The directors present their annual report and financial statements for the year ended 31 December 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 9.
Going concern
The directors are confident of building on the great progress made in 2023 and expect to further improve financial performance in 2024. The underlying data business continues to grow (up 15% in 2023), even though the industry is experiencing a number of headwinds as signalled by the bitcoin price being subdued throughout 2023 which impact the group's AUM revenue (down 50%).
The directors have considered their response to the likely effects of the crypto market dip and the going concern of the business.
As such the directors have reviewed the group’s forecast and projections in respect of the impacts of crypto market dip. The analysis confirmed the group has sufficient resources to meet obligations as they fall due for a period of at least 12 months from the date of signing these financial statements.
During 2023 the group has experienced strong growth in recurring revenue and before the crypto markets fell the company had converted to fiat currencies and reduced exposure to market volatility. The directors prepared sensitivity forecasts to consider the group’s cash flow to assess the group’s going concern.
The directors intend to take in funding from existing shareholders and new strategic investors in 2024. However, making the assumptions that the group did not receiving further funding, the current liquid digital assets held reduce in value by 25% and the group took no proactive steps to mitigate a negative cashflow the directors considered a sensitised forecast which considered the group’s ongoing cash outflows and determined the group needed net 4% month on month growth in revenues to reach profitability within 18 months, without running out of cash. Growth less than 4% would require headcount and operational costs savings effected in late 2024 to continue as a going concern.
On 27 December 2023, the company signed a £2,000,000 convertible loan note with MarketVector GmbH. On the same date the company also signed a £2,000,000 warrant permitting MarketVector GmbH to invest more in the company at a time before 27 June 2025. On 11 March 2024, the loan note converted to equity at £112.47 per share.
In making the assessments above, the directors have considered the following steps in anticipation of possible downturn of events: securing further investment in the group, and drawing up a plan to reduce costs in stages rapidly if required.
Under these scenarios the group possesses a reasonable level of liquidity to meet commitments for at least 12 months from approval of these financial statements without borrowings.
The group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
Qualified opinion
We have audited the financial statements of Crypto Coin Comparison Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for qualified opinion
At 31 December 2023, the group and parent company balance sheets included software development costs of £1,852,996 within intangible assets. We were unable to satisfy ourselves that additions in the year, of capitalised staff salaries of £495,871, was an accurate reflection of the time spent by the employees on development activity. The number of projects that the development team worked on over the course of the year expanded and accurate time recordings were not maintained. Consequently we were unable to determine whether any adjustment to this amount was necessary.
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 and parent company 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, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Material uncertainty relating to going concern
We draw attention to note 1.3 to the financial statements, which shows that the group recorded a net loss for the year of £2,611,240 (2022 - £1,893,949) and at the reporting date had net current liabilities of £883,692 (2022 - net current assets of £1,750,680) although it had net assets of £951,070 (2022 - £3,461,403).
As described in note 1.3, the directors’ forecasts suggest that unless the group significantly reduces expenditure, additional capital will be required for the group to continue in operational existence for the foreseeable future. However, the availability of this capital cannot be guaranteed. This indicates the existence of a material uncertainty, which 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.
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.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Directors' Report.
Arising solely from the limitation on the scope of our work relating to software development additions, referred to above:
we have not obtained all of the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records have been kept.
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:
returns adequate for our audit have not been received from 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
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and from the requirement to prepare a strategic report.
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 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.
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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent 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. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the 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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The notes on pages 14 to 27 form part of these financial statements.
The notes on pages 14 to 27 form part of these financial statements.
These financial statements have been prepared in accordance with the provisions applicable to groups and companies subject to the small companies regime.
The notes on pages 14 to 27 form part of these financial statements.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £2,816,406 (2022 - £1,449,456 loss).
The notes on pages 14 to 27 form part of these financial statements.
The notes on pages 14 to 27 form part of these financial statements.
Crypto Coin Comparison Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 6th Floor, 9 Appold Street, London, EC2A 2AP.
The group consists of Crypto Coin Comparison Ltd and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention except where disclosed in the accounting policies where certain items are shown at weighted average cost (WAC).
The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Crypto Coin Comparison Ltd together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The group recorded a net loss for the year of £2,748,288 (2022 - £1,893,949) and at the year-end had net current liabilities of £883,692 (2022 - net current assets of 1,750,680) although had net assets of £814,022 (2022 - £3,461,403).
The directors are confident of building on the great progress made in 2023 and expect to further improve financial performance in 2024. The underlying data business continues to grow (up 15% in 2023), even though the industry is experiencing a number of headwinds as signalled by the bitcoin price being subdued throughout 2023 which impact the group's AUM revenue (down 50%).
The directors have considered their response to the likely effects of the crypto market dip and the going concern of the business.
As such the directors have reviewed the group’s forecast and projections in respect of the impacts of crypto market dip. The analysis confirmed the group has sufficient resources to meet obligations as they fall due for a period of at least 12 months from the date of signing these financial statements.
During 2023 the group has experienced strong growth in recurring revenue and before the crypto markets fell the company had converted to fiat currencies and reduced exposure to market volatility. The directors prepared sensitivity forecasts to consider the group’s cash flow to assess the group’s going concern.
The directors intend to take in funding from existing shareholders and new strategic investors in 2024. However, making the assumptions that the group did not receiving further funding, the current liquid digital assets held reduce in value by 25% and the group took no proactive steps to mitigate a negative cashflow the directors considered a sensitised forecast which considered the group’s ongoing cash outflows and determined the group needed net 4% month on month growth in revenues to reach profitability within 18 months, without running out of cash. Growth less than 4% would require headcount and operational costs savings effected in late 2024 to continue as a going concern.
On 27 December 2023, the company signed a £2,000,000 convertible loan note with MarketVector GmbH. On the same date the company also signed a £2,000,000 warrant permitting MarketVector GmbH to invest more in the company at a time before 27 June 2025. On 11 March 2024, the loan note converted to equity at £112.47 per share.
In making the assessments above, the directors have considered the following steps in anticipation of possible downturn of events: securing further investment in the group, and drawing up a plan to reduce costs in stages rapidly if required.
Under these scenarios the group possesses a reasonable level of liquidity to meet commitments for at least 12 months from approval of these financial statements without borrowings.
The group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for advertising and data services services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from advertising and data services provided over a period greater than one month is recognised either over the period services are provided or at completion of a project, depending on the facts and circumstances of each project.
Revenue from conferences and events is accounted for in the period in which the activity takes place.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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 and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Basic financial instruments are measured at amortised cost. The company has no other financial instruments or basic financial instruments measured at fair value.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group uses the Black-Scholes model to determine the fair value of options granted to employees. The calculation requires the use of estimates and assumptions. A change in these estimates or assumptions may affect charges to the profit and loss account over the vesting period of the options.
Intangible assets are amortised over their deemed useful economic life. This period has been determined via a review of the asset considering historic and future factors. The directors believe that the period over which the assets are amortised reflects the estimated useful economic life of the assets.
The directors determine whether there are any indicators of impairment of tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
The company capitalises the development costs of internal projects on the basis that they bring future economic benefits. Qualifying expenditure comprises payroll costs, and involves management estimating the percentage of time that individual staff members spend on the development phase of individual projects.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Digital assets comprise crypto assets, including Bitcoin, Ethereum and USD Tether. At 31 December 2023 the fair value of the assets was £413,893 (2022 - 679,280).
On 18 September 2017 the company incorporated a subsidiary, CC Data Ltd, in the UK. The subsidiary is registered at 6th Floor, 9 Appold Street, London, EC2A 2AP. The company holds 1 share at £1 representing 100% of the shares of the subsidiary. CC Data Ltd is a provider of data services.
Included within other creditors is £2,000,000 of unsecured convertible loan notes. These were converted to share capital on 11 March 2024.
Deferred income is included in the financial statements within other creditors as follows:
The options outstanding at 31 December 2023 had an exercise price ranging from £81.54 to £140.59, and a remaining contractual life of between 6 and 10 years.
During the year the company recognised £99,642 (2022 - £273,648) in share-based compensation expenses.
The company adopted an employee option plan in December 2017 (the "2017 plan") to enable certain executives, employees and full-time consultants of the company and its subsidiaries to be granted options to acquire up to 1,185 shares of common stock of the company. In October 2018 and 2019 the plan was amended to expand the share pool to 4,608 and 6,072 respectively. The terms of the options, including the exercise price per share and vesting provisions, are determined by the company's Board of Directors. As of 31 December 2023, 2022, 2021, 2020, 2019 and 2018; nil, 9,943, 2,477, 1,112, 6,072, 5,793 shares, respectively, have been issued, net of forfeitures, under the 2017 plan.
Stock options are generally granted at exercise prices not less than the estimated fair market value of the company's common shares at the date of grant. The fair market value of the company's common shares are determined using numerous objective and subjective factors including third-party valuations, preference share transactions with third-parties, current operating and financial performance and management estimates and future expectations. Option grants typically have a three-year vesting period with one third vesting upon expiration of each year and expire ten years from the date of grant. Compensation expenses are recognised on a graded vesting basis over the requisite employee service period, which is generally the vesting period. Share-based compensation is recognised only for those awards that are expected to vest, with forfeitures estimated at the date of grant based on historical experiences and future expectations.
The fair value of options is determined using a Black-Scholes options valuation model with the assumptions noted in the table below. The dividend rate is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the historical volatility of a peer group of public companies over the most recent period commensurate with the estimated expected term of the company's awards as the stock is not publicly traded. The risk-free interest rate is based on the Bank of England treasury yield curve in effect at the time of the grant. The expected term of the options granted represents the weighted-average period of time from the grant date to date of exercise, expiration or cancellation based on the simplified method. The company uses the simplified method for employee awards due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options granted to employees.
The ordinary A shares do not have rights to dividends.
During the year 9 share options were exercised for cash of £1,265.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
The company has taken advantage of the exemption available in FRS Section 33.1A not to disclose transactions with any fellow wholly owned group companies.
During the year the group loaned two directors a total of £60,000 (2022 - £nil). This amount is included in other debtors at 31 December 2023.