard to the Sipiem legal claim:
• On 15 March 2023, the Company announced that the Appeals Court in Venice ruled in favour of CL17
thereby allowing it to seek enforcement of the Award Payment against the main Sipiem defendant, who
is individually liable for the full amount of the Award Payment.
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.
•
• As announced CL17 has commenced efforts to collect the Award Payment from the main defendant
immediately. CL17 cannot confirm, at this stage, the exact amount of the Award Payment that will
eventually be collected.
10 | P a g e
STRATEGIC REPORT (continued)
Regarding the Shares and Options on Company’s Shares:
• On 1 June 2023, 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.
• 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.
Principal Risks and Uncertainties
The Group's investments as at 31 December 2022 were all in unlisted entities. As a result, there is no readily
available market for sale in order to arrive at a fair value. The valuation of each investment is appraised on a
regular basis and requires a significant amount of judgment together with reviewing the cash flows and budgets
of the investee company in order to arrive at a fair value.
The Company received a liquidity injection during the year under analysis and during the first 6 months of 2023,
but the Directors consider that the amount will be sufficient to meet operating expenditure over the next 12
months. This is covered further in the Going concern section of this report and Note 2 to the financial statements.
As the Company focuses more on improving existing practices to accelerate bitcoin mining, risks arise in relation
to the development of new solutions and products. These risks arise in regard to developing products to a
marketable stage and eventually bringing to market. The risks are mitigated through the Board’s strong
knowledge of the market and the finished product being a new, innovative addition to the industry.
Key performance indicators (“KPIs”)
The key performance indicators are set out below:
Net asset value
Closing share price
Market capitalisation
Assessment of business risk
31 December
2022
31 December
2021
Change %
(€3,222,000)
(€2,824,000)
14.09
1.125p
3.100p
(63.71)
€12,658,933
€34,840,404
(63.67)
The Board regularly reviews operating and strategic risks. The Group's operating procedures include a system
for reporting financial and non-financial information to the Board including:
•
•
•
•
•
reports from management with a review of the business at each Board meeting, focusing on any new
decisions/risks arising;
reports on the performance of investments;
reports on selection criteria of new investments;
discussion with senior personnel; and
consideration of reports prepared by third parties.
11 | P a g e
STRATEGIC REPORT (continued)
Financial risk management
Details of the Group's financial instruments and its policies with regard to financial risk management are
contained in Note 20 to the financial statements.
Results for the year and dividends
The loss for the year was €5,026,000 (2021: loss of €5,396,000). Since the Group does not have any distributable
reserves, the Directors are not recommending the payment of a dividend.
Going concern
The Group’s activities generated a loss of €5,026,000 (2021: €5,396,000) and had net current assets as at 31
December 2022 of €4,414,000 (2021: net current liabilities of €3,863,000). The Group’s operational existence is
dependent on its 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.
By order of the Board.
Francesco Gardin
Director
29 June 2023
12 | P a g e
DIRECTORS’ REPORT
The Directors present their report together with the audited financial statements for the year ended
31 December 2022.
Principal Activity
The principal activities of the Group are the R&D programme and operating as investing company with a portfolio
of in technology sectors. The main focus of management is to successfully run the R&D programme and release
new products to the market. The management is also pursuing the monetisation of all of the Company’s Legacy
Assets, through selected realisations, court-led recoveries of misappropriated assets and substantial debt-
recovery processes.
Activities in the field of research and development
In the current year, the Company continued an intense in-house Research and Development programme in
respect of advanced proprietary techniques for bitcoin mining, with the primary goal to encounter and exploit
new important efficiencies of the mining process.
Directors
The present members of the Board of Directors together with brief biographies are shown on page 5.
The Board comprised the following directors who served throughout the year and up to the date of this report
save where disclosed otherwise beside their name:
Francesco Gardin
Reginald Eccles (deceased on 13 August 2022)
Peter Fuhrman (appointed on 12 September 2022)
Mark Trafeli (appointed on 25 November 2022)
Qualifying third party indemnity provisions
The Company has made qualifying third-party indemnity provisions for the benefit of its directors during the
year. These provisions remain in force at the reporting date.
Directors’ interests
During the period, some Directors had a material interest in certain contracts of significance to the Company or
any of its subsidiaries. No Director of the Company have any beneficial interests in the shares of its subsidiary
companies.
The interests of the directors who served at the end of the year in the share capital of the Company at 31
December 2022 and 31 December 2021 were as follows:
Directors
(0.25p ordinary shares)
%
(0.25p ordinary shares)
31 December 2022
Holding
31 December 2021
Francesco Gardin
29,284,149
2.94%
29,284,149
The above 29,284,149 Ordinary Shares do not include the 5,000,000 Ordinary Shares that are the subject of the
Sale and Repurchase Agreement between Francesco Gardin and MC Strategies AG, as originally announced on
15 December 2021.
The closing market price of the Quantum Blockchain Technologies Ordinary Shares at 31 December 2022 was
1.13p and the highest and lowest closing prices during the year were 2.95p and 0.02p respectively.
13 | P a g e
DIRECTORS’ REPORT (continued)
Remuneration
Remuneration receivable by each Director during the year was as follows:
Executive Directors
Reginald Eccles
Francesco Gardin
Peter Fuhrman
Mark Michael Trafeli
Total
2022
Board fees
2022
Remuneration
€’000
€’000
32
57
10
17
116
-
-
-
-
-
2022
Total
€’000
32
57
10
17
116
2021
Total
€’000
71
454
-
-
525
None of the Directors had any pension entitlement.
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).
Directors’ interests in share options and warrants
Details of directors’ share options are as follows:
At 1 January
2022
Granted
Exercised
At 31
December
2022
Exercise
date
Date from
which
exercisable
Expiry date
100,000,000
100,000,000
5,000,000
Nil
Nil
Nil
205,000,000
Nil
Nil
Nil
2,500,000
2,500,000
2,500,000
7,500,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
100,000,000
100,000,000
5,000,000
2,500,000
2,500,000
2,500,000
212,500,000
N/A
N/A
N/A
N/A
N/A
N/A
06/05/2022
06/05/2023
01/12/2021
12/09/2022
12/09/2022
01/09/2022
06/05/2026
05/05/2026
01/12/2026
15/12/2024
15/12/2024
15/12/2024
Executive
Directors
Francesco Gardin
Francesco Gardin
Reginald Eccles*
Peter Fuhrman
Peter Fuhrman
Mark Trafeli
Total
*Reginald Eccles’ share options are in the process of being transferred to his estate.
14 | P a g e
DIRECTORS’ REPORT (continued)
Significant shareholders
As at 8th June, the parties who are directly or indirectly interested in 3 percent or more of the nominal value of
the Company’s share capital are as follows:
SHAREHOLDER
Number of Ordinary Shares
HARGREAVES LANSDOWN (NOMINEES) LIMITED
INTERACTIVE INVESTOR SERVICES NOMINEES LIMITED
HSDL NOMINEES LIMITED
EUFINGEST SA
BARCLAYS DIRECT INVESTING NOMINEES LIMITED
LAWSHARE NOMINEES LIMITED
LYNCHWOOD NOMINEES LIMITED
AURORA NOMINEES LIMITED
300,225,768
138,618,491
133,958,215
86,279,102
59,120,173
48,398,509
44,346,640
34,296,677
%
28.1
13.0
12.5
8.1
5.5
4.5
4.1
3.2
Corporate Governance
The Board of Directors is accountable to the Company’s Shareholders for ensuring good corporate governance
and the Directors have agreed (on 27 September 2017) to report under the UK Quoted Companies Alliance
("QCA") Governance Code.
QCA Code Recommendation
Principle 1
Application by the Company
Establish a strategy and business model which
promote long-term value for shareholders
•
•
•
The board must be able to express a shared
view of the company’s purpose, business
model and strategy.
It should go beyond the simple description of
products and corporate structures and set
out how the company intends to deliver
shareholder value in the medium to long-
term.
It should demonstrate that the delivery of
long-term growth is underpinned by a clear
set of values aimed at protecting the
company from unnecessary risk and securing
its long-term future.
Quantum Blockchain Technologies plc is an AIM listed
investing company which has recently realigned its
strategic focus to technology related investments, with
special regard to Quantum computing, Blockchain,
Cryptocurrencies and AI sectors. The Company has
commenced an aggressive R&D and
investment
programme
in the dynamic world of Blockchain
Technology, which includes cryptocurrency mining and
other advanced blockchain applications.
A more detailed explanation of the Company’s strategy
is set out in the preface of the Company’s Annual Reports
and business updates released to the market which are
available on the Company’s website in the Regulatory
News Section.
15 | P a g e
DIRECTORS’ REPORT (continued)
Principle 2
Seek to understand and meet shareholder needs
and expectations
• Directors must develop a good
understanding of the needs and expectations
of all elements of the company’s shareholder
base.
•
The board must manage shareholders’
expectations and should seek to understand
the motivations behind shareholder voting
decisions.
The Company endeavours to maintain a dialogue and
institutional shareholders
keep both private and
informed through its public announcements and its
corporate website.
Shareholders are sent Annual Reports and all
shareholders receive a Notice of the Meeting and are
encouraged to attend the Annual General Meeting.
Members of the Board are in attendance at the Annual
General Meeting and are available to meet shareholders
formally after the meeting to discuss information that is
available in the public domain. The Company will advise
shareholders attending the AGM of the number of proxy
votes lodged for and against each resolution after each
resolution has been dealt with by a show of hands.
In addition, shareholder communication may also be
answered, where possible or appropriate, by the
Company’s Financial PR advisor, Leander PR or the
Company’s Nominated Advisor and Broker, SP Angel
Corporate Finance LLP.
Leander PR is responsible for the public relations of the
Company, which includes assistance in the preparation
of public announcements and liaison with the press.
The Board is responsible for the Company’s public
announcements to the market and where appropriate
takes advice from the Company’s advisors in respect of
their preparation and the Company’s regulatory
requirements.
The Board is responsible for the Company’s public
announcements to the market and where appropriate
takes advice from the Company’s advisors in respect of
their preparation and the Company’s regulatory
requirements.
16 | P a g e
The Directors are aware of the impact the business
activities have on the communities in which the Group's
businesses operate and are very cognisant of the
importance of stakeholders, including but not limited to
shareholders, employees, advisors, business partners,
regulators and the wider society.
The Company holds formal and informal meetings, to
identify both internal and external stakeholders’ needs,
interests, and expectations.
The Board, on a case-by-case basis, will take the decision
to act on feedback from stakeholders.
The Company does not have a policy on charity giving,
given the current size of the Company, but the Board
may from time to time decide to make charitable
donations.
The Company works closely with its advisors to ensure it
meets its listing obligations as well as the social, legal,
religious, and cultural requirements of the countries in
which it operates.
The Company is exposed to a variety of risks that result
from its investing activities. A detailed explanation of the
Board’s management of each risk is outlined in the
Annual Reports. Internal controls are designed to
manage rather than eliminate risk and therefore even
the most effective system cannot provide assurance that
each and every risk, present and future, has been
addressed.
is
responsible
The Board
identification,
assessment and management of such risks. In assessing
the risks, the Board is assisted by the Company’s
advisors.
the
for
DIRECTORS’ REPORT (continued)
Principle 3
Take into account wider stakeholder and social
responsibilities and their implications for long-
term success
•
Long-term success relies upon good relations
with a range of different stakeholder groups
both internal (workforce) and external
(suppliers, customers, regulators and others).
The board needs to identify the company’s
stakeholders and understand their needs,
interests and expectations.
• Where matters that relate to the company’s
impact on society, the communities within
which it operates or the environment have
the potential to affect the company’s ability
to deliver shareholder value over the
medium to long-term, then those matters
must be integrated into the company’s
strategy and business model.
Feedback is an essential part of all control
mechanisms. Systems need to be in place to
solicit, consider and act on feedback from all
stakeholder groups.
•
Principle 4
Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
•
•
The board needs to ensure that the
company’s risk management framework
identifies and addresses all relevant risks in
order to execute and deliver strategy;
companies need to consider their extended
business, including the company’s supply
chain, from key suppliers to end-customer.
Setting strategy includes determining the
extent of exposure to the identified risks that
the company is able to bear and willing to
take (risk tolerance and risk appetite).
17 | P a g e
DIRECTORS’ REPORT (continued)
Principle 5
Maintain the board as a well-functioning,
balanced team led by the chair
•
•
•
•
The board members have a collective
responsibility and legal obligation to promote
the interests of the company, and are
collectively responsible for defining
corporate governance arrangements.
Ultimate responsibility for the quality of, and
approach to, corporate governance lies with
the chair of the board.
The board (and any committees) should be
provided with high quality information in a
timely manner to facilitate proper
assessment of the matters requiring a
decision or insight.
The board should have an appropriate
balance between executive and non-
executive directors and should have at least
two independent non-executive directors.
Independence is a board judgement.
The board should be supported by
committees (e.g. audit, remuneration,
nomination) that have the necessary skills
and knowledge to discharge their duties and
responsibilities effectively.
• Directors must commit the time necessary to
fulfil their roles.
18 | P a g e
Quantum Blockchain Technologies plc’s Board of
Directors is comprised of Prof Francesco Gardin as
Chairman and Chief Executive Officer (“CEO”). Mr Peter
Fuhrman and Mr Mark Trafeli are the independent Non-
executive Directors of the Company, while Mr James
Douglas Gordon acts as Company Secretary.
Directors allocate sufficient time to the Company to
discharge their duties.
Ultimate responsibility for the quality of, and approach
to, corporate governance lies with the Chair of the
Board.
The Board is aware that the QCA Corporate Governance
Code advises that, save in exceptional circumstances, the
Chairman should not also fulfil the role of Executive
Director. Given the current size and stage of the
Company, alongside Prof Gardin’s knowledge of past
and present complex legal matters impacting on the
Company, the Board believes that this combined role is
currently appropriate. This, however, will be kept under
review as the Company develops.
The shareholders are aware of these circumstances and
have not opposed the re-election of the Board at the
Annual General Meetings.
In addition, there is a regular dialogue between the
Directors and the Company Secretary to ensure every
decision is correctly assessed and properly balanced.
The Board is also supported by a number of committees
including the Audit Committee and the Remuneration
Committee.
The Audit Committee is composed of Mr Paul Howarth
(external independent Chairman of the Committee) and
Mr Peter Fuhrman (independent non-executive director).
The Remuneration Committee is composed of Mr Paul
independent Chairman of the
Howarth
Committee) and Mr Peter Fuhrman (independent non-
executive director).
(external
company, Quantum
Additionally, as a holding
Blockchain Technologies is supported by the Boards and
independent Directors
operating
of
companies.
individual
DIRECTORS’ REPORT (continued)
Principle 6
Ensure that between them the directors have the
necessary up-to-date experience, skills and
capabilities
Biographies and expertise of the Directors are available
on the Company’s website (in the Board of Directors
section) and within the Annual Report.
•
•
The board must have an appropriate balance
of sector, financial and public markets skills
and experience, as well as an appropriate
balance of personal qualities and capabilities.
The board should understand and challenge
its own diversity, including gender balance,
as part of its composition.
The board should not be dominated by one
person or a group of people. Strong personal
bonds can be important but can also divide a
board.
• As companies evolve, the mix of skills and
experience required on the board will
change, and board composition will need to
evolve to reflect this change.
For matters relating to the Company Law, the Company
depends upon the legal expertise of its legal advisers.
Where there are issues that exceed the expertise of the
Directors, the Company utilises external advisors.
The Company has engaged several law firms, in Italy and
in the UK, to advise in respect of the legal matters related
to the claims the Company has pursued since the
appointment of the current Chairman in July 2015.
The Directors’ background and experience guarantee
they can maintain their skillset up-to-date. Prof
Francesco Gardin has maintained close connections with
his former colleagues at Udine, Milan and Siena
Universities, where he lectured for 30 years, regularly
attends global technology and technology-related
conferences and is part of a network of advisors, CEOs
and CFOs, of quoted and unquoted companies around
the world, he meets regularly. Prior to his passing in
August 2022, Mr Reginald Eccles was a long-standing
member of the Institute of Directors, through which he
maintained access
to outstanding advice and
information. He was also a Freeman of a City Livery
Company and a Freeman of the City of London, in which
roles he continuously met with entrepreneurs and
businessmen. Mr Fuhrman has over twenty years of
experience and expertise working as an investor and
strategic partner in the global semiconductor industry, in
Europe, the USA and for the last +10 years in China. He
has a large and diverse set of senior-level contacts in the
high-technology industry.
Mr Trafeli remains a practising solicitor and not only
draws upon his decades of experience working in highly
regulated markets, but also his work as a litigator. He
maintains worldwide global network of current and
former colleagues.
19 | P a g e
The Board considers the evaluation process is best
carried out internally given the Company’s current size,
However, the Board will keep this under review and may
consider independent external evaluation reviews in due
course as the Company grows.
The Independent Non-Executive Director Mr Fuhrman is
a member of the Remuneration Committee, which is
responsible for assessing and for evaluating the
effectiveness of the Executive Director
(including
determination of any annual bonus) by reference to the
performance of the Company. This review takes place
every six months.
The Company does not consider it necessary at the
current time to have a Nominations Committee and the
Board as a whole is responsible for Board and senior
management nominations. The merits of constituting a
separate Nominations Committee will be kept under
review. The Board continues to monitor and evolves the
Company’s corporate governance structures and
processes, and maintains that these will evolve over
time, in line with the Company’s growth and
development.
The Board meets periodically and is regularly updated by
the Executive Director.
The Board approved a succession plan, with the
appointment of new key figures in the Company.
The Board recognises that a corporate culture based on
sound ethical values and behaviours is an asset and
provides
competitive advantages. The Company
operates in different sectors and markets and is mindful
that respect of individual cultures is critical to corporate
success.
The Company endeavours to conduct its business in an
ethical, professional and responsible manner, treating its
employees, business partners and wider stakeholders
with equal courtesy and respect at all times.
DIRECTORS’ REPORT (continued)
Principle 7
Evaluate board performance based on clear and
relevant
continuous
improvement
objectives,
seeking
•
•
The board should regularly review the
effectiveness of its performance as a unit, as
well as that of its committees and the
individual directors.
The board performance review may be
carried out internally or, ideally, externally
facilitated from time to time. The review
should identify development or mentoring
needs of individual directors or the wider
senior management team.
It is healthy for membership of the board to
be periodically refreshed. Succession
planning is a vital task for boards. No
member of the board should become
indispensable.
Principle 8
Promote a corporate culture that is based on
ethical values and behaviours
•
•
•
The board should embody and promote a
corporate culture that is based on sound
ethical values and behaviours and use it as an
asset and a source of competitive advantage.
The policy set by the board should be visible
in the actions and decisions of the chief
executive and the rest of the management
team. Corporate values should guide the
objectives and strategy of the company.
The culture should be visible in every aspect
of the business, including recruitment,
nominations, training and engagement. The
performance and reward system should
endorse the desired ethical behaviours
across all levels of the company.
20 | P a g e
DIRECTORS’ REPORT (continued)
Principle 8 (continued)
•
The corporate culture should be recognisable
throughout the disclosures in the annual
report, website and any other statements
issued by the company.
Principle 9
Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the board
•
The company should maintain governance
structures and processes in line with its
corporate culture and appropriate to its:
size and complexity; and
capacity, appetite and tolerance for
risk.
o
o
The governance structures should evolve over
time in parallel with its objectives, strategy and
business model to reflect the development of the
company.
21 | P a g e
The Board is responsible for maintaining the corporate
governance structure that is appropriate to its
corporate culture and business growth. In maintaining
the governance structure, the Board works closely with
its Nominated Advisor.
The Executive Director is responsible for running the
business and implementing the decisions and policies of
the Board. The Board is also responsible for ensuring
the Company’s communication with shareholders is
timely, informative and accurate with due regard to
regulatory requirements.
The Non-Executive Directors were appointed not only to
provide independent oversight and constructive
challenge to the Executive Director but also chosen to
provide strategic advice and guidance that draws upon
their diverse professional backgrounds.
The Board is supported by the Audit Committee, and
the Remuneration Committee.
is
The Audit Committee meets twice a year and
responsible
for dealing with accounting matters,
ensuring the independence of the external auditors,
financial reporting and internal controls. The committee
comprises Mr Paul Howarth (external independent
Chairman of the Committee) and the Non-executive
Director Mr Fuhrman. The Remuneration Committee,
chaired by Mr Paul Howarth and comprising the Non-
executive Director Mr Furhman, is responsible for the
approval of the remuneration for the executive Director.
The Committee meets twice a year. In determining the
total remuneration (including bonuses, if any) of the
Committee’s chairman and, Mr Fuhrman may consult
advisors. The Executive Director also consults the Non-
Executive Directors with respect to overall staff
remuneration.
DIRECTORS’ REPORT (continued)
Principle 10
Communicate how the company is governed and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
• A healthy dialogue should exist between the
board and all of its stakeholders, including
shareholders, to enable all interested parties
to come to informed decisions about the
company.
In particular, appropriate communication and
reporting structures should exist between
the board and all constituent parts of its
shareholder base. This will assist:
•
o
o
the communication of shareholders’
views to the board; and
the shareholders’ understanding of
the unique circumstances and
constraints faced by the company.
It should be clear where these communication
practices are described (annual report or
website).
The Chairman is responsible for maintaining a dialogue
with shareholders and the financial markets, including
the financial press. The Company communicates with
shareholders through the Annual Report and half-year
accounts, announcements to the stock market, and at its
Annual General Meeting.
The AIM Rule 26 section of the Company’s website
provides all required regulatory information as well as
additional information shareholders may find helpful.
Historical Company announcements, annual reports and
circulars of Annual General Meeting are available on the
Company’s website in the Annual Report and Circulars
and Regulatory News section.
Results of shareholder meetings will be publicly
announced through the regulatory notifications system
and displayed on the Company’s website with suitable
explanations of any actions undertaken as a result of any
significant votes against resolutions.
Information on the work of the various Board
Committees and other relevant information are included
in the Company’s Annual Report.
22 | P a g e
DIRECTORS’ REPORT (continued)
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the Group and Parent Company’s financial statements in accordance with
International Accounting Standards as adopted in the United Kingdom ("UK adopted IFRS"). Under Company law
the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements in accordance with the AIM rules of the London
Stock Exchange.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgments and accounting estimates that are reasonable and prudent;
•
state whether applicable UK adopted IFRS has been followed, subject to any material departures
disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Group will continue in business.
•
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group
and Company and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions. The Group is compliant with AIM Rule
26 regarding the Group’s website.
Disclosure of information to auditor
In the case of each person who was a director at the time this report was approved:
•
•
so far as that director is aware there is no relevant audit information of which the Group’s auditor is
unaware; and
that director has taken all steps that the director ought to have taken as a director to make himself
aware of any relevant audit information and to establish that the Group’s auditor is aware of that
information.
Independent auditor
MHA, having expressed their willingness to continue in office, will be deemed reappointed for the next financial
year in accordance with section 487(2) of the Companies Act 2006 unless the Company receives notice under
section 488(1) of the Companies Act 2006.
By order of the Board
Francesco Gardin
Chairman
29 June 2023
23 | P a g e
Independent auditor’s report to the members
of Quantum Blockchain Technologies plc
For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal, professional
and regulatory responsibilities and reporting obligations to the members of Quantum Blockchain
Technologies plc. For the purposes of the table on page 27 that sets out the key audit matter and how
our audit addressed the key audit matter, the terms “we” and “our” refer to MHA. The Group financial
statements, as defined below, consolidate the accounts of Quantum Blockchain Technologies plc and its
subsidiaries (the “Group”). The “Parent Company” is defined as Quantum Blockchain Technologies plc, as
an individual entity. The relevant legislation governing the Company is the United Kingdom Companies
Act 2006 (“Companies Act 2006”).
Qualified Opinion
We have audited the financial statements of Quantum Blockchain Technologies plc for the year ended 31
December 2022.
The financial statements that we have audited comprise:
•
•
•
•
•
•
•
the Group income statement and statement of comprehensive income;
the Group statement of financial position;
the Parent Company statement of financial position;
the Group statement of changes in equity;
the Parent Company statement of changes in equity;
the Group and Parent Company statement of cash flows; and
the related Group and Parent Company Notes 1 to 28.
The financial reporting framework that has been applied in the preparation of the Group and Company
financial statements is applicable law and UK adopted international accounting standards.
In our opinion, except for the effects of the matter described in the Basis of qualified opinion section, the
financial statements:
• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2022 and of the Group’s loss for the year then ended;
• have been properly prepared in accordance with UK adopted international accounting
standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
Investment in GeoSim Systems Ltd
The investment disclosed in note 15 in relation to GeoSim Systems Ltd for an amount of €622,000 has
been accounted for at fair value by the Directors. The measurement of fair value by the directors is based
on the share price of another share placement of the investee that took place 42 months before the year
end. In our opinion the valuation technique used by the directors does not provide a reliable measurement
of the fair value of the investment in GeoSim Systems Ltd at the reporting date. As the investee is a
company that is still in the course of establishing itself, an income approach, in isolation or combined
with a cost approach, could have been used to estimate the fair value of the investment in accordance
with IFRS 13 Fair Value Measurement. We were unable, via our audit procedures, to obtain sufficient and
appropriate audit evidence about the carrying amount of the investment in GeoSim Systems Ltd and,
consequently we were unable to determine whether any adjustment to that amount was necessary.
24 | P a g e
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our ethical responsibilities in accordance with those requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Material uncertainty related to going concern
We draw your attention to note 2 in the financial statements which states that the Group and Parent
Company incurred substantial losses during the year and that the Group and Parent Company’s
operational existence is still dependent on the ability to raise further funding either through an equity
placing, or through other external sources of finance. The impact of this together with other matters set
out in the note, indicate that a material uncertainty exists that may cast significant doubt on the group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter. In auditing
the financial statements, we have concluded that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’
assessment of the Group and Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
• The consideration of inherent risks to the Company’s operations and specifically its business
model.
• The evaluation of how those risks might impact on the Company’s available financial resources.
• Where additional resources may be required the reasonableness and practicality of the
assumptions made by the Directors when assessing the probability and likelihood of those
resources becoming available.
Liquidity considerations including examination of cash flow projections.
•
• Solvency considerations including examination of budgets and forecasts and their basis of
preparation, including review and assessment of the model’s mechanical accuracy and the
reasonableness of assumptions included within.
• Consideration of availability of funds required to settle funding facilities due for repayment during
the going concern review period. Assessing the reasonableness and practicality of the mitigation
measures identified by management in their conservative case scenario and considered by them
in arriving at their conclusions about the existence of any uncertainties in respect of going
concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
25 | P a g e
Overview of our audit approach
Scope
Our audit was scoped by obtaining an understanding of the Group, including the
Parent Company, and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the financial
statements. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the directors
that may have represented a risk of material misstatement.
Materiality
2022
2021
Group
€96,000
€96,500
Parent Company
€86,400
€87,000
1.04% of total liabilities (2021: 0.98% of total
liabilities).
1% of total liabilities, but capped at 90% of
Group materiality
total
liabilities).
(2021: 1% of
Key audit matters
Recurring
• Classification and valuation of bonds
• Contingencies and existence of litigation and claims
• Accuracy of accounting for Group entities
• Employment tax liabilities
Key Audit Matters
In addition to the matters described in the Basis for qualified opinion section, we have determined the
matters described below to be Key Audit Matters to be communicated in our report. Key Audit Matters
are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current year and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those matters
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
26 | P a g e
Classification and valuation of Bonds
Key audit
matter description
The Group has historic external financing arrangements, including bonds
and loans, that have share conversion options. These arrangements are
regarded as hybrid financial instruments, that comprise a financial liability
host contract and conversion option that is an embedded derivative.
The accounting classification and valuation of these external financial
arrangements is a significant judgement area, which also includes whether
the conversion option should have been separated from the financial
liability host instruments and accounted for at fair value through profit or
loss as a derivative.
How the scope of our audit
responded to the key audit
matter
Our work over the classification and valuation of bonds included, but was
not limited to:
• We obtained a detailed understanding and background regarding
the bonds and loans in place at the start of the year; during the
year; and held as at the year-end via the review of the contracts
that underpin the instruments. Subsequently, we verified the
appropriateness of the respective accounting treatment adopted.
• We engaged a valuation expert to undertake audit procedures over
issued
the accounting valuation of the
instructions regarding the scope of the work to be completed.
instruments and
• We tested and formed an opinion on the appropriateness of
management inputs into the valuation calculations.
• We reviewed the market interest rate for the new bond in 2021 and
2022 and the Black Scholes model inputs for the conversion
option of one of the convertible bonds that is separately
accounted as a derivative.
• We also verified the accuracy of the retrospective restatement
relating to the treatment of the historic external financing
arrangements.
Based on our audit work detailed above, we confirm that we have nothing
material to report, and or draw attention to in respect of these matters.
Key
communicated
Group’s Audit Committee
observations
the
to
27 | P a g e
Contingencies and existence of litigation and claims
Key audit
matter description
The Group is actively engaged in ongoing litigation and claims to recover
receivables advanced and investments made, as well as contingent
damages for breach of contract, where the Group expects significant
future economic benefits.
The Group is required to assess the initial and subsequent measurement
of the recoverability of receivables and investments and the other
proceeds of its claims in view of the requirements of IFRS 9 Financial
Instruments and IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
Some of the claims are yet to be concluded in the courts and require
significant
judgement from management as to the total amount
receivable.
The risk exists that the outcome of these claims are not assessed
appropriately and that rights and obligations do not exist to the extent that
the corresponding assets are recognised.
How the scope of our audit
responded to the key audit
matter
Our work over contingencies and existence of litigation and claims
included, but was not limited to:
• We reviewed the significant judgements adopted by management
in respect of assets subject to litigation and claims and assessed
its consistency with the requirements of IFRS 9 and IAS 37.
• We reviewed and discussed each claim with management and
understood their basis for the treatment of each claim.
• We tested managements calculations as to the value of any claim
amount and tested the key inputs to confirmations from external
legal advisers and versus similar historical claims where the
Group has been successful.
• We considered the presentation and measurement of the assets
under litigation.
• We assessed whether the appropriate disclosures regarding the
nature of the claims have been adequately disclosed in the
financial statements.
We concluded that the assets arising from litigation claims were only
recognised when their recovery was virtually certain and the assets could
be reliably measured.
Key
communicated
Group’s Audit Committee
observations
the
to
28 | P a g e
Accuracy of accounting for Group entities
Key audit
matter description
Quantum Blockchain Technologies plc is required to prepare consolidated
financial statements that include the entities that it controls in accordance
with the requirements of IFRS 10 Consolidated Financial Statements.
There is a risk that entities have been omitted from the Groups
consolidated accounts and therefore have been accounted for incorrectly.
If 'control' exists over an entity, in accordance with the definition in IFRS
10, and this has not been consolidated, the Group accounts may be
materially misstated.
The Group has shareholdings in several dormant, inactive, liquidated and
in-liquidation entities that might need to be consolidated into the Group
financial statements.
In particular, the Group has not consolidated the subsidiary Alnitak S.A and
Mediapolis Investment S.A. as the directors consider their inclusion to be
immaterial to the consolidated financial statements.
How the scope of our audit
responded to the key audit
matter
Our work over the accuracy of accounting for Group entities included, but
was not limited to:
• Assessment of each investment held by the Group in other entities
against the definition of control set out in IFRS 10.
• We sought to establish whether the investment resulted in control
of the entity by reviewing relevant internal and third-party
documentation about the various entities and by enquiries of the
Group’s management and advisers.
• We also obtained the latest available financial information for all
the investments and assessed the conclusions of the Directors
about the inclusion of the various entities set out in Note 15.
• We obtained from management their updated assessment of the
non-consolidation of the Alnitak S.A.
• We challenged management as to any further information
obtained during 2022 or post year end that supported their
conclusions.
• Management provided legal representation that Alnitak S.A has no
outstanding liabilities, which would not be settled by its assets,
and confirmed that post year end formal liquidation procedures
have begun.
• Management provided
legal representation that Mediapolis
Investment S.A had no material outstanding liabilities, which
would not be settled by its assets, and confirmed that post year
end formal liquidation procedures have begun.
29 | P a g e
Key
communicated
Group’s Audit Committee
observations
the
to
We concluded that the entities meeting the definition of control by the
Group were consolidated in accordance with IFRS 10, with the exception
of:
• Alnitak S.A;
• Mediapolis Investment S.A.
In terms of these two entities, the evidence provided on the post year end
liquidation was consistent with management’s assessment that the non-
consolidation of the subsidiary on the grounds of it being immaterial was
appropriate.
Employment tax liabilities
Key audit
matter description
The business assesses and categorises all tax risks between remote,
possible and probable, with possible risks being disclosed as contingent
liabilities and probable risks being provided for in the financial statements.
During the period under review, the most material tax risk relates to
employment taxes not being deducted between 2015 and 2022 on
consultancy payments to Directors.
We note that the Group has made a provision for the potential
underpayment of employer’s pay as you earn and national insurance which
totals €210,000.
• We engaged our internal employment tax specialist to review the
calculations prepared by management to ensure that these had
taken into consideration all available and relevant information.
• We ensured that the calculations prepared by management were
materially accurate mathematically.
• We obtained a confirmation from the director’s tax adviser to
confirm key assumptions used in management’s calculation.
We are comfortable that the provision included in the Group financial
statements is materially accurate based on the information available to
management.
How the scope of our audit
responded to the key audit
matter
Key
communicated
Group’s Audit Committee
observations
the
to
30 | P a g e
Our application of materiality
Our definition of materiality considers the value of error or omission on the financial statements that,
individually or in aggregate, would change or influence the economic decision of a reasonably
knowledgeable user of those financial statements. Misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as
a whole. Materiality is used in planning the scope of our work, executing that work and evaluating the
results.
Overall
materiality
How we
determined
it
Rationale
for the
benchmark
applied
Group financial statements
Parent Company financial statements
€96,000 (2021: €96,500)
€86,400 (2021: €87,000)
1.04% of total liabilities (2021: 0.98%)
1% of total liabilities, capped at 90% of Group
materiality (2021: 1%)
We consider total liabilities to be the
for
most appropriate benchmark
materiality given that the company is
largely associated with raising finance
and
for
operating
investment
then creates a
purposes which
corresponding liability, both in terms
of bonds and loans raised.
The Parent Company constitutes
the
majority of the Group’s operations and holds
the external debt. Therefore, in line with
Group materiality, the most appropriate
benchmark is total liabilities as this is the
most important area to the users of the
financial statements.
Performance materiality is the application of materiality at the individual account or balance level, set at
an amount to reduce, to an appropriately low level, the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a whole.
Performance materiality for the Group was set at €57,600 (2021: €57,900) and at €51,800 (2021: €52,200)
for the Parent Company which represents 60% (2021: 60%) of the above materiality levels.
The determination of performance materiality reflects our assessment of the risk of undetected errors
existing, the nature of the systems and controls and the level of misstatements arising in previous audits.
We agreed to report any corrected or uncorrected adjustments exceeding €4,800 (2021: €4,825) and
€4,320 (€4,350) in respect of the Group and Parent Company respectively to the Audit Committee as well
as differences below this threshold that in our view warranted reporting on qualitative grounds.
31 | P a g e
Overview of the scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality
sets our audit scope for each company within the Group. Taken together, this enables us to form an
opinion on the consolidated financial statements. This assessment takes into account the size, risk
profile, organisation / distribution and effectiveness of group-wide controls, changes in the business
environment and other factors such as recent internal audit results when assessing the level of work to
be performed at each component.
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure
we had adequate quantitative and qualitative coverage of significant accounts in the consolidated
financial statements we identified all 4 UK and Italian components as representing the principal business
units within the Group.
Full scope audits - Of the 4 components selected, audits of the complete financial information of
Quantum Blockchain Technologies Plc, Clear Leisure 2017 Limited and Brainspark Associates were
undertaken, these entities were selected based upon their size or risk characteristics.
Specified procedures - The final reporting component, QBT R&D Srl, was not considered to be a significant
component of the group and thus specified procedures on all balances in excess of component
materiality were undertaken.
The control environment
We evaluated the design and implementation of those internal controls of the Group, including the Parent
Company, which are relevant to our audit, such as those relating to the financial reporting cycle. We also
tested operating effectiveness, but did not place reliance on this work.
Reporting on other information
The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
As described in the Basis for qualified opinion section of our report, our audit opinion is qualified for
insufficient audit evidence in respect of the fair value of the investment in GeoSim Systems Ltd.
Strategic report and directors report
Except for the matter described in the Basis for qualified opinion section of our report, in our opinion,
based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial period for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
32 | P a g e
Matters on which we are required to report by exception
Except for the matter described in the Basis for qualified opinion section of our report, we have nothing
to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for
•
our audit have not been received by branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and
returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.;
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the
Parent 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 Group or Parent Company or to cease operations, or have no realistic alternative but to do
so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website
at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements
were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is
inherently more difficult than detecting those that result from error, as fraud may involve collusion,
deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-
compliance with laws and regulations is from events and transactions reflected in the financial
statements, the less likely we would become aware of it.
33 | P a g e
Identifying and assessing potential risks arising from irregularities, including fraud
The extent of the procedures undertaken to identify and assess the risks of material misstatement in
respect of irregularities, including fraud, included the following:
• We considered the nature of the industry and sector the control environment, business
performance including remuneration policies and the Group’s, including the Parent Company’s,
own risk assessment that irregularities might occur as a result of fraud or error. From our sector
experience and through discussion with the directors, we obtained an understanding of the legal
and regulatory frameworks applicable to the Group focusing on laws and regulations that could
reasonably be expected to have a direct material effect on the financial statements, such as
provisions of the Companies Act 2006, listing rules and tax legislation.
• We enquired of the directors and management concerning the Group’s and the Parent
Company’s policies and procedures relating to:
-
-
-
identifying, evaluating and complying with the laws and regulations and whether they
were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they had any knowledge of
actual or suspected fraud; and
the internal controls established to mitigate risks related to fraud or non-compliance with
laws and regulations.
• We assessed the susceptibility of the financial statements to material misstatement, including
how fraud might occur by evaluating management’s
incentives and opportunities for
manipulation of the financial statements. This included utilising the spectrum of inherent risk and
an evaluation of the risk of management override of controls. We determined that the principal
risks were related to posting inappropriate journal entries to increase revenue or reduce costs,
creating fictitious transactions to improve financial performance, and management bias in
accounting estimates particularly in determining the valuation of investments in unquoted
companies.
Audit response to risks identified
In respect of the above procedures:
• we corroborated the results of our enquiries through our review of the minutes of the Group’s
and the Parent Company’s audit committee meetings;
• audit procedures performed by the engagement team in connection with the risks identified
included:
-
reviewing financial statement disclosures and testing to supporting documentation to
assess compliance with applicable laws and regulations expected to have a direct
impact on the financial statements.
testing journal entries, including those processed late for financial statements
preparation, those posted by infrequent or unexpected users, those posted to unusual
account combinations;
evaluating the business rationale of significant transactions outside the normal course
of business, and reviewing accounting estimates for bias;
enquiry of management around actual and potential litigation and claims.
challenging the assumptions and judgements made by management in its significant
accounting estimates, in particular those relating to the valuation of investments in
unquoted companies as reported in the key audit matter section of our report; and
obtaining confirmations from third parties to confirm existence of a sample of
transactions and balances.
-
-
-
-
-
•
the Senior Statutory Auditor considered the experience and expertise of the engagement team
to ensure that the team had the appropriate competence and capabilities; and
• we communicated relevant laws and regulations and potential fraud risks to all engagement
team members, including experts, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
34 | P a g e
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Parent Company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
for and on behalf of MHA, Statutory Auditor
London, United Kingdom
29 June 2023
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales
(registered number OC312313)
35 | P a g e
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Revenue
Administrative expenses
Other income
Operating loss
Share of loss from equity-accounted associates
Finance costs
Loss before tax
Tax
Loss for the year
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
Earnings per share:
Basic loss per share (cents)
Diluted loss per share (cents)
Note
7
8
9
12
13
13
There was no other comprehensive income during the year.
The accounting policies and notes form an integral part of these financial statements.
2022
€’000
2021
€’000
-
-
9
9
(4,547)
-
(4,985)
6
(4,547)
(4,970)
(69)
(636)
(33)
(446)
(5,252)
(5,449)
226
53
(5,026)
(5,396)
(5,026)
(5,396)
€0.508
€0.621
€0.312
€0.354
36 | P a g e
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Non-current assets
Property, plant and equipment
Financial assets at fair value through profit
and loss
Investments held at cost
Investments in equity-accounted associates
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Total current liabilities
Notes
Group
2022
Group
2021
Company
2022
Company
2021
€’000
€’000
€’000
€’000
14
15
8
16
17
18
19
20
21
226
677
-
60
963
4,626
463
5,089
164
664
-
211
1,039
4,905
1,039
5,944
-
115
10
-
125
-
288
10
-
298
1,056
449
1,505
665
1,035
1700
6,052
6,983
1,630
1,998
(465)
-
-
(210)
(675)
(329)
(8,365)
(1,113)
-
(9,807)
(577)
-
-
(210)
(787)
(354)
(8,365)
(1,113)
-
(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
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Share capital
Share premium account
Other reserves
Retained losses
19
20
22
22
24
(8,131)
(468)
(8,599)
-
-
-
(8,131)
(468)
(8,599)
-
-
-
(9,274)
(9,807)
(9,386)
(9,832)
(3,222)
(2,824)
(7,756)
(7,834)
8,378
50,541
13,812
(75,953)
8,221
49,442
11,409
(71,896)
8,378
50,541
5,487
(72,162)
8,221
49,442
3,084
(68,581)
Total equity
(3,222)
(2,824)
(7,756)
(7,834)
37 | P a g e
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022 (CONTINUED)
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).
The financial statements were approved by the board of directors and authorised for issue on 29 June 2023, on
its behalf by:
Francesco Gardin
Director
Company Number 03926192
The accounting policies and notes form part of these financial statements.
38 | P a g e
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Group
At 1 January 2021
Total present loss and
comprehensive loss for the year
Grants of warrants
Exercise of warrants
Issue of shares
Grant of share options
At 31 December 2021
Total comprehensive loss
for the year
Exercise of warrants
Grant of share options
Modification of bond
At 31 December 2022
Share
capital
€’000
7,397
Share
premium
account
€’000
47,124
Other
reserves
Retained
losses
Total
equity
€’000
8,787
€’000
€’000
(65,531)
(2,223)
-
-
119
705
-
-
-
831
1,487
-
8,221
49,442
-
-
157
1,099
-
-
-
-
-
-
-
-
2,622
11,409
-
-
1,854
549
(5,396)
(5,396)
1,447
1,447
(2,416)
(1,466)
-
-
2,192
2,622
(71,896)
(2,824)
(5,026)
(5,026)
969
2,225
-
-
1,854
549
8,378
50,541
13,812
(75,953)
(3,222)
The following describes the nature and purpose of each reserve:
Share capital
Share premium
Retained losses
Other reserves
Merger reserve
Loan note equity reserve
Share option reserve
represents the nominal value of equity shares.
amount subscribed for share capital in excess of the nominal value.
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.
consist of three reserves, as detailed in Note 24, see below:
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.
relates to the equity portion of the convertible loan notes.
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.
39 | P a g e
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Company
At 1 January 2021
Total present loss and
comprehensive loss for the year
Grant of warrants
Exercise of warrants
Issue of shares
Grant of share options
At 31 December 2021
Total comprehensive loss
for the year
Share
capital
€’000
7,397
Share
premium
account
€’000
47,124
-
-
119
705
-
-
-
831
1,487
-
8,221
49,442
-
-
Exercise of warrants
157
1,099
Grant of share options
Modification of bond
-
-
-
-
Other
reserves
Retained
losses
Total
€’000
462
€’000
(62,095)
€’000
(7,112)
-
-
-
-
2,622
3,084
-
-
1,854
549
(5,517)
(5,517)
1,447
1,447
(2,416)
(1,466)
-
-
(68,581)
(4,550)
969
-
-
2,192
2,622
(7,834)
(4,550)
2,225
1,854
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
Share premium
Retained losses
represents the nominal value of equity shares.
amount subscribed for share capital in excess of the nominal value.
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
Loan note equity reserve
Share option reserve
consist of two reserves, as detailed in Note 24, see below:
relates to the equity portion of the convertible loan notes.
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.
40 | P a g e
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
15
8
15
9
14
16
18
15
14
Cash used in operations
Loss before tax
Impairment of investments
Share of post-tax losses of equity accounted
associates
Non cash foreign exchange movements
Finance charges
Depreciation expense
Decrease /(increase) in receivables
(Decrease) /increase in payables
Impairment of intercompany receivables
Loss /(gain) on derivatives
Share based payments
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of investments
Purchase of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from capital issue
Proceeds from exercise of warrants
Net cash (outflow)/inflow from financing
activities
Net (decrease) /increase in cash for the
year
Cash and cash equivalents at beginning of
year
(5,252)
(5,449)
(4,753)
(5,570)
154
69
(35)
637
49
474
346
33
-
167
33
(41)
305
-
340
(5)
-
143
154
69
-
635
-
(196)
433
12
-
200
-
-
305
-
230
27
-
143
1,854
(1,671)
2,694
(1,813)
1,854
(1,792)
2,694
(1,971)
(50)
(111)
(161)
-
1,256
1,256
(54)
(164)
(218)
1,951
1,119
3,070
(50)
-
(50)
(64)
-
(64)
-
1,256
1,256
1,951
1,119
3,070
(576)
1,039
(586)
1,035
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.
41 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
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 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.
42 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
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.
43 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
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.
44 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent
and the non-controlling interests based on their respective ownership interests.
On consolidation, the results of overseas operations are translated into euros at rates approximating to those
ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill
arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange
differences arising on translating the opening net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange
reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of
comprehensive income as part of the profit or loss on disposal.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any impairment loss.
Investments in associates
Investments in associates are accounted for using the equity method less any impairment loss.
The carrying amount of the investment in associates is increased or decreased to recognise the Group’s share
of the profit or loss and other comprehensive income of the associate, adjusted where necessary to ensure
consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates are eliminated to the extent
of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also
tested for impairment.
Foreign currency
The functional currency is Euro. Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. This is
applicable to non-monetary items. Exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss. Exchange gains and losses that relate to borrowings and cash and
cash equivalents are presented in the income statement within ‘finance income or costs’. All other exchange
gains and losses are presented in the income statement within ‘other (losses)/gains – net’.
Changes in the fair value of monetary securities denominated in foreign currency are analysed between
translation differences resulting from changes in the amortised cost of the security and other changes in the
carrying amount of the security. Translation differences related to changes in amortised cost are recognised in
profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
Current taxes are based on the results of the Group companies and are calculated according to local tax rules,
using the tax rates and laws that have been enacted or substantially enacted by the reporting date.
45 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
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:
Identifying the contract with a customer
Identifying the performance obligations
1.
2.
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.
46 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
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.
47 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
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.
48 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
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.
49 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
2. Accounting policies (continued)
(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.
3. 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.
4. 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.
50 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
5. Staff costs
Group
2022
€’000
2021
€’000
Company
2022
€’000
2021
€’000
Staff costs during the period including directors comprise:
Wages and salaries
Social security costs and pension contributions
Share options expense
188
228
1,854
2,270
555
3
2,622
3,180
188
228
1,854
2,270
6. Directors’ emoluments
Aggregate emoluments
Share options expense
2022
€’000
116
1,728
1,844
555
3
2,622
3,180
2021
€’000
525
2,444
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.
2022
€’000
1,844
378
509
86
216
618
75
821
2021
€’000
2,969
210
441
50
156
769
192
198
4,547
4,985
7. Expenses by nature
Directors’ emoluments
Employee emoluments
Professional and legal fees
Audit fees
Administrative expenditure
Impairment of assets
Fundraising fees
Research and development costs
51 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
8.
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:
Loss from continuing operations
Impairment
Total comprehensive loss
Aggregate carrying amount of the Group’s interests in this associate
9. Finance (costs)/income
(Loss)/gain on derivatives
Interest on convertible bonds
Interest credit on modification of convertible bonds
Other gains or losses
Interest received
Bank fees
10. Auditor’s remuneration
Group Auditor’s remuneration:
Fees payable to the Group’s auditor for the audit of the Company and
consolidated financial statements:
Non audit services:
Other services (tax)
Subsidiary Auditor’s remuneration
Other services pursuant to legislation
11. Employee numbers
2022
2021
€’000
(69)
(82)
(151)
60
2022
€’000
(324)
(325)
9
-
6
(2)
(636)
€’000
(33)
-
(33)
211
2021
€’000
(143)
(305)
-
(4)
6
-
(446)
2022
€’000
2021
€’000
56
-
-
56
50
-
-
50
Group
2022
Number
2021
Number
Company
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
52 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
12. Taxation
Corporation tax - current period
Corporation tax - prior period underprovision
Foreign tax
Deferred taxation
Tax charge for the year
2022
€’000
2021
€’000
(117)
(53)
(86)
(23)
-
-
-
-
(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:
Trading losses
Management expenses
Non trade loan relationship deficits
Capital losses
2022
€’million
2021
€’million
2
19
2
8
2
19
2
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
following reconciliation:
53 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
12. Taxation (continued)
Continuing operations
Loss for the year before tax
Tax on ordinary activities at standard rate
Effects of:
Expenses not deductible for tax purposes
R&D enhancement
R&D losses surrendered
R&D Foreign Tax losses surrendered
Losses brought forward claimed
Tax losses available for carry forward against future profits
Total tax payable
Enhanced R&D expenditure
Total tax repayable – current year
Corporation tax - prior period underprovision
Foreign tax
Total tax repayable
2022
€’000
2021
€’000
(5,252)
(5,449)
(998)
(1,035)
595
(153)
270
11
-
275
-
751
(39)
70
-
(10)
263
-
804
368
117
53
86
23
-
-
226
53
The UK government has announced that the corporation tax rate will increase from 19% to 25% with effect
from 1 April 2023.
54 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
13. Earnings per share
The basic earnings per share is calculated by dividing the loss attributable to equity shareholders by the weighted
average number of ordinary shares in issue during the period. Diluted earnings per share is computed using the
weighted average number of shares during the period adjusted for the dilutive effect of share options, warrants
and convertible loans outstanding during the period.
The loss and weighted average number of shares used in the calculation are set out below:
Profit/
(Loss)
€’000
2022
Weighted
average no.
of shares
000’s
Per share
amount
Profit/
(Loss)
Euro Cent
€’000
2021
Weighted
average no.
of shares
000’s
Per share
amount
Euro Cent
Basic earnings per share
Continuing operations
Total operations
(5,026)
(5,026)
989,497
989,497
(0.508)
(0.508)
(5,396)
(5,396)
869,339
869,339
(0.621)
(0.621)
Fully diluted earnings per share
Continuing operations
Total operations
(5,091)
(5,091)
1,632,694
1,632,694
(0.312)
(0.312)
(5,328)
(5,328)
1,503,440
1,503,440
(0.354)
(0.354)
See note 28 for details of share option transactions and share issues that have occurred since the end of the
reporting period.
14. Property, plant and equipment
Group
Cost
At 1 January 2022
Additions
At 31 December 2022
Depreciation and impairment
At 1 January 2022
Depreciation charged in the year
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Computers
€’000
Total
€’000
164
111
275
-
49
49
226
164
164
111
275
-
49
49
226
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.
55 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
15. Investments
The significant entities for which the Group owns shares, held at 31 December 2022, were as follows:
Group Companies
Ownership Country
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Brainspark Associates Ltd
Clear Leisure 2017 Ltd
QBT R&D Srl
Milan Digital Twin Ltd
London Digital Twin Ltd
Miner One Ltd
Clear Holiday Srl
Mediapolis Investment S.A 71.72%
99.30%
Sosushi Company Srl
84.04%
Fallimento Mediapolis Srl
50.17%
Sipiem S.P.A
41.17%
ForCrowd Srl
ClassFinance in
Liquidazione Srl
PBV Monitor
Geosim Systems
Beni Immobili Srl
TLT S.P.A
20.00%
10.00%
4.53%
15.05%
0.25%
Company
Status
Trading
Trading
Trading
Dormant
Dormant
Dormant
Dormant
Inactive
In liquidation
Liquidated
In liquidation
Investment
Net Assets/
(Liabilities)
€,000
(36,204)
(96)
(26)
Nil
Nil
Nil
10
(6,648)
654
1,204
645
(43)
Date of
latest
accounts
2021
2021
2021
2021
2021
2021
2014
2010
2013
2016
2014
2021
UK
UK
Italy
UK
UK
UK
Italy
Luxembourg
Italy
Italy
Italy
Italy
Italy
Italy
Israel
Italy
Italy
Investment
Investment
Investment
Investment
Investment
(104)
471
(330)
14
(2,476)
2018
2021
2018
2014
2016
Treatment
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Not Consolidated
Not Consolidated
Not Consolidated
Not Consolidated
Not Consolidated
Equity-accounting
Held at fair value
Held at fair value
Held at fair value
Held at fair value
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.
56 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
15. Investments (continued)
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.
57 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
15. Investments (continued)
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.
58 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
15. 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
At as 1 January
Additions
Fair value decrease
Foreign exchange
Carrying value at 31 December
59 | P a g e
Group
Company
2022
2021
2022
2021
€’000
664
50
(72)
35
677
€’000
848
-
(225)
41
664
€’000
298
€’000
434
50
(223)
-
125
64
(200)
-
298
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
15. Investments (continued)
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.
16. Trade and other receivables
Trade receivables
Other receivables
Amounts owed by related parties
Group
Company
2022
€’000
14
4,537
75
2021
€’000
58
4,769
78
4,626
4,905
2022
€’000
-
280
776
1,056
2021
€’000
-
144
521
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.
17. Cash and cash equivalents
Bank current accounts
Group
2022
€’000
463
463
2021
€’000
1,039
1,039
Company
2022
€’000
449
449
2021
€’000
1,035
1,035
The Directors consider the carrying amounts of cash and cash equivalents approximates to their fair value.
60 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
18. Trade and other payables
Trade payables
Other payables
Accruals
Trade and other payables
Group
2022
€’000
147
183
135
465
2021
€’000
128
91
110
329
Company
2022
€’000
122
320
2021
€’000
126
91
135 137
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.
19. Borrowings
Zero rate convertible bond 2015
Zero rate convertible bond 2020
Disclosed as:
Current borrowings
Non-current borrowings
Group
2022
€’000
5,148
2,983
8,131
-
8,131
8,131
2021
€’000
5,100
3,265
8,365
8,365
-
8,365
Company
2022
€’000
5,148
2,983
8,131
-
8,131
8,131
2021
€’000
5,100
3,265
8,365
8,365
-
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.
61 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
19. Borrowings (continued)
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
Share price
Expected life
Volatility
Dividend yield
Risk free interest rate
Fair value
20. Financial instruments
2022
1.125p
2 years
136%
0%
3.58%
0.5p
2021
3.100p
1 year
130%
0%
0.76%
0.4p
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.
62 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
20. Financial instruments (continued)
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:
Financial assets:
Financial assets held at fair value through profit and loss
Investments in equity-accounted associates
Trade and other receivables
Cash and cash equivalents
2022
€’000
677
60
4,284
463
5,484
2021
€'000
664
211
4,862
1,039
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:
Financial liabilities at amortised cost:
Trade and other payables
Provisions
Borrowings
Derivative
Financial instruments measured at fair value:
As at 31 December 2022
Investments at fair value through profit or loss
As at 31 December 2021
Investments at fair value through profit or loss
2022
€'000
465
210
8,131
468
9,274
2021
€'000
329
-
8,365
1,113
9,807
Level 1
€’000
Level 2
€’000
Level 3
€’000
-
-
-
-
-
-
-
-
677
677
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.
Significant unobservable
inputs (Level 3 only)
Assessment
recoverability of loan.
of
technique
Valuation
used
Based on issue of shares
in the investments held
by
and
the Group
directors assessment on
recoverability of
the
loans.
relationship
–
Inter
between
key
unobservable inputs and
fair value (level 3 only)
If loan was considered
not to be recoverable
this would result in the
reduction
fair
in
value of the investment.
the
Financial Instruments
Investments
63 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
20. Financial instruments (continued)
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:
Level 2:
Level 3:
valued using quoted prices in active markets for identical assets;
valued by reference to valuation techniques using observable inputs other than quoted prices
included in Level 1;
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.
64 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
20. Financial instruments (continued)
The following are the undiscounted contractual maturities of financial liabilities:
As at 31 December 2022
Trade and other payables
Provisions
Borrowings
Derivative financial instruments
As at 31 December 2021
Trade and other payables
Borrowings
Derivative financial instruments
Carrying
Amount
€’000
Less than 1
year
€’000
Between
1 and 5 years
€’000
465
210
8,131
468
9,274
329
8,365
1,113
9,807
465
210
-
-
675
329
8,365
1,113
9,807
-
-
8,131
468
8,599
-
-
-
-
Total
€’000
465
210
8,131
468
9,274
329
8,365
1,113
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.
Fixed rate instruments
Financial assets
Financial liabilities
Group
2022
5,021
8,528
2021
€’000
4,845
8,718
Company
2022
222
8,503
2021
€’000
605
8,743
Change in interest rates will affect the Group’s income statement as follows:
Group
Euribor +0.5% / -0.5%
Gain / (loss)
2022
€’000
2021
€’000
+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.
65 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
20. Financial instruments (continued)
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
€’000
4,626
4,626
Allowance
for
impairment
€’000
-
-
Total book
value
€’000
4,905
4,905
Allowance
for
impairment
€’000
-
-
1,056
1,056
-
665
- 665
-
-
Group
Current
Company
Current
21. Provisions
Provision for potential payroll tax liability
Provisions
Group
2022
€’000
210
210
2021
€’000
-
-
Company
2022
€’000
210
210
2021
€’000
-
-
The above provision estimates a potential employment tax liability deriving from consultancy payments to
directors between 2015 and 2022.
66 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
22. Share capital and share premium
ISSUED AND FULLY
PAID:
Number of
ordinary
shares
Number of
deferred
shares
At 1 January 2021
662,371,447
199,409,377
Ordinary
share
capital
€’000
1,930
Deferred
share
capital
€’000
5,467
Share
premium
Total
€’000
47,124
€’000
54,521
Issue of shares
282,680,404
-
At 31 December 2021
945,051,851
199,409,377
Issue of shares
52,500,000
-
At 31 December 2022
997,551,851
199,409,377
824
2,754
157
2,911
-
2,318
3,142
5,467
49,442
57,663
-
1,099
1,256
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.
23. 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).
67 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
23. Share based payments (continued)
The significant inputs to the model in respect of the options granted during the year were as follows:
Share price
Expected life
Volatility
Dividend yield
Risk free interest rate
Fair value
5p
1.175p - 3.100p
2 months - 3 years
130% - 136%
0%
0.76% – 3.58%
0.0p – 2.1p
10p
1.175p - 3.050p
6 months - 3 years
130% - 136%
0%
0.76% - 3.58%
0.0p – 1.7p
The table below discloses the movements in share options during the year.
Number of
options at
1 Jan 2022
105,000,000
105,000,000
10,000,000
5,000,000
5,000,000
2,500,000
5,000,000
−
−
−
−
−
−
−
−
−
−
Granted
in the year
−
−
−
−
−
−
−
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
Exercised
in the year
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Lapsed
in the year
−
−
10,000,000
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Number of
options at
31 Dec 2022
105,000,000
105,000,000
−
5,000,000
5,000,000
2,500,000
5,000,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
Exercise
Price, pence
5.00
10.00
5.00
5.00
10.00
5.00
10.00
5.00
10.00
5.00
5.00
5.00
5.00
10.00
5.00
10.00
5.00
Expiry
date
06.05.2026
06.05.2026
15.08.2022
06.05.2025
06.05.2025
06.05.2024
01.12.2026
15.12.2024
15.12.2024
15.12.2024
31.03.2023
31.03.2023
31.03.2023
30.06.2023
22.05.2025
22.05.2025
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.
68 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
23. Share based payments (continued)
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:
Share price
Expected life
Volatility
Dividend yield
Risk free interest rate
Fair value
5p
1.175p - 3.100p
1 - 3 years
130%
0%
0.76%
0.4p – 2.1p
10p
1.175p - 3.050p
3 years
130%
0%
0.76%
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
105,000,000
105,000,000
10,000,000
5,000,000
5,000,000
2,500,000
5,000,000
Exercised
in the year
−
−
−
−
−
−
−
Lapsed
in the year
−
−
−
−
−
−
−
Number of
options at
31 Dec 2021
105,000,000
105,000,000
10,000,000
5,000,000
5,000,000
2,500,000
5,000,000
Exercise
Price, pence
5.00
10.00
5.00
5.00
10.00
5.00
10.00
Expiry
date
06.05.2026
06.05.2026
15.08.2022
06.05.2025
06.05.2025
06.05.2024
01.12.2026
−
237,500,000
−
−
237,500,000
24. 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.
69 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
24. Other reserves (continued)
Group
Merger
reserve
Loan note
equity reserve
Share option
reserve
At 1 January 2021
Grant of share options
€’000
8,325
-
At 31 December 2021
8,325
Grant of share options
Modification of bond
-
-
At 31 December 2022
8,325
€’000
462
-
462
-
-
462
€’000
-
2,622
2,622
1,854
-
4,476
Company
At 1 January 2021
Grant of share options
At 31 December 2021
Grant of share options
Modification of bond
At 31 December 2022
25. Warrants
Loan note
equity reserve
Share option
reserve
€’000
462
-
462
-
-
462
€’000
-
2,622
2,622
1,854
-
4,476
Capital
redemption
reserve
€’000
-
-
-
-
549
549
Capital
redemption
reserve
€’000
-
-
-
-
549
549
Total other
reserves
€’000
8,787
2,622
11,409
1,854
549
13,812
Total other
reserves
€’000
462
2,622
3,084
1,854
549
5,487
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.
70 | P a g e
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
26. Ultimate controlling party
The Group considers that there is no ultimate controlling party.
27. 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:
Related party
Clear Leisure 2017 Limited
QBT R&D Srl
PBV Monitor Srl
Geosim Systems Limited
ForCrowd Srl
2022
Group
2021
Group
2022
Company
2021
Company
-
-
-
49,605
25,000
74,605
-
-
22,609
55,156
-
77,765
255,575
448,655
-
49,605
22,500
776,335
132,067
311,389
22,609
55,156
-
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.
28. 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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
28. Events after the reporting date (continued)
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.
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