The directors present their annual report and financial statements for the year ended 30 June 2025.
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
During the year, Johnston Carmichael LLP were appointed as auditor to the group and in accordance with section 487(2) of the Companies Act 2006, are deemed to be reappointed.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
We have audited the financial statements of Arbnco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2025 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Material uncertainty related to going concern
We draw attention to Note 1.4 which states that the directors have prepared the financial statements on a going concern basis. The group and company are in a scale-up phase and the group incurred a net loss of £1.8m during the year ended 30 June 2025 and, as of that date, the group's current liabilities exceeded its current assets by £2.0m. The group and company will require additional investment to support the business achieve its strategic objectives.
The Directors are confident from discussions with investors that additional funding will be raised. However, as the fundraise is critical for achieving the company’s future strategic objectives, and given that its success is not guaranteed, the directors have concluded that there is a material uncertainty regarding going concern. This uncertainty may cast significant doubt on the company’s ability to continue as a going concern.
The events or conditions explained above and in Note 1.4 indicate that a material uncertainty exists that may cast significant doubt on the group's and company's ability to continue as a going concern. Our opinion in not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Extent to which the audit was considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006
UK Corporation Tax legislation; and
UK Generally Accepted Accounting Practice.
We gained an understanding of how the group and the parent company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the group’s and parent company’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
Management override of controls; and
Revenue recognition
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the group's and the parent company's procurement of legal and professional services;
Performing audit procedures over the risk of management override of controls; including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and assessing judgements made by management in their calculation of accounting estimates for potential management bias;
Performing audit procedures over revenue recognition, agreeing from the accounting system to source documentation to ensure that revenue has occurred, as well as performing year-end cut-off procedures to ensure that revenue has been recognised accurately in the appropriate financial year.;
Completion of appropriate checklists and use of our experience to assess the group's and parent company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that 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 intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed 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 are to become aware of it.
Other matters which we are required to address
In the previous financial year, the directors of the group and the parent company took advantage of the audit exemption under section 477 of the Companies Act 2006. Therefore the prior year financial statements were not audited.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members those matters we are required to state to them 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £1,756,476 (2024 - £1,131,606 loss).
Arbnco Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is Inovo - Ground Floor Suite F, 121 George Street, Glasgow, G1 1RD.
The group consists of Arbnco Limited and all of its subsidiaries as listed in note 8.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Arbnco Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 June 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The Directors have prepared the financial statements on a going concern basis. The group and company are in a scale-up phase and the group incurred a net loss of £1.8m during the year ended 30 June 2025 and, as of that date, the group's current liabilities exceeded its current assets by £2.0m. The group and company will require additional investment to support the business achieve its strategic objectives. The company has raised £2.8m of investment during the period and has raised £20.7m since its incorporation.
The Directors have prepared cash flow projections that support the company meeting its obligations as they fall due in the future. The cash flow projections include key assumptions that the company will generate revenue in excess of £2m per annum. The projections assume that the business will raise £4m to fund the investment required for the business to achieve it’s strategic objectives. The expectation is this fundraise will complete in the 12 months from the date of authorising the financial statements. While the directors are confident of raising the required funding from existing investors, there are no guarantees of raising this funding.
In the event that a successful fund raise is not completed then the Directors consider it reasonable to assume that the costs of the business could be reduced to allow the company to meet its obligations as they fall due during the next 12 months. The Directors are confident from discussions with investors that additional funding will be raised. However, as the fundraise is critical for achieving the company’s future strategic objectives, and given that its success is not guaranteed, the directors have concluded that there is a material uncertainty regarding going concern. This uncertainty may cast significant doubt on the company’s ability to continue as a going concern.
Turnover is recognised at the fair value of the consideration received or receivable for goods and 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.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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.
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.
Financial assets 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 profit or loss.
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 profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans 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 payments 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. Amounts 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
The component parts of compound instruments issued by the group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity net of income tax effects and is not subsequently remeasured.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Sholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
As explained in Note 1.4, the directors have prepared cash flow projections that support the group and company meeting its obligations as they fall due in the future. The cash flow projections include key assumptions that the company will generate revenue in excess of £2m per annum. The projections assume that the business will raise £4m to fund the investment required for the business to achieve it’s strategic objectives. The expectation is this fundraise will complete in the 12 months from the date of authorising the financial statements. While the directors are confident of raising the required funding from existing investors, there are no guarantees of raising this funding.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Equity-settled share based payments are measure at fair value at the date of grant by reference to the fair value of the equity instruments granted. Where material, the fair value determined at the grant date is expensed over the vesting period, which is based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The directors are required to consider any potential indicators of impairment on an annual basis in relation to the carrying value of the intangible assets. After considering current and prior year results, alongside future forecasts, the directors have concluded that intangible assets are not impaired. The carrying amount of intangible assets held in the group balance sheet at the reporting date was £2,747,340 (2024: £2,579,011).
The parent company and group have an unrecognised deferred tax asset of £2,240,100 (2024: £1,930,484) and £3,292,322 (2024: £2,983,706) respectively in relation to unutilised tax losses.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Details of the company's subsidiaries at 30 June 2025 are as follows:
Amounts owed by group undertakings in the parent company are interest free, unsecured and repayable on demand.
There is a bond and floating charge over the assets of the parent company and the group.
Included within other creditors in the parent company and group are amounts due to a director for £480,147 (2024: £nil).
Also included within other creditors is deferred income of £1.1m (2024 - £1.0m).
There is a bond and floating charge over the assets of the parent company and the group.
Included within other creditors in the parent company and group is £349,654 (2024: £585,181) payable to a director.
The Ordinary and Series A Ordinary shares have full rights to voting, dividend and capital distribution upon winding up.
During the year, 724,517 Ordinary shares were issued for consideration of £196,769.
During the year, 7,010,312 Series A Ordinary shares were issued for consideration of £2,243,300.
During the year, 4,000 Ordinary shares were repurchased by the company for consideration of £4.
The share premium account increased by £2,267,278 in the year, being £2,432,275 in respect of amounts paid above the par value of the shares issued, less £164,997 in directly attributable legal fees.
The share premium account represents the exceed amount received by the company over the par value of its shares.
The capital redemption reserve represents the preservation of permanent capital following the redemption of shares.
Other reserves comprise warrant shares and provisions for equity-based share payments.
The profit and loss reserves represents cumulative comprehensive gains and losses less dividends declared.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
In addition to the above, at 30 June 2025 there were 6,638,550 (2024: 6,594,111) share warrants outstanding, with 43,639 (2024: 6,581,294) being issued in the current year.
Included within other creditors (as per notes 10 and 11) are amounts due to a director. Interest of £86,483 (2024: £19,035) was paid in relation to these loans during the year.