Form: 6-K

Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

June 2, 2023

 

Exhibit 99.1

 

Arqit Quantum Inc.

 

Unaudited Condensed Consolidated Interim Financial Statements

 

As of and for the period ended 31 March 2023

 

 

 

Arqit Quantum Inc.

Unaudited Condensed Consolidated Interim Financial Statements

as of and for the period ended 31 March 2023

 

Contents   Page
     
Condensed Consolidated Statement of Comprehensive Income (unaudited)   2
     
Condensed Consolidated Statement of Financial Position   3
     
Condensed Consolidated Statement of Changes in Equity (unaudited)   4
     
Condensed Consolidated Statement of Cash Flows (unaudited)   5
     
Condensed Notes to the Financial Statements (unaudited)   6-9

 

1

 

 

Arqit Quantum Inc.
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the period ended 31 March 2023

 

          Unaudited six
month
    Unaudited six
month
 
          period ended     period ended  
    Note     31 March 2023     31 March 2022  
          $'000     $'000  
Revenue             19       5,293  
Other operating income             2,570       6,959  
Administrative expenses     2       (24,963 )     (26,600 )
Impairment loss on trade receivables and contract assets             (12,203 )      
Operating loss             (34,577 )     (14,348 )
Change in fair value of warrants             12,910       72,464  
Finance costs             (169 )     (69 )
Finance income                    
(Loss)/ profit before tax             (21,836 )     58,047  
Income tax                    
(Loss)/ profit for the financial year attributable to equity holders             (21,836 )     58,047  
                         
Other comprehensive (loss)/income :                        
Items that may be reclassified to profit or loss                        
Currency translation differences             (2,503 )     258  
Total comprehensive (loss)/ profit for the year attributable to equity holders             (24,339 )     58,305  
                         
Earnings per ordinary share from continuing operations attributable to equity holders                        
                         
Basic earnings per share             (0.17409 )     0.48212  
Diluted earnings per share             (0.17409 )     0.47999  

 

All of the Group’s activities were derived from continuing operations during the above financial periods.

 

2

 

 

Arqit Quantum Inc.  
Condensed Consolidated Statement of Financial Position
As at 31 March 2023  

 

          Unaudited     Audited  
          31 March     30 September  
    Note     2023     2022  
          $'000     $'000  
ASSETS                        
Non-current assets                        
Property, plant and equipment             2,435       2,206  
Right of use asset             7,106       6,139  
Intangible assets     3       57,221       40,291  
Fixed asset investments             31       28  
Trade and other receivables     4       1,918       18,565  
Total non-current assets             68,711       67,229  
                         
Current assets                        
Trade and other receivables     4       4,252       7,677  
Cash and cash equivalents             41,504       48,966  
Total current assets             45,756       56,643  
Total assets             114,467       123,872  
                         
LIABILITIES                        
Current liabilities                        
Trade and other payables     5       19,203       22,655  
Lease liabilities             1,580       1,154  
Total current liabilities             20,783       23,809  
                         
Non-current liabilities                        
Trade and other payables     5       5,293       4,183  
Lease liabilities             7,595       6,681  
Warrants liability             633       10,644  
Total non-current liabilities             13,521       21,508  
Total liabilities             34,304       45,317  
Net assets             80,163       78,555  
                         
EQUITY                        
Share capital     6       13       12  
Share premium     7       109,195       92,306  
Other reserves     7       166,804       166,804  
Foreign currency translation reserve     7       854       3,357  
Share-based payment reserve     7       32,272       23,216  
Retained earnings     7       (228,975 )     (207,140 )
Total Equity             80,163       78,555  

 

3

 

 

Arqit Quantum Inc.

Condensed Consolidated Statement of Changes in Equity (Unaudited)

For the period ended 31 March 2023

 

   

Share
Capital

   

Share
Premium

   

Other
reserves

    Foreign
currency
translation
    Share
option
reserve
    Retained earnings     Total  
    $'000   $'000   $'000   $'000   $'000   $'000   $'000  
Balance at 1 October 2021     11       70,999       166,805       256       303       (272,215 )     (33,841 )
Profit for the year                                   58,046       58,046  
Other comprehensive income                       258                   258  
Total comprehensive income                       258             58,046       58,304  
Transactions with owners in their capacity as owners:                                                        
Share option charge                             10,134             10,134  
Earnout shares     1             (1 )                        
Exercise of warrants           21,279                               21,279  
Balance at 31 March 2022 attributable to owners of the Group     12       92,278       166,804       514       10,437       (214,169 )     55,876  
                                                         
Balance at 1 October 2022     12       92,306       166,804       3,357       23,216       (207,140 )     78,555  
Loss for the period                                   (21,835 )     (21,835 )
Other comprehensive income                       (2,503 )                 (2,503 )
Total comprehensive income                       (2,503 )           (21,835 )     (24,338 )
Issuance of ordinary shares     1       16,889                               16,890  
Transactions with owners in their capacity as owners:                                                        
Share option charge                             9,056             9,056  
Balance at 31 March 2023 attributable to owners of the Group     13       109,195       166,804       854       32,272       (228,975 )     80,163  

 

4

 

 

Arqit Quantum Inc.

Condensed Consolidated Statement of Cash Flows (Unaudited)

For the period ended 31 March 2023

 

    Unaudited
six month
period ended
    Unaudited
six month
period ended
 
    31 March
2023
    31 March
2022
 
    $'000     $'000  
Cash flows from operating activities                
Cash used in operations     (9,356 )     (13,221 )
                 
Net cash used in operating activities     (9,356 )     (13,221 )
                 
Cash flows from investing activities                
Capital expenditure on property, plant and equipment     (207 )     (609 )
Capital expenditure on intangibles     (16,930 )     (12,883 )
                 
Net cash used in investing activities     (17,137 )     (13,492 )
                 
Cash flows from financing activities                
Shares issued on exercise of warrants           21,279  
Proceeds from issue of shares, net of issue costs     19,788        
Payments of lease liabilities     (558 )     (205 )
Payments of interest portion of lease liabilities     (99 )     (73 )
Proceeds from government grants     508        
                 
Net cash generated from financing activities     19,639       21,001  
                 
Net decrease in cash and cash equivalents     (6,854 )     (5,712 )
Cash and cash equivalents at beginning of period     48,966       86,966  
Foreign exchange on cash and cash equivalents     (608 )     904  
                 
Cash and cash equivalents at end of period     41,504       82,158  

 

5

 

 

 

Arqit Quantum Inc.

Condensed Consolidated Notes to the Financial Statements (Unaudited)

For the period ended 31 March 2023

 

1.    General information and significant accounting policies

 

General information

 

Arqit Quantum Inc. (the “Company”) is a Cayman Islands exempted limited liability company with registered number 374857. The address of its registered office and its principal place of trading is c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 

These unaudited condensed consolidated financial statements comprise the Company and its subsidiaries (together referred to as the “Group”).

 

The principal activity of the Group is provision of cybersecurity services via satellite and terrestrial platforms.

 

Basis of preparation

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB, including IAS 34 ‘Interim Financial Reporting’. They do not include all of the information required in annual financial statements, and should be read in conjunction with the consolidated financial statements for the year ended September 30, 2022. The report of the auditors on those financial statements was unqualified. The comparative balance sheet figures for the year ended September 30, 2022 were derived from the audited consolidated financial statements.

 

The unaudited condensed consolidated financial statements have been presented in United States Dollars “USD” which is also the Group’s functional currency. All values are rounded to the nearest units (USD '000), except when otherwise indicated.

 

Information on the accounting policies applied can be found in the Group’s latest annual audited financial statements. The unaudited interim financial statements are prepared on the historical cost basis, other than investor warrants held at fair value through profit or loss, The preparation of the unaudited interim 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.

 

New and amended standards adopted by the Group

 

There have been no new or amended standards adopted by the Group for the first time during the interim period.

 

2.    Expenses by Nature

 

    Period ended     Period ended  
    31 March     31 March  
    2023     2022  
    $'000     $'000  
Employee benefit expense and other staff costs     15,557       9,628  
Capitalised within intangible assets     (3,149 )     (2,474 )
Legal and professional     4,828       2,441  
Foreign exchange     (9,294 )     989  
Property costs     1,363       374  
Share based compensation     9,004       10,133  
Depreciation
    469       91  
Depreciation of right of use asset     693       225  
Other expenses     5,492       5,193  
Total administrative expenses     24,963       26,600  

 

6

 

 

Arqit Quantum Inc.

Condensed Consolidated Notes to the Financial Statements (Unaudited) (continued)

For the period ended 31 March 2023

 

3.    Intangible fixed assets

 

    Development  
    Costs  
    $'000  
Cost        
At 1 October 2021     18,235  
Additions     25,294  
Foreign exchange on translation     (3,238 )
At 30 September 2022     40,291  
Additions     12,144  
Foreign exchange on translation     4,786  
At 31 March 2023     57,221  
Amortisation        
At 1 October 2021      
Charge      
At 30 September 2022      
Charge      
At 31 March 2023      
Net Book Value        
At 31 March 2023     57,221  
At 31 September 2022     40,291  

 

The Group’s intangible assets under development are internally generated and the Group has not yet begun amortisation of these finite useful economic life assets. $1.0 million (2022: $0.201 million) of these capitalised costs relate to QuantumCloud™. An impairment test was performed for the period ended March 31, 2023, which considered the value of existing contracts and forecasted revenues. No impairment was deemed necessary. The Group will begin amortisation when the intangible assets are available for use.

 

4.    Trade and other receivables

 

   

31 March

2023

   

30 September

2022

 
    $'000     $'000  
Current assets                
Trade debtors     1,116       5,924  
Other debtors     736       892  
Prepayments and accrued income     2,400       861  
Total     4,252       7,677  

 

An allowance for doubtful debts has been made in relation to balances with Virgin Orbit LLC. Please see note 8 for more details.

 

The directors consider that the carrying amount of financial assets recorded at amortised costs in the financial statements approximate their fair value.

 

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.

 

7

 

 

Arqit Quantum Inc.

Condensed Consolidated Notes to the Financial Statements (Unaudited) (continued)

For the period ended 31 March 2023

 

   

31 March

2023

   

30 September

2022

 
    $'000     $'000  
Non-current Assets                
Prepayments           15,873  
Trade debtors           975  
Other debtors     1,918       1,717  
Total     1,918       18,565  

 

In the prior period, non-current prepayments comprise the payment of a non-refundable deposit towards the cost of the first satellite launch service, which was expected to be more than one year from the accounting reference date.

 

5.    Trade and other payables

 

    31 March     30 September  
    2023     2022  
    $'000     $'000  
Current liabilities                
Trade payables     13,286       17,478  
Other tax and social security     815       633  
Other creditors
    620       516  
Accruals     4,482       3,803  
Deferred income           225  
Total     19,203       22,655  

 

Trade payables and accruals relate to amounts payable at the balance sheet date for services received during the period. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. The directors consider that the carrying amount of financial liabilities recorded at amortised costs in the financial statements approximate their fair value.

 

   

31 March

2023

   

30 September

2022

 
    $'000     $'000  
Non-current Liabilities                
Deferred government grants     5,293       4,183  
      5,293       4,183  

 

6.    Share capital

 

As of March 31, 2023, the total number of ordinary shares of the Company outstanding is 134,078,493 with a par value of $0.0001.

 

    Number of ordinary     Share capital  
    shares     $  
September 30, 2022 – par value $0.0001     121,926,166       12,192  
                 
Shares issued in direct offering     10,000,000       1,000  
Shares issued in ATM     472,396       47  
EMI exercised     1,196,981       120  
Grants vested     482,950       48  
March 31, 2023 – par value $0.0001     134,078,493       13,408  

 

8

 

 

Arqit Quantum Inc.

Condensed Consolidated Notes to the Financial Statements (Unaudited) (continued)

For the period ended 31 March 2023

 

7.    Reserves

 

Share premium

 

Includes the difference in price between the par value of shares, and the total price the Group received for those shares, net of expenses.

 

Foreign currency translation reserve

 

Includes other comprehensive income relating to the translation of subsidiaries into the presentational currency of the group.

 

Share based payment reserve

 

Cumulative charges in respect of share options issued.

 

Retained earnings

 

Includes cumulative profit and loss and all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

 

Other reserves

 

Other reserve includes the IFRS 2 deemed acquisition cost and other reserves assumed as part of the reverse acquisition.

 

8.    Post balance sheet events

 

On April 4, 2023 Virgin Orbit LLC (‘Virgin Orbit’) filed for Chapter 11 bankruptcy protection and Arqit Limited was listed as the largest creditor. On May 24, 2023 it was announced that Virgin Orbit has shut down operations. An impairment provision has been made for the balances outstanding with Virgin Orbit, with the related expenses recorded in the Statement of Other Comprehensive Income.

 

9