Notes to the financial statements

 

1.       Description of business, basis of preparation and going concern

 

GENERAL INFORMATION

 

Silver Bullet Data Services Group PLC ("SBDS") was incorporated on 13 May 2013. SBDS is a public limited company incorporated in England and Wales and domiciled in the UK.  The address of the registered office is The Harley Building, 77 New Cavendish Street, London, England, W1W 6XB.

 

SBDS is the ultimate parent company to the subsidiaries listed at Note 14, together referred to as "the Group". The principal activity of the SBDS Group is marketing services through the application of big data technologies to reduce friction.

 

Silver Bullet Data Services Group PLC is registered with Companies House (Company Number: 08525481).

 

BASIS OF PREPARATION

 

These financial statements have been prepared in accordance with UK-adopted International Accounting Standards, interpretations issued by the International Financial Reporting Standards Interpretations Committee ("IFRIC"), and the Companies Act 2006.  The accounting policies have been applied consistently throughout the period.

 

The Company has taken advantage of the exemption under S408 of the Companies Act 2006 not to include a separate Statement of Comprehensive Income as group statements have been prepared.

 

The consolidated financial statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

 

The presentational currency of the Group is GBP with functional currencies of the subsidiaries disclosed at Note 14 being GBP, EUR, AUD, and USD.

 

GOING CONCERN

 

The Directors have prepared and reviewed detailed budgets and forecasts covering the period to 31 December 2026 which are based on the strategic business plan. These consider all reasonably foreseeable circumstances and include consideration of trading results, cash flows and the level of facilities the Group requires on a month-by-month basis.

 

Management is in the process of completing a working capital facility. The directors are confident that the Group will be able to raise any required funds to meet their strategic objectives however there is an uncertainty over how much funding may be raised when required. However as securing new funding cannot be assured, a material uncertainty exists related to the Group or Company's ability to continue as a going concern.

 

Based on their enquiries and the information available to them and considering the other risks and uncertainties set out herein, the Directors have a reasonable expectation that the Company and the Group has or will be able to secure adequate resources to continue operating for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing this financial information.

 

 

2.       Material accounting policies

 

REVENUE RECOGNITION

 

IFRS 15 - Revenue from Contracts with Customers has been applied for all periods presented within the financial statements. The timing of all revenue recognised by the Group during the reporting period was satisfied over time in accordance with IFRS 15 recognition criteria. None of the Group's activities result in the transfer of control of a product at a point in time for revenue recognition purposes.

 

During the period under review the Group recognised revenue from the following activities:

 

Customer Experience Services

Revenue relating to service contracts is invoiced according to milestones defined within each contract, the terms of which vary on a case-by-case basis. In all cases the revenue is recognised in line with the provision of the services or, where the quantum and timing of the services cannot be reliably predicted, rateable over the period of the agreement.

 

Invoices against services contracts are raised on a monthly basis with adjustments for accrued or deferred income where the agreed invoicing timescale does not match the valuation of provision of services.

 

4D contextual targeting and insights platform

Amounts received or receivable for campaigns, typically invoiced on a monthly basis, recognise revenue in proportion to the quantum of advertising units delivered according to the contracted service. Units and metrics deliverable under each contracted services will vary on a case-by-case basis.

 

Contract liabilities

Contract liabilities are recognised when payment from a customer is received in advance of performance obligations being satisfied. Contract liabilities are recognised in trade and other payables.

 

Contract assets

Contract assets are recognised when revenue is recognised but payment is conditional on a basis other than the passage of time. Contract assets are included in trade and other receivables.

 

BUSINESS COMBINATIONS

                                                     

Silver Bullet Data Services Group PLC applies the acquisition method of accounting to account for business combinations in accordance with IFRS 3, 'Business Combinations'.

 

The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by Silver Bullet Data Services Group PLC. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of Silver Bullet Data Services Group PLC's share of the identifiable net assets acquired is recorded as goodwill. All transaction-related costs are expensed in the period they are incurred as exceptional operating expenses.

 

TAXES

 

Corporation tax, where payable, is provided on taxable profits at the current rate.

 

Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

 

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

 

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

 

FOREIGN CURRENCY TRANSLATION

 

Transactions in currencies other than the functional currency (foreign currencies) are initially recorded at the exchange rate prevailing on the date of the transaction.

 

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the date of the transaction.

 

All translation differences are taken to profit or loss, except to the extent that they relate to gains or losses on non-monetary items recognised in other comprehensive income, when the related translation gain or loss is also recognised in other comprehensive income.

 

Subsidiaries using a functional currency other than the presentation currency of the group are retranslated at each period end. Any translation differences are held within the group foreign exchange reserve.

 

INTANGIBLE ASSETS AND GOODWILL

 

Goodwill

 

Goodwill is initially measured as the excess of the aggregate of the consideration transferred over the fair value of the net assets acquired, and any previous interest held over the net identifiable assets acquired and liabilities assumed.  After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The goodwill is tested annually for impairment irrespective of whether there is an indication of impairment.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired.  If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

 

 

Intangible assets (other than goodwill)

Intangible assets acquired separately from a business combination are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably.

 

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

 

Development costs                            -              Straight line basis over 5 years

Customer lists                                    -              Straight line basis over 4 years

 

PROPERTY PLANT AND EQUIPMENT

 

Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses. Cost comprises purchase cost together with any incidental costs of acquisition.

 

Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied:

 

Computer equipment                          -              Straight line over 3 years

Fixtures, fittings and equipment             -                       Reducing balance over 4 years

 

INVESTMENTS

All investments are accounted for at cost and reviewed for impairment at each reporting period end date. Where share options are issued to employees of subsidiary companies this is treated as a capital contribution in the subsidiary with a corresponding increase in the cost of investment in the parent company.

 

IMPAIRMENT OF NON-CURRENT ASSETS

 

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.

 

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 is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income.

 

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.

 

RESEARCH AND DEVELOPMENT EXPENDITURE

 

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.

 

Development costs relate to the 4D Platform developed internally by the group which are continuing to generate revenue streams.

 

FINANCIAL INSTRUMENTS

 

Silver Bullet Data Services Group PLC classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on the date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not a fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are derecognised on the settlement date when the Group is no longer a party to the contractual provisions of the instrument.

 

          Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

 

Trade and other receivables and trade and other payables

Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. Impairments of the trade receivable balances are based on a review of individual receivable balances, their ageing and management's assessment of realisation.

 

If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

 

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised costs using the effective interest method.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand form an integral part of the Group's cash management and are included as a component of cash and cash equivalents for the purpose only on the cash flow statement.

 

EMPLOYEE BENEFITS

 

During the period the Group operated a defined contribution money purchase pension scheme under which it pays contributions based upon a percentage of the members' basic salary. The Group also paid other employee benefits including medical insurance.

 

All employee benefits are charged to the Statement of Comprehensive Income and differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments.

 

LEASES

 

The Group leases a number of properties in various locations in Europe, Australia, USA, and the UK from which it operates.

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

- Leases of assets below £1,000; and

- Leases with a duration of twelve months or less.

 

All leases signed by the Group during the reporting period were for a period of less than twelve months so no right-of-use assets have been recognised.

 

GRANT INCOME

 

Grant income is recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

 

SHARE-BASED PAYMENTS

 

The Group operates a share option programme which allows employees of the subsidiary companies to be granted options to purchase shares in this company. The fair value of options granted is recognised as an employment expense in the corresponding subsidiary company. The Group recognises a corresponding increase in subsidiary investment value and equity to recognise the capital contribution made for share option charges.

 

The fair value of the options is measured at the grant date and spread over the vesting period. The fair value is measured based on an option pricing model taking into account the terms and conditions upon which the instruments were granted.

 

Vesting periods in each share option agreement vary from vesting immediately on grant date to vesting over a period of four years.

 

EXCEPTIONAL ITEMS

 

Where items of income and expense included in the statement of comprehensive income are considered to be material and exceptional in nature, separate disclosure of their nature and amount is provided in the financial statements. These items are classified as exceptional items. The Group considers the size and nature of an item both individually and when aggregated with similar items when considering whether it is material, for example impairment of intangible assets or restructuring costs.

 

FINANCE INCOME AND EXPENSES

 

Finance expenses comprise interest payable recognised in the statement of comprehensive income using the effective interest method.

 

Interest income and interest payable are recognised in the statement of comprehensive income as they accrue, using the effective interest method.

 

ADOPTION OF NEW AND REVISED STANDARDS

 

The following standards and interpretations relevant to the Group are in issue but are not yet effective and have not been applied in the financial statements. In some cases these standards and guidance have not been endorsed for use in the United Kingdom.

 

·      IAS 1 Presentation of liabilities as current or non-current

 

The above standards are not expected to materially impact the Group.

 

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

 

The preparation of these financial statements requires the Directors to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue in the financial statements. Actual results could differ from these estimates. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

 

Key sources of estimation uncertainty that could cause an adjustment to be required to the carrying amount of assets or liabilities within the next accounting period are:

 

Critical accounting estimates:

 

Impairment of intangible fixed assets

Impairment tests have been undertaken in respect of goodwill and intangible fixed assets using an assessment of the value in use of the respective cash generating units (CGUs). This assessment requires a number of assumptions and estimates to be made including the allocation of assets to CGUs, the expected future cash flows from each CGU and also the selection of a suitable discount rate in order to calculate the present value of those cash flows. Impairments of intangible assets are explained in more detail at note 11.

 

Critical accounting judgements:

 

Amortisation

The assessment of the useful economic lives, residual values and the method of depreciating or amortising intangible (excluding goodwill) fixed assets requires judgement. Amortisation is charged to profit or loss based on the useful economic life selected, which requires an estimation of the period and profile over which the group expects to consume the future economic benefits embodied in the assets. Useful economic lives and residual values are re-assessed, and amended as necessary, when changes in their circumstances are identified.

 

Capitalised development costs

Development costs incurred in building the Group's key platform for future expansion have been capitalised in accordance with the requirements of IAS38. The majority of these costs consist of salary expenses to which an estimated proportion of development time has been applied.

 

Convertible loan notes

The equity portion of the convertible loan notes have been valued using the Black-Scholes model. This gives equivalent discount rates on the liability components ranging from 14% to 21%. The directors consider this rate to be an approximation of the rate on a similar loan without the conversion feature. The directors consider this method is used as a practical measure to estimate the value of the debt.

 

Going concern

As discussed more fully in the Directors' Report these financial statements have been prepared on the going concern basis. This treatment is based on management's judgement that cashflow requirements for the continued development can be achieved through operating activities and through additional fundraising if required.

 

3.       Operating segments

 

IFRS 8 requires that operating segments be identified on the basis of internal reporting and decision-making. The Board of Directors is the chief operating decision maker for the Group.

 

The Group has two business segments outlined below. The business analyses these streams by revenue and gross profit.  Overheads, assets and liabilities are not separately allocated across the business streams.

 

The business monitors operating segments using gross profit as the key measurement. Group profitability is measured using earnings before interest, tax, depreciation and amortisation (EBITDA) which is used to represent operating cashflow generated by the business.

 

	2023			2022
	Revenue	Gross profit		Revenue	Gross profit
	£	£		£	£
Customer Experience Services	5,551,586	5,314,225		4,302,431	4,011,972
4D Platform	2,806,504	1,049,368		1,515,824	207,310
Total	8,358,090	6,363,593		5,818,255	4,219,282
EBITDA from continuing operations
Operating (loss)		(2,959,124)			(7,348,222)
Depreciation and amortisation		836,403			790,274
Total		(2,122,721)			(6,557,948)

 

4.       Geographical analysis

 

Revenue analysed by geographical market:

	2023		2022
	£		£
United Kingdom	2,126,778		1,066,801
Rest of Europe	1,158,692		1,553,243
Rest of the world	5,072,620		3,198,211
	8,358,090		5,818,255

 

The timing of all revenue recognised by the Group during the reporting period was satisfied over time in accordance with IFRS 15 recognition criteria. None of the Group's activities result in the transfer of control of a product at a point in time for revenue recognition purposes.

 

Three major customers are included within revenue totalling £3,805,304 representing 13%, 16%, and 17% of total group revenue respectively (2022: two major customer totalling £1,512,875, each representing 13%).

 

Non-current assets analysed by geographical market:

	2023		2022
	£		£
United Kingdom	6,341,362		6,934,199
Rest of Europe	-		4,506
Rest of the world	11,911		14,504
	6,353,273		6,953,209

 

 

5.       Exceptional items

	Group
	2023	2022
	£	£
Amounts recovered relating to a historic fraud	-	(42,154)
	-	(42,154)

 

          Reported loss before tax for the group is reconciled to the headline loss before tax below. This figure is a non-GAAP measure used for internal purposes and may not be comparable to other non-GAAP measures.

 

	Group
	2023	2022
	£	£
Reported (loss) before tax	(3,447,776)	(7,536,773)
Share option charges	217,921	1,476,183
Amounts recovered relating to a historic fraud	-	(42,154)
Headline (loss) before tax	(3,229,855)	(6,102,744)

 

 

6.       Operating (loss)

 

          The operating loss is arrived at after charging:

 

	Group
	2023	2022
	£	£
Depreciation of property plant and equipment	28,117	29,209
Amortisation of intangible assets	808,287	761,065
Short-term leases	259,330	237,388
Foreign exchange losses	83,763	24,334
Auditor's remuneration in respect of:
- audit of the consolidated financial statements	79,200	72,000
- other audit related assurance services	2,500	5,000

 

7.       Staff costs

 

	Group
	2023	2022
	£	£
Wages and salaries	5,006,201	5,594,877
Share-based payments	217,921	1,476,183
Social security costs	497,419	786,795
Pension costs - defined contribution	260,639	215,546
Termination payments	27,855	19,598
	6,010,035	8,092,999

                     

Average number of staff

	Group			Company
	2023	2022		2023	2022
Customer Experience Services	36	36		-	-
4D Platform	23	32		-	-
Central	9	12		-	-
	68	80		-	-

 

8.       Directors' remuneration

 

          Key management personnel are considered to be the directors and their remuneration, employer's national insurance, and pension contributions are disclosed below:

 

	Group
	2023	2022
	£	£
Directors' remuneration	691,728	763,237
Share-based payments	175,773	637,430
Social security costs	67,520	79,133
Pension costs - defined contribution	20,533	20,526
Invoiced services	-	17,920
	955,554	1,518,246

 

The directors are remunerated, in respect of their services to the Group, through subsidiary companies. During the year three directors (2022: three) were accruing benefits under the company defined contribution pension scheme.

 

Remuneration disclosed above includes the following amounts paid to the highest paid director:

 

	Group
	2023	2022
	£	£
Directors' remuneration	225,000	225,000
Share-based payments	71,552	229,757
Social security costs	28,243	29,744
Pension costs - defined contribution	6,750	6,750

 

 

9.       Finance expenses

	Group
	2023	2022
	£	£
On convertible loan notes	419,455	166,651
On bank loans	69,198	21,900
	488,653	188,551

 

10.     Income tax provision

         

          A deferred tax asset in respect of the Group's losses to date has not been recognised due to the uncertainty of the timing of future loss relief.

 

	Group
	2023	2022
Current tax	£	£
UK corporation tax charge from prior periods	698	-
UK corporation tax charge/(credit) for R&D from prior years	8,064	(41,009)
UK corporation tax credits for R&D for current year	(143,676)	(360,000)
Foreign taxation	3,021	1,971
Total current tax	(131,893)	(399,038)
Deferred tax	(144,199)	84,298
Total tax credit	(276,092)	(314,740)

 

 

Reconciliation of tax expense

 

The tax assessed on the loss on ordinary activities for the year is lower than the standard rate of corporation tax in the UK of 19% (2022: 19%).

 

	Group
	2023	2022
	£	£
Loss on ordinary activities before taxation	(3,447,777)	(7,512,440)
Loss on ordinary activities by rate of tax	(655,077)	(1,427,364)
Non-allowable expenses	158,917	150,152
Enhanced R&D expenditure	(143,676)	(360,000)
Deferred tax movement on intangible assets	(144,199)	84,298
Movement in deferred tax not recognised	496,160	1,277,212
Adjustments in respect of prior periods	8,762	(41,009)
Foreign taxation	3,021	1,971
Tax on loss	(276,092)	(314,740)

 

 

Deferred tax assets have not been recognised on cumulative losses for the group totalling £43,151,563 (2022: £40,012,779).

 

 

11.     Goodwill and intangible assets

 

	Customer lists	Development Costs	Goodwill	Total
	£	£	£	£
COST
At 1 January 2022	595,708	2,498,004	4,349,662	7,443,374
Additions	-	1,099,062	-	1,099,062
At 31 December 2022	595,708	3,597,066	4,349,662	8,542,436
At 1 January 2023	595,708	3,597,066	4,349,662	8,542,436
Additions	-	226,891	-	226,891
At 31 December 2023	595,708	3,823,957	4,349,662	8,769,327
AMORTISATION
At 1 January 2022	362,790	524,180	-	886,970
Amortisation charge	148,927	612,138	-	761,065
At 31 December 2022	511,717	1,136,318	-	1,648,035
At 1 January 2023	511,717	1,136,318	-	1,648,035
Amortisation charge	83,991	724,296	-	808,287
At 31 December 2023	595,708	1,860,614	-	2,456,322
NET BOOK VALUE
At 31 December 2022	83,991	2,460,748	4,349,662	6,894,401
At 31 December 2023	-	1,963,343	4,349,662	6,313,005

 

 

          Amortisation is charged within administrative expenses in the Statement of Comprehensive Income.

 

Cash Generating Unit (CGU) impairment reviews

 

The Group has identified two CGUs: Customer Experience Services and 4D Platform (as reported in Note 3). The intangible assets are allocated to these CGUs as follows:

 

	Goodwill	Development costs	Total
Customer Experience Services	3,076,826	-	3,076,826
4D Platform	1,272,836	1,963,343	3,236,179
	4,349,662	1,963,343	6,313,005

 

1.   Customer Experience Services

 

The key assumptions for the value in use calculation are considered separately below.

 

Number of years of cash flows used and budgeted growth rate

The recoverable amount is based on a value in use calculation using specific cash flow projections over a five-year period with a growth rate of 2% for a further 3 years. The five-year forecast is prepared considering the directors' expectations based on market knowledge, numbers of new engagements and the pipeline of opportunities.

 

 

Discount rate

The Group's pre-tax weighted average cost of capital has been used to calculate a discount rate, which reflects current market assessments of the time value of money for the period under review and the risks specific to the Group. A discount rate of 19% was applied for each of the periods under review.

 

Future growth rate

An appropriate growth rate is selected, based on the directors' expectations of growth beyond the budgeted period.  The growth rate used for the period following the detailed forecast period is 2%, which is within the expected growth for the industry.

 

The discounted cashflows expected compares to the carrying value as follows:

 

	Net Book Value	Recoverable Amount	Impairment Headroom
As at 31 December 2022	3,160,817	13,788,238	10,627,421
As at 31 December 2023	3,076,826	8,732,408	5,655,582

 

Sensitivity analysis has been conducted on each of management's key assumptions to assess the volatility of the impairment head room against the Group's Cash Generating Units.

 

A discount factor of 19% has been applied by management in order to calculate the net present value of each CGUs recoverable amount. For the Impairment Headroom to reduce to £nil this discount factor would need to increase to 74%. This discount factor is an estimate of the Group's cost of capital based on the capital asset pricing model using the beta value from similar listed businesses.

 

Management have used a sales pipeline to assess likely revenue for the proceeding three years, with a medium-term sales growth rate at 5% for three financial years with a growth rate forecast at 2% for years 2029 to 2031. Sensitivity analysis on these revenue estimates show that a reduction in forecast revenue of 17% would not result in any impairment.

 

For the purposes of reviewing goodwill impairments, the tangible fixed assets acquired in business combinations are not considered to be material.

 

 

2.   4D Platform

 

The carrying value of amortised intangible assets and the key assumptions used in performing the annual impairment assessment and sensitivities are disclosed below:

 

	Net Book Value	Recoverable Amount	Impairment Headroom
	£	£	£
As at 31 December 2022	3,733,584	4,557,679	824,095
As at 31 December 2023	3,236,179	4,066,574	830,395

 

The key assumptions applied by management in assessing these recoverable amounts are:

 

-     a discount rate of 19% to calculate the present value of future cashflows;

-     revenue growth assumptions used in development costs averaging 50% per year over the first two years to 31 December 2025.

 

Sensitivity analysis has been conducted on these management assumptions to show that an increased discount rate of 24% would not result in any impairments being recognised.

 

Cashflow forecasts used in this analysis have been prepared by management based on best estimates of future activity and expected profit margins. Reduction of future revenue streams by a factor of 6% would not result in any impairment without considering any cost control measures.

 

12.     Investments

 

          All investments held by the group relate to investments in trading companies as detailed in Note 14.

 

COST	Group		Company
At 1 January 2022	-		6,872,911
Additions	4,999		1,481,183
At 31 December 2022	4,999		8,354,094
At 1 January 2023	4,999		8,354,094
Additions	-		217,921
At 31 December 2023	4,999		8,572,015

 

 

Impairment review of investments

Using the assumptions applied in reviewing intangible assets for impairment (see Note 11) the Company's investments in subsidiaries have also been compared to the discounted future cashflows expected from the subsidiary CGUs.

 

At the period end no impairment charges (2022: £nil) were necessary given the headroom below:

 

 

	Net Book Value	Recoverable Amount	Impairment Headroom
As at 31 December 2022	£	£	£
Investments in subsidiaries	8,354,094	18,345,917	9,991,823
	8,354,094	18,345,917	9,991,823
As at 31 December 2023
Investments in subsidiaries	8,572,015	12,798,982	4,226,967
	8,572,015	12,798,982	4,226,967

 

 

13.      Tangible assets

 

	Fixtures, fittings and equipment	Computer equipment	Total
	£	£	£
COST
At 1 January 2022	8,297	142,725	151,022
Additions	11,814	29,089	40,903
At 31 December 2022	20,111	171,814	191,925
At 1 January 2023	20,111	171,814	191,925
Additions	471	9,106	9,577
At 31 December 2023	20,582	180,920	201,502
DEPRECIATION
At 1 January 2022	4,973	103,934	108,907
Charge for the period	4,237	24,972	29,209
At 31 December 2022	9,210	128,906	138,116
At 1 January 2023	9,210	128,906	138,116
Charge for the period	4,868	23,249	28,117
At 31 December 2023	14,078	152,155	166,233
NET BOOK VALUE
At 31 December 2022	10,901	42,908	53,809
At 31 December 2023	6,504	28,765	35,269

 

Depreciation is charged to administrative expenses within the Statement of Comprehensive Income.

 

14.      Investments in subsidiaries

 

As at 31 December 2023 Silver Bullet Data Services Group PLC owned an interest in the ordinary share capital of the companies below.

 

All companies are 100% owned with the exceptions of Local Planet Data Services Ltd (51% owned) and Silver Bullet Data Science Limited (49.99% owned).

 

Silver Bullet Data Science Limited has not been consolidated into these financial statements as the Group does not exercise control over the company's activities.

 

During the period steps were taken to close and liquidate the German-registered subsidiary Silver Bullet Data Services GmbH which is expected to be completed during 2024.

 

Subsidiary undertaking	Country of incorporation	Registered office	Principal activity
Silver Bullet Media Services Limited	England and Wales	The Harley Building, 77 New Cavendish Street, London, W1W 6XB	Marketing services and data technologies
IOTEC Native Limited	England and Wales	The Harley Building, 77 New Cavendish Street, London, W1W 6XB	Dormant
Silver Bullet Data Services Limited	England and Wales	The Harley Building, 77 New Cavendish Street, London, W1W 6XB	Marketing services and data technologies
Silver Bullet Data Services GmbH	Germany	Herzogspitalstraße 24, 80331, Munich	Dormant
Silver Bullet Data Services Pty Ltd	Australia	452 Flinders St, Melbourne, 3000, Victoria	Marketing services and data technologies
Silver Bullet Data Services S.r.l	Italy	20161, Via Gian Rinaldo, Carli n. 47, Milan	Marketing services and data technologies
Technobeet S.r.l.	Italy	20161, Via Gian Rinaldo, Carli n. 47, Milan	Dormant
Silver Bullet USA Inc.	United States of America	1250 Broadway, 36th Floor, New York, New York, 10001	Marketing services and data technologies
Local Planet Data Services Ltd	England and Wales	The Harley Building, 77 New Cavendish Street, London, W1W 6XB	Marketing services and data technologies

 

15.     Trade and other receivables

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
Trade receivables	2,202,850	1,307,790		-	-
Other receivables	440,560	448,798		177,827	227,439
Prepayments	249,292	225,537		120,395	58,135
Contract assets	297,184	170,855		-	-
Corporation tax receivable	143,676	334,864		-	-
	3,333,562	2,487,844		298,222	285,574

 

In determining the recoverability of accounts receivable, the Group considers any changes in the credit quality of the accounts receivable from the date credit was initially granted up to the reporting date.

 

Those receivable balances that are passed due have been assessed by management on an individual basis and provisions for bad debts has been made as necessary.

 

Contract assets represent agreements with customers against which revenue has been recognised but not yet invoiced in accordance with the contract terms. All accrued revenue at each period end has been invoiced within a maximum of three months of the reporting period.

 

16.     Cash and cash equivalents

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
Cash at bank	677,855	1,352,221		152,477	8,572
	677,855	1,352,221		152,477	8,572

 

Cash at bank earns interest at floating rates based on daily bank deposit rates. Bank interest received is not material.

 

17.     Trade and other payables

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
Trade payables	1,221,776	530,257		166,823	34,448
Tax and social security	551,163	497,631		21,027	20,613
Other payables	339,670	345,496		10,051	5,050
Accruals	516,847	647,382		1,464	4,607
Contract liabilities	204,400	290,988		-	-
Amounts owed to group undertakings	-	-		3,974,951	3,762,367
	2,833,856	2,311,754		4,174,316	3,827,085

 

The fair value of trade and other payables approximates to book value at each year-end. Trade payables are non-interest bearing and are normally settled monthly.

 

Contract liabilities represent agreements with customers against which revenue has not yet been recognised for payments that have been received in advance during the report period. All such deferred revenue at each period end has been released to the Statement of Comprehensive Income within a maximum of three months of the reporting period.

 

18.        Loans and borrowings

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
Current liabilities
Bank loans	75,002	41,227		33,862	-
Term loans	350,000	-		200,000	-
	425,002	41,227		233,862	-
	2023	2022		2023	2022
	£	£		£	£
Non-current liabilities
Convertible loan notes	2,554,672	1,687,697		2,554,673	1,687,697
Bank loans	66,800	110,295		-	-
	2,621,472	1,797,992		2,554,673	1,687,697

 

As at 31 December 2023 the Group had two bank loans of £141,801 (2022: £151,522). One loan accrues interest at 1.95% repayable over six years to 2026. Other loan balances are payable in equal instalments over a period of six months accruing annual interest rate of 11.2%.

 

As at 31 December 2023 the group had two short-term loan facilities totalling £350,000 (2022: £nil). The loans were lent without security and accrue interest at rates of 8.5% and 12%.

 

Convertible loan notes are in issue which are convertible by the option holder into new ordinary shares at any point during the three-year term of the loan, the latest of which expires 31 May 2026. Conversion prices are fixed at £1.10 for the June 2022 convertible loan note instruments and £0.50 for the May 2023 convertible loan note instrument.

 

The loan notes attract interest at a rate of 12% per annum, which is payable commencing on the date of issue either:

i)          at the Company's option of 8% per annum paid monthly plus 4% payable via the issue of additional Convertible Loan Notes as payment in kind.

ii)          12% payable via the issue of additional Convertible Loan Notes as payment in kind.

 

The loan notes may be redeemed in cash at the option of company at any point at a premium equal to 15% of the principal amount of the Notes.

 

The equity element of the convertible loan note is recognised within other reserves (see Note 23). Market interest rates of between 14% and 21% have been applied to calculate the residual equity value of the financial instrument.

 

19.     Deferred tax liability

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
Movements in the year:
Liability brought forward	632,190	547,892		-	-
Charge / (credit) to profit or loss	(144,199)	84,298		-	-
Liability carried forward	487,991	632,190		-	-

 

All deferred tax liabilities are recognised in respect of intangible and tangible asset timing differences. No deferred tax assets have been recognised by the Group.

 

20.     FINANCIAL INSTRUMENTS

 

Financial instruments and risk management

The Group's financial instruments may be analysed as follows:

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
Financial assets measured at amortised cost
Cash and cash equivalents	677,855	1,352,221		152,477	8,571
Trade receivables	2,202,850	1,307,790		-	-
Contract assets	297,184	170,855		-	-
Other receivables	440,560	448,798		177,827	227,439
	3,618,450	3,279,664		330,304	236,010
Financial liabilities measured at amortised cost
Trade payables	1,221,776	530,257		166,823	34,448
Accruals	516,847	647,382		1,467	4,609
Other payables	339,670	345,496		3,985,002	3,767,417
Loans	3,046,474	1,839,219		2,554,673	1,687,697
	5,124,767	3,362,354		6,707,964	5,494,171

 

Financial assets measured at amortised cost comprise cash, trade receivables, contract assets and other receivables.

 

Financial liabilities measured at amortised cost comprise bank loans and overdrafts, other loans, trade payables, convertible loan notes and other payables.

 

The debt instruments, excluding convertible loan notes, were initially recognised at fair value, and subsequently they were measured at amortised cost using the effective interest rate method, whereby the fair value of the debt approximates their carrying value.

 

The Group is exposed to a variety of financial risks through its use of financial instruments which result from its operating activities. All of the Group's financial instruments are classified as loans and receivables.

 

The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below:

 

Credit risk

       

Generally, the Group's maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised at the reporting date, as summarised above.

 

Credit default risk is the financial risk to the Group if a counter party to a financial instrument fails to meet its contractual obligation. The nature of the Group's receivable balances, the time taken for payment by entities and the associated credit risk are dependent on the type of engagement.

 

Credit risk is minimised substantially by ensuring the credit worthiness of the entities with which it carries on business. Credit terms are provided on a case-by-case basis. The Group's trade and other receivables are actively monitored. The Group has not experienced any significant instances of non-payment from its customers.

 

Unbilled revenue is recognised by the Group only when all conditions for revenue recognition have been met in line with IFRS 15.

 

Liquidity risk

 

Liquidity risk represents the contingency that the Group is unable to gather the funds required with respect to its financial obligations at the appropriate time and under reasonable conditions in order to meet their current obligations. The Group attempts to manage this risk so as to ensure that it has sufficient liquidity at all times to be able to honour its current and future financial obligations under normal conditions and in exceptional circumstances. Financing strategies to ensure the management of this risk include the issuance of equity or debt securities as deemed necessary.

 

The group's financial liabilities mature to the following profile:

 

	2024	2025	2026	Total
	£	£	£	£
Trade payables	1,221,776	-	-	1,221,776
Accruals	516,847	-	-	516,847
Other payables	339,670	-	-	339,670
Loans	425,001	2,102,482	518,990	3,046,474
	2,503,294	2,102,482	518,990	5,124,767

 

Foreign currency risk

       

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily Australian Dollars, United States Dollars and Euros. The Group monitors exchange rate movements closely and ensures adequate funds are maintained in appropriate currencies to meet known liabilities.

 

The Group's exposure to foreign currency risk at the end of the respective reporting periods were as follows:

	2023				2022
	AUD	USD	EUR		AUD	USD	EUR
Assets and liabilities	172,852	1,681,089	(537,629)		299,236	244,995	(515,938)

 

Assets and liabilities include the monetary assets and liabilities of subsidiaries denominated in foreign currency.

 

The Group is exposed to foreign currency risk on the relationship between its functional currencies and other currencies in which the Group's material assets and liabilities are denominated. The table below summaries the effect on reserves had the functional currencies of the Group weakened or strengthened against these other currencies, with all other variables held constant.

 

	Group			Company
	2023	2022		2023	2022
	£	£		£	£
10% strengthening of functional currency	85,952	(7,876)		-	-
10% weakening of functional currency	(180,498)	16,539		-	-

 

The impact of a change of 10% has been selected as this has been considered reasonable given the current level of exchange rates and the volatility observed both on a historical basis and market expectations for future movements.

 

21.     Share capital and premium

         

Ordinary share capital
Issued and fully paid	No.	£
As at 1 Jan 2023	15,936,687	159,367
Shares issued	1,454,081	14,541
As at 31 Dec 2023	17,390,768	173,908

In December 2023 investment funding was raised for 1,428,571 new shares issued at £0.70. At the reporting date deferred share subscriptions were outstanding of £125,000 (2022: £142,720) and are held within other receivables.

22.     Share Option Reserve

 

The Group operates a programme for employees of its subsidiaries to acquire shares in the company under an EMI scheme. All options are settled by the physical delivery of shares once the options have vested and are exercised.

 

The number and weighted average exercise price of share options during the year were as follows:

	2023		2022
	Weighted average exercise price	Share options	Weighted average exercise price	Share options
	£	No.	£	No.
Outstanding at start of period	1.49	1,569,620	1.56	1,679,607
Forfeited/expired during period	1.01	(196,626)	1.50	(198,987)
Granted during period	0.04	111,000	0.27	109,000
Exercised during period	0.01	(25,510)	0.01	(20,000)
Outstanding at end of period	1.47	1,458,484	1.49	1,569,620

 

Share options have been valued at grant date based on the Black Scholes valuation model using an estimated volatility of 40%. Options vest over varying terms according to individual option agreements from vesting in full on grant date to a period of three years.

 

All options expire after seven years and an expected take-up rate of 100% has been applied. A dividend yield of 0% has been applied to option valuation models as the Group focuses on capital growth through this period. Risk-free rates have been applied ranging from 0.26% to 3.62% based on UK 10-year gilt rates since 2014.

 

The movement in option valuation during the year ended 31 December 2023 resulted in a staffing cost being recognised by the Group of £217,921 (2022: £1,476,183), with a corresponding increase in the Group's equity.

 

The valuation of options exercised, lapsed, and forfeited during the year totalled £181,122 (2022: £355,150) which has been transferred to Retained Earnings.

 

The contractual life for outstanding options runs for a number of periods, the latest of which being to 26^th October 2030.

 

23.     Other reserves

 

		2023		2022
		£		£
Convertible loan notes		451,432		398,954
		451,432		398,954

 

Loan notes are in issue which are convertible into new ordinary shares at prices ranging from £0.50 to £1.10 per new ordinary share at any point during the three-year term of the loan.

 

The equity element of the convertible loan note is recognised within other reserves. Market interest rates varying from 14% to 21% have been applied to calculate the residual equity value of the financial instrument.

 

24.     Related party transactions

 

Key management personnel and directors' remuneration is detailed at note 8.

 

Local Planet International Limited: is a related party to the group by virtue of having Directors in common.  Ian James, Martyn Rattle and Nigel Sharrocks are directors of both companies.

 

Recharges for shared services totalling £124,668 (2022: £146,293) are included in revenue for the year ended 31 December 2023. Amounts outstanding at the year end included in trade receivables totals £9,857 (2022: £29,611).

 

Recharges for direct costs incurred were processed during the year ended 31 December 2023 totalling £100,100 (2022: £114,009). Amounts outstanding at 31 December 2023 totalled £37,800 (2022: £32,400).

 

Marmalade Consultants Limited: is a related party to the group by virtue of having Directors in common. Martyn Rattle is a director of both companies Consultancy services were provided during the year ended 31 December 2023 totalling £nil (2022: £17,920).

 

Educated Solutions Limited: is a related party to the group by virtue of having Directors in common. Ian James and Martyn Rattle are directors of both companies. Costs of £nil (2022: £3,462) were recognised in respect of a profit share agreement.

 

Umberto Torrielli: A director of the Group company relocated to the USA in order to establish a new presence in this territory in 2020. For this purpose a loan was issued of £151,969 which is held within other debtors at the end of the reporting period (2022: £150,000). The loan is repayable within 12 months and attracts interest at the Bank of England interest rate.

 

Transactions with group companies

 

As a holding company for the subsidiaries listed at Note 14, all funds raised are distributed to subsidiary companies as required. A summary of balances outstanding at the period end are provided below. All balances are repayable on demand and are lent without security or accruing any interest.

 

A provision for bad debts has been included in the Company financial statements for all amounts receivable from subsidiaries in both the current and previous year.

 

Amounts owed to subsidiary companies	2023	2022
	£	£
Silver Bullet Media Services Limited	2,921,809	2,960,236
Iotec Native Limited	802,131	802,131
Silver Bullet Data Services Limited	196,011	-
Local Planet Data Services Ltd	55,000	-
	3,974,951	3,762,367

25.     Earnings per share

 

Earnings per share (EPS) is calculated on the basis of profit attributable to equity shareholders divided by the weighted average number of shares in issue for the year. The diluted EPS is calculated on the treasury stock method and the assumption that the weighted average EMI share options outstanding during the period are exercised.

	2023	2022
	£	£
Loss after taxation	(3,171,684)	(7,222,033)
Non-controlling interest	(2,534)	946
Loss after taxation attributable to shareholders	(3,169,150)	(7,222,979)
Number of shares
Weighted average number of ordinary shares in issue	16,057,860	14,889,187
Dilutive effect of in-the-money share options	656,832	589,590
Diluted weighted average number of shares	16,714,692	15,478,777
Earnings per share
Basic earnings per share	(0.20)	(0.49)
Diluted earnings per share	(0.20)	(0.49)

 

As there is a loss for the year the options are antidilutive and therefore the basic and the diluted EPS are the same.

 

26.     Other financial commitments

 

          The Company has provided a guarantee in respect of the outstanding liabilities of the subsidiary companies listed below in accordance with Sections 479A - 479C of the Companies Act 2006, as these subsidiary companies of the Group are exempt from the requirements of the Companies Act 2006 relating to the audit of the accounts by virtue of Section 479A of this Act.

 

Silver Bullet Media Services Limited (06216702)

IOTEC Native Limited (08286180)

Silver Bullet Data Services Limited (10081847)

Local Planet Data Services Ltd (13123941)

 

27.     Subsequent events

         

          No other significant events have occurred between the end of the reporting period and the date of signature of the Annual Report and Accounts.

         

28.     Ultimate controlling party

 

Management consider there is no ultimate controlling party of the Group.