Period from 1 December 2021 to
Registration number:
Engineered Arts Limited
Balance Sheet
31 December 2022
Note |
2022 |
2021 |
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Fixed assets |
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Intangible assets |
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Tangible assets |
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Current assets |
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Stocks |
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Debtors |
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Cash at bank and in hand |
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Creditors: Amounts falling due within one year |
( |
( |
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Net current assets |
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Total assets less current liabilities |
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Creditors: Amounts falling due after more than one year |
( |
( |
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Provisions for liabilities |
( |
( |
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Net assets |
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Capital and reserves |
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Called up share capital |
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Share premium reserve |
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Profit and loss account |
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Total equity |
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These financial statements have been prepared and delivered in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006 and the option not to file the Profit and Loss Account has been taken.
Approved and authorised by the
......................................... |
Company Registration Number: 05265468
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
These financial statements were authorised for issue by the
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements have been prepared in accordance with Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of Section 1A of FRS102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in pounds sterling which is the functional currency of the company.
Monetary amounts in these financial statements are rounded to the nearest pound.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
Going concern
In preparing and approving these financial statements the directors have given due consideration to going concern risks.
In reaching this conclusion the directors, having made all necessary enquiries, have considered the level of cash reserves at the balance sheet date, and post year end. The company continues to invest in development projects in order to drive future sales, and has sufficient cash to fund both this development and cover its other operational expenditure as and when they fall due.
After due consideration of these factors the Directors are satisfied that the company will be able to operate within their available facilities and continue as a going concern for the foreseeable future - being a period no less than 12 months from the date of approval of these financial statements.
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Key sources of estimation uncertainty
Held within other loans due in less than one year are balances in relation to funds received under a Simple Agreement for Future Equity (SAFE) agreement.
It has been considered whether this should be classified for as an equity or liability.
Under FRS102 S.22.3B(i), a financial liability is a contract that will or may be settled in the entity's own equity instruments and is a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity's own instruments.
On the basis that the number of shares to be issued will vary depending on the outstanding amount at that time and the applicable conversion rate, it is understood that the balance should be classified as a liability. The carrying amount is £2,357,790 (2021 -£Nil).
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable in respect of:
- The sale of humanoid and semi humanoid robots, including custom commissions and installations;
- The rental of humanoid and semi humanoid robots;
- The provision of software solutions and upgrades.
Turnover is shown net of value added tax, returns, rebates and discounts. Revenue in respect of the sale of units is recognised when the items are dispatched or made available for collection by customers. Revenue in respect of the provision of services is recognised over the term to which it relates.
Revenue in respect of product warranties is recognised over the period to which it relates. Revenue not relating to a period is deferred and recognised within accruals.
Government grants
Government grants in respect of capital expenditure are credited to a deferred income account and are released to profit over the expected useful life of the relevant assets by equal annual instalments. Grants of a revenue nature are credited to income so as to match them with the expenditure to which they relate.
In the year, the company also received Coronavirus Job Retention Scheme ("CJRS") grant income from the Government, designed to mitigate the impact of Covid 19. The company has elected to account for such grants under the accruals model as permitted by FRS 102. Grants of a revenue nature are recognised in "other income" within the profit and loss in the same period as the related expenditure.
Other grants
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Tax
Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current corporation tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Deferred tax is recognised on all timing differences at the balance sheet date unless indicated below. Timing differences are differences between taxable profits and the results as stated in the profit and loss account and other comprehensive income. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Leasehold properties |
Straight line over the life of the lease |
Plant and machinery |
15% reducing balance |
Fixtures, fittings and equipment |
15% reducing balance |
Motor vehicles |
15% reducing balance |
Research and development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred. In the event that an internally generated intangible asset arises from the company's development activities then it may be recognised only if all of the following conditions are met:
• it is technically feasible to complete the asset so that it is available for use;
• management intends to complete the asset and use or sell it;
• there is an ability to use or sell the asset;
• adequate technical, financial, and other resources to complete the development and to use or sell the product are available;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Development costs |
10% straight-line |
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the average cost (AVCO) method. In prior years, the first-in, first-out (FIFO) method had been used.
The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance costs in the profit and loss account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Share based payments
The company provides share based payments to certain employees.
Equity settled arrangements are measured at the fair value (excluding the effect on non market based vesting conditions) at the date of the grant. The fair value is expensed on a straight line basis over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of shares or options that will vest.
Where equity settled arrangements are modified, and are of benefit to the employee, the incremental fair value is recognised over the period from the date of modification to date of vesting. Where a modification is not beneficial to an employee there is no change to the charge for share based payment. Settlements and cancellations are treated as an acceleration of vesting and the unvested amount is recognised immediately in profit and loss.
The company has no cash settled arrangements.
Financial instruments
Classification
• Short term trade and other debtors and creditors; and
• Cash and bank balances.
All financial instruments are classified as basic.
Recognition and measurement
Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument and derecognised when in the case of assets, the contractual rights to cash flows from the assets expire or substantially all the risks and rewards of ownership are transferred to another party, or in the case of liabilities, when the company’s obligations are discharged, expire or are cancelled.
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Critical judgements and estimation uncertainty
In applying the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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.
In the opinion of the Directors the following areas are where significant estimates or judgements have been made in the financial statements:
Recognition of development expenditure (note 4)
During the year development expenditure of £454,187 (2021 - £800,415) has been recognised as an intangible asset in the financial statements. Management have considered the requirements of Section 18 of FRS102 and are satisfied that the necessary conditions have been met in regards to the works performed. The company continues to invest in further development projects for launch in future periods.
Development costs that are capitalised in accordance with the requirements of FRS 102 are not treated, for dividend purposes, as a realised loss.
Recognition of share based payment arrangements (note 11)
The cost of share-based payments plans (our warrant plans) are calculated on the basis of the fair value of the equity instrument at grant date. Determining the fair value assumes choosing the most suitable valuation model for these equity instruments, which in this instance has involved the application of the Black - Scholes model. The application of this model requires input of relevant judgments, such as the estimated expected life and the volatility. Expected life assessments include consideration of when, or if, an exit event would occur.
Management have considered a range of scenarios in regards to the valuation and have assessed the impact of the share based payment arrangement as being immaterial to the financial statements.
Staff numbers |
The average number of persons employed by the company (including directors) during the period, was
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Intangible assets |
Development costs |
Total |
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Cost or valuation |
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At 1 December 2021 |
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Additions |
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At 31 December 2022 |
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Amortisation |
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At 1 December 2021 |
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Amortisation charge |
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At 31 December 2022 |
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Carrying amount |
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At 31 December 2022 |
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At 30 November 2021 |
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The aggregate amount of research and development expenditure recognised as an expense during the period is £
The amortisation of development costs recognised in the year is £110,392 (2021 - £101,901) and is included in administration costs.
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Tangible assets |
Short leasehold |
Fixtures and fittings |
Motor vehicles |
Plant and machinery |
Total |
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Cost or valuation |
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At 1 December 2021 |
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Additions |
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- |
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At 31 December 2022 |
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Depreciation |
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At 1 December 2021 |
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Charge for the year |
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At 31 December 2022 |
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Carrying amount |
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At 31 December 2022 |
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At 30 November 2021 |
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Leased assets
Included within the year end net book value of tangible fixed assets is £180,375 (2021 - £126,369) in respect of assets held under finance leases and similar hire purchase contracts.
Depreciation for the year on these assets was £14,625 (2021 - £22,301).
Stocks |
2022 |
2021 |
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Work in progress |
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Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Debtors |
2022 |
2021 |
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Trade debtors |
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Other debtors |
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Prepayments |
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Creditors |
Creditors: amounts falling due within one year
Note |
2022 |
30 November 2021 |
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Due within one year |
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Loans and borrowings |
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Trade creditors |
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Social security and other taxes |
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Outstanding defined contribution pension costs |
- |
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Other creditors |
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Accrued expenses |
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Deferred income |
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Creditors: amounts falling due after more than one year
Note |
2022 |
2021 |
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Due after one year |
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Loans and borrowings |
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Deferred income |
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96,058 |
460,894 |
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Loans and borrowings |
2022 |
2021 |
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Current loans and borrowings |
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Bank borrowings |
- |
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HP and finance lease liabilities |
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Other borrowings |
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- |
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Other borrowings relate to funds received through a Simple Agreement for Future Equity (SAFE) arrangement. This is understood to meet the definition of a liability because the number of shares to be issued will vary depending on the outstanding amount at that time and the applicable conversion rate.
The balance is categorised as due in less than one year on the basis that there is no set date for the conditions to be met and the loan converted to equity.
2022 |
2021 |
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Loans and borrowings due after one year |
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Bank borrowings |
- |
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HP and finance lease liabilities |
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- |
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The amounts shown as being due under finance lease are secured against the assets to which they relate.
Share capital |
Allotted, called up and fully paid shares
2022 |
2021 |
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No. |
£ |
No. |
£ |
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2 |
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2 |
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1 |
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1 |
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Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Rights of share classes
The holders of Ordinary shares are entitled to full and equal rights to vote; participate in dividend, full and equal entitlement to A Ordinary shares; participate in a capital distribution including on winding up ranking behind A Ordinary shares; non-redeemable and class right to appoint a director.
The holders of the A Ordinary shares are entitled to full and equal rights to vote; participate in dividend, full and equal entitlement to Ordinary shares; participate in a capital distribution including on winding up in priority to Ordinary shares capped at the greater of amount paid for the A Ordinary shares or the amount that would have been received if the A Ordinary shares had been converted to Ordinary shares; non-redeemable; class right to appoint a director and conversion to Ordinary shares in the event of the death of the ultimate beneficial owner of the A Ordinary shares.
Share based payments |
The company utilises a share based payment arrangement, in which certain employees hold options. At the start of the year, 978 share options were held between 8 employees.
During the year an additional 120 share options were issued to 1 employee.
The options can be exercised in the event of certain conditions as outlined in the scheme rules, which relate to the occurance of an exit event. The exit events are as follows:
- A share sale;
- An asset sale;
- A listing.
Employees are required to remain in employment with the company until exercise, or else the options will lapse. Employees are not entitled to dividends on the options until they are exercised.
During the year:
- No options have lapsed;
- No exit events were triggered;
- 1,098 options were outstanding at the balance sheet date.
The exercise price of each share option is £64.21, which was determined at the date of grant.
Financial commitments, guarantees and contingencies |
Amounts not provided for in the balance sheet
The total amount of financial commitments not included in the balance sheet is £
The company is a lessee of the property from which it operates. The total financial commitment pertaining these operating lease rentals not included in the balance sheet is £949,641 (2021 - £632,800).
Engineered Arts Limited
Notes to the Financial Statements
Period from 1 December 2021 to 31 December 2022
Related party transactions |
Transactions with directors |
2022 |
At 1 December 2021 |
Advances to director |
Repayments by director |
At 31 December 2022 |
W S Jackson |
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Interest free directors loan repayable on demand |
( |
( |
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( |
N Desmarais |
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Interest free directors loan repayable on demand |
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- |
- |
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T D Rasburn |
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Interest free directors loan repayable on demand |
( |
- |
- |
( |
2021 |
At 1 December 2020 |
Advances to director |
Repayments by director |
At 30 November 2021 |
W S Jackson |
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Interest free directors loan repayable on demand |
( |
- |
- |
( |
N Desmarais |
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Interest free directors loan repayable on demand |
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- |
- |
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T D Rasburn |
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Interest free directors loan repayable on demand |
( |
- |
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( |
Audit report |