Company registration number 11632462 (England and Wales)
AAVE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
AAVE LIMITED
COMPANY INFORMATION
Director
S Kulechov
Company number
11632462
Registered office
71-75 Shelton Street
Covent Garden
London
WC2H 9JQ
Auditor
Wilson Wright LLP
Chartered Accountants
5 Fleet Place
London
EC4M 7RD
AAVE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 22
AAVE LIMITED
STRATEGIC REPORT
true
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The director presents the strategic report for the year ended 31 December 2021.
Fair review of the business
A summary of the
period
's trading results is given on
page 8. The company's turnover has almost quadrupled compared with the prior period as a result of increased software development activities undertaken.
T
he company continued to design and build its electronic money issuing solution following the grant by the FCA of an
Electronic Money Institute (
EMI
)
licence in July
2020.
At the end of 2021,
there was
a corporate reorganisation
, that included the incorporation of
a
g
roup
e
mployment
c
ompany
, Avara People Limited.
The aim of this entity is to
be the employment vehicle for all UK employees and non-UK service providers of the group no
t
directly involved in our EMI product.
In April 2022, a TUPE transfer happened for some
of the
employees of Aave Limited to Avara People Limited.
During 2022, the parent company Aave SAGL sold its interest in Aave Limited to Avara Labs Cayman Holdings SEZC (ALCH). The new shareholder has stated that it is committed to supporting the objectives of the Company and its future developments.
Principal risks and uncertainties
Aside from the risks that exist in the software development sector, the key business risks facing the company are:
Credit Risk
A
s the company’s revenue is entirely derived from a small number of
group
clients,
there is a risk of default in the receipt of revenue from that counter party
. This risk is managed through regular dialogue to ensure the company maintains sufficient working capital to meet its liabilities as they fall due;
Currency Risk
T
he company is exposed to fluctuations of sterling against other currencies or cryptocurrencies.
Management review this risk on a regular basis.
Risk as a result of the Covid-19 pandemic
The director has considered the impact of the Covid-19 outbreak and does not believe this to have a material impact on going concern.
Key performance indicators
Key performance indicators are as follows:
2021
2020
as restated
£
£
Revenue
2,758,249
693,484
Profit/(loss) for the financial year
117,756
(121,018)
Net assets
186,967
69,211
AAVE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Statement by the Director in performance of his duties in accordance with s172(1) Companies Act 2006
The Directors of the Company, as those of all UK companies, must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 and include a duty to promote the success of the Company and are summarised as follows:
'
A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
-
the likely consequences of any decision in the long term,
-
the interests of the company's employees,
-
the need to foster the company's business relationships with suppliers, customers and others,
-
the impact of the company's operations on the community and the environment,
-
the desirability of the company maintaining a reputation for high standards of business conduct, and
-
the need to act fairly as between members of the company.’
The following paragraphs summarise how the Director fulfil
s
his
duties:
Risk Management
We provide software development services to
group
clients across multiple jurisdictions. As we grow, our business and our risk environment also become
s
more complex. It is therefore vital that we effectively identify, evaluate, manage and mitigate the risks we face, and that we continue to evolve our approach to risk management. Alongside the principal risks set out
on page 1
we engage external consultants and advisors to ensure that we monitor and maintain an effective oversight of regulatory changes and compliance with our ongoing legal and regulatory requirements.
Our People
The Company is committed to being a responsible business. Our behaviour is aligned with the expectations of our people, clients and the community as a whole. People are fundamental to our business so, in order to succeed, we need to manage our people’s performance and develop their talent whilst rewarding them appropriately and ensuring we operate as efficiently as possible. Alongside this we look to share common values that inform and guide our behaviour so that we achieve our goals in the right way. Being a relatively small company with less than
2
0 employees we achieve this through regular dialogue and events with employees which allows all staff to share our common values.
Business Relationships
As a key requirement for building the business of the Company, the Board is very aware of the need to foster good relationships with clients, the community and other important stakeholders. The Board looks to discharge these duties by engaging in regular dialogue with both customers and service providers and attending industry events to further build and gain new relationships with key people within the industry.
Community and Environment
The Company’s approach is to use our position as
a
software developer to ensure that
we
interact with
our
local communities in a beneficial and environmentally friendly manner. The Company also looks to make a positive impact on under privileged parts of society through regular charitable donations
.
Maintaining a reputation for high standards of business conduct
As
a
Director,
my
intention is to behave responsibly and ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours and, which in doing so, will help the business grow over the coming years.
S Kulechov
Director
3 March 2023
AAVE LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
The director presents his annual report and financial statements for the period ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of software development.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the period and up to the date of signature of the financial statements was as follows:
S Kulechov
Future developments
As of 31 December 2021, there are no future developments planned which are outside of the normal course of business. The company will continue to trade and carry on its operations as normal.
Auditor
In accordance with the company's articles, a resolution proposing that Wilson Wright LLP be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
AAVE LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of
financial risk management.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
S Kulechov
Director
3 March 2023
AAVE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF AAVE LIMITED
- 5 -
Opinion
We have audited the financial statements of Aave Limited (the 'company') for the
period
ended 31 December 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
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
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 opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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 strategic report and the director's
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
AAVE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF AAVE LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report or the director's
r
eport
.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is 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 director determines 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
director is
responsible for assessing the 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 director either intends to liquidate the company or to cease operations, or has
no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
Capability of the audit in detecting irregularities, including fraud:
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the failure to comply with tax regulations, health and safety regulations and anti-bribery and anti-corruption laws, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraud manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and management bias in accounting estimates. Audit procedures performed by the auditors included:
There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. 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.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
AAVE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF AAVE LIMITED
- 7 -
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Jeremy Asher FCA
Senior Statutory Auditor
For and on behalf of Wilson Wright LLP
6 March 2023
Chartered Accountants and Statutory Auditor
5 Fleet Place
London
EC4M 7RD
AAVE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
Year
Period
ended
ended
31 December
31 December
2021
2020
as restated
Notes
£
£
Turnover
4
2,758,249
693,484
Cost of sales
(105,750)
Gross profit
2,652,499
693,484
Administrative expenses
(2,534,743)
(814,502)
Profit/(loss) before taxation
117,756
(121,018)
Tax on profit/(loss)
9
Profit/(loss) for the financial year
117,756
(121,018)
AAVE LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2021
31 December 2021
- 9 -
2021
2020
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
10
2,250
3,250
Tangible assets
11
41,027
8,819
43,277
12,069
Current assets
Debtors
12
1,120,296
285,105
Cash at bank and in hand
788,061
82,334
1,908,357
367,439
Creditors: amounts falling due within one year
13
(1,764,667)
(310,297)
Net current assets
143,690
57,142
Net assets
186,967
69,211
Capital and reserves
Called up share capital
15
308,814
308,814
Profit and loss reserves
(121,847)
(239,603)
Total equity
186,967
69,211
The financial statements were approved and signed by the director and authorised for issue on 3 March 2023
S Kulechov
Director
Company Registration No. 11632462
AAVE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
As restated for the period ended 31 December 2020:
Balance at 1 November 2019
308,814
(118,585)
190,229
Period ended 31 December 2020:
Loss and total comprehensive income for the period - as restated
22
-
(121,018)
(121,018)
Balance at 31 December 2020
308,814
(239,603)
69,211
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
117,756
117,756
Balance at 31 December 2021
308,814
(121,847)
186,967
AAVE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
2021
2020
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
19
744,350
85,412
Investing activities
Purchase of tangible fixed assets
(38,623)
(9,255)
Net cash used in investing activities
(38,623)
(9,255)
Net increase in cash and cash equivalents
705,727
76,157
Cash and cash equivalents at beginning of year
82,334
6,177
Cash and cash equivalents at end of year
788,061
82,334
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
1
Accounting policies
Company information
Aave Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
71-75 Shelton Street, Covent Garden, London, WC2H 9JQ.
1.1
Accounting convention
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.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future.
The company has positive net assets and access to support from the parent company if required.
Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
The director has considered the impact of the Covid-19 outbreak and does not believe this to have a material impact on going concern.
1.3
Turnover
Turnover consists of intercompany services performed in respect of software development. Revenue for the period is based on project related costs recharged at a mark-up of 10%.
Turnover is recognised at the fair value of the consideration received or receivable for 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.
1.4
Development expenditure
Development
expenditure is written off against profits in the year in which it is incurred
.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business 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
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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:
Patents & licences
20% on cost
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
1.6
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation 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:
Fixtures and fittings
25% reducing balance
Computers
25% reducing balance
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 credited or charged to the statement of income
.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
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 (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.
1.8
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through the statement of income
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the statement of income.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the statement of income.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors and
loans from
fellow group companies, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade creditors
are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company 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 company.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Foreign exchange
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 16 -
3
Prior period adjustment
During the year management identified an expense of £131,198 in relation to consultancy services provided for the period ended 2020 which was not accrued for and so management have restated the prior period results. As a result of this adjustment, administrative expenses for the prior period have increased from £683,304 to £814,502 and other creditors have increased from £35,182 to £166,380.
Please refer to note 22 for the impact on the profit and loss account and balance sheet as at 31 December 2020 from that previously presented.
4
Turnover
2021
2020
£
£
Turnover analysed by class of business
Software development
2,758,249
693,484
2021
2020
£
£
Turnover analysed by geographical market
Europe
2,758,249
693,484
5
Operating profit/(loss)
2021
2020
Operating profit/(loss) for the year is stated after charging:
£
£
Exchange losses
7,422
2,392
Depreciation of owned tangible fixed assets
6,415
593
Amortisation of intangible assets
1,000
1,167
Operating lease charges
165,837
62,805
6
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
45,250
8,500
For other services
Taxation compliance services
2,500
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Total
12
6
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
7
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
1,058,741
427,765
Social security costs
123,745
46,133
Pension costs
8,696
6,053
1,191,182
479,951
8
Director's remuneration
2021
2020
£
£
Remuneration for qualifying services
60,000
70,000
Company pension contributions to defined contribution schemes
1,316
1,533
61,316
71,533
9
Taxation
2021
2020
£
£
Total tax charge
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
as restated
£
£
Profit/(loss) before taxation
117,756
(121,018)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
22,374
(22,993)
Tax effect of expenses that are not deductible in determining taxable profit
(20,911)
1,485
Tax effect of utilisation of tax losses not previously recognised
(1,777)
Unutilised tax losses carried forward
7,851
24,927
Permanent capital allowances in excess of depreciation
(9,314)
(1,642)
Taxation charge for the year
-
-
The company has estimated UK tax losses of £150,000 (2020 - £109,000) available for carry forward against future profits.
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Taxation
(Continued)
- 18 -
Factors that may affect future tax charges:
An increase in the UK corporation tax rate from 19% to 25% with effect from 1 April 2023 was substantially enacted on 24 May 2021.
10
Intangible fixed assets
Patents & licences
£
Cost
At 1 January 2021 and 31 December 2021
5,000
Amortisation and impairment
At 1 January 2021
1,750
Amortisation charged for the year
1,000
At 31 December 2021
2,750
Carrying amount
At 31 December 2021
2,250
At 31 December 2020
3,250
11
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 January 2021
759
8,676
9,435
Additions
7,532
31,091
38,623
At 31 December 2021
8,291
39,767
48,058
Depreciation and impairment
At 1 January 2021
66
550
616
Depreciation charged in the year
1,055
5,360
6,415
At 31 December 2021
1,121
5,910
7,031
Carrying amount
At 31 December 2021
7,170
33,857
41,027
At 31 December 2020
693
8,126
8,819
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
12
Debtors
2021
2020
£
£
Amounts falling due within one year:
Amounts owed by related parties
845,073
44,765
Amounts owed by parent undertakings
69,717
79,715
Other debtors
141,950
21,783
Prepayments and accrued income
63,556
138,842
1,120,296
285,105
13
Creditors: amounts falling due within one year
2021
2020
Notes
as restated
£
£
Trade creditors
76,425
10,330
Amounts owed to related parties
1,082,101
101,577
Taxation and social security
78,721
32,010
Deferred income
220,399
Other creditors
307,021
166,380
1,764,667
310,297
14
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
8,696
6,053
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
15
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
1,000,000 Ordinary shares of €0.35 each
1,000,000
1,000,000
308,814
308,814
16
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
229,100
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
17
Related party transactions
Transactions with related parties
During the year, the parent company was Aave SAGL whose ultimate controlling party is the director S Kulechov. The company entered into transactions with companies whose ultimate controlling party is also S Kulechov and are therefore related party transactions.
During the year the company entered into the following transactions with related parties:
Sales
Sales
2021
2020
£
£
Quantum Swan OU
2,026,682
665,663
Avara Labs Cayman Holdings SEZC
731,567
27,821
2,758,249
693,484
Consultancy fees
Consultancy fees
2021
2020
as restated
£
£
Quantum Swan OU
179,717
131,198
Aave LLC
19,432
-
199,149
131,198
The following amounts were outstanding at the reporting end date:
2021
2020
Amounts due to related parties
£
£
Quantum Swan OU
1,045,341
101,577
Aave LLC
36,760
-
1,082,101
101,577
2021
2020
Amounts due from related parties
£
£
Aave Holdings Limited
52,369
16,427
Crowdback Limited
29,457
756
Avara Labs Cayman Holdings SEZC
762,989
27,582
Avara People Limited
258
-
845,073
44,765
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
18
Ultimate controlling party
During the year the parent company was Aave SAGL. Since October 2022, the ultimate parent company has been Bear Holdings (Cayman) Limited, a company incorporated in the Cayman Islands. The registered office of the company is 190 Elgin Avenue, George Town, Grand Cayman, KY1-9008.
The ultimate controlling party is the director S Kulechov.
19
Cash generated from operations
2021
2020
as restated
£
£
Profit/(loss) for the year after tax
117,756
(121,018)
Adjustments for:
Amortisation and impairment of intangible assets
1,000
1,167
Depreciation and impairment of tangible fixed assets
6,415
593
Movements in working capital:
Increase in debtors
(835,191)
(73,471)
Increase in creditors
1,454,370
278,141
Cash generated from operations
744,350
85,412
20
Analysis of changes in net funds
1 January 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
82,334
705,727
788,061
21
Events after the reporting date
On 13 January 2023, 1 ordinary share was issued for £3,818,505 as part of a debt equity swap with Avara Labs Cayman Holdings SEZC.
AAVE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
22
Prior period adjustment
Reconciliation of changes in equity
1 November
31 December
2019
2020
£
£
Adjustments to prior period
Adjustment to prior period
3
-
(131,198)
Equity as previously reported
190,229
200,409
Equity as adjusted
190,229
69,211
Analysis of the effect upon equity
Profit and loss reserves
-
(131,198)
Reconciliation of changes in profit/(loss) for the previous financial period
2020
£
Adjustments to prior period
Adjustment to prior period
3
(131,198)
Profit as previously reported
10,180
Loss as adjusted
(121,018)
2021-12-31
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