The directors present the strategic report for the year ended 31 March 2024.
During the year the Group generated revenues of £14,889,650 (2023: £11,659,810). The Group made a loss for the year of £7,578,918 (2023: £7,686,904). The net assets of the Group as at 31 March 2024 were £19,822,319 (2023: £27,123,455).
The Company focused on customer acquisition activity in the year, which can be seen in the increase in Sales and Marketing costs. The Company also focused on acquisitions to support the wider group strategy of delivering financing options to homeowners. The Company also continued to prioritise customer satisfaction which can be seen in the increase in the Trustpilot score 4.7 (2023: 4.5).
The Group uses a number of financial and non-financial key performance indicators ("KPIs") to assess business performance. The primary financial KPIs used by the Group are
Financial
Turnover: The Group continued investment in growth in the Homecover business unit by growing the customer base and the acquisition of the Financing business unit, achieving growth in turnover from £11.7m (2023) to £14.9m (2024).
Gross profit margin: The Group focused on key operational improvements to drive efficiency in the Homecover business unit, achieving improvements in the gross profit margin from 37% (2023) to 46% (2024).
Operating loss / EBITDA: Improvements achieved in the gross profit efficiency were offset by new investment in developing the finance offering and preparation for the future growth of the group, resulting in operating loss growing from £7.6m (2023) to £8m (2024). EBITDA slipped slightly from a loss of £7m (2023) to a loss of £7.1m (2024).
Non-financial
Average number of employees: 130 (2024) vs 106 (2023)
Trustpilot score: 4.7 (2024) vs 4.5 (2023)
The non-financial metrics, the Group focuses on customer satisfaction and measure employee growth to support the wider activities of the business, both of which have improved year-on-year in line with expectations.
Strategic risks:
Integration of acquired business into the Group
The Group seeks to make acquisitions that complement its core business activities and that will contribute to the overall success of the Group for its stakeholders. However, there is a risk that the Group fails to achieve this objective on future acquisitions.
The Group undertakes a robust due diligence exercise on all potential acquisitions which involves the engagement of specialist external advisers as well as senior members of the Group’s management team. For all acquisitions, a full report is prepared for the board to consider whether or not the transaction should proceed.
Competition in our markets
The Group operates in a competitive market environment and the introduction of new products is key to their success.
The group strategy to provide a full lifecycle proposition to customers, combined with great service, creates longer-term customer relationships.
Financial risks:
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Group management team uses short and long-term cash flow forecasts to manage liquidity risk. Forecasts are supplemented by sensitivity analysis which is used to assess funding adequacy.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligations. The Company’s principal financial assets are trade and other debtors. The amounts presented in the balance sheet are net of expected credit losses, and the carrying amount of financial assets represents the maximum exposure.
The group has a robust credit risk framework for financing products, and continuously monitors key indicators to ensure any emerging credit risk trends can be dealt with rapidly.
Operational risks:
Legal and regulatory
The Group operates in highly regulated environments and there is a risk of failing to comply with regulations, information security or data protection standards or other legal requirements. This could be damaging to the business as it may result in a loss of trust or restrictions on what trade can be carried out.
The group has built risk and compliance processes and employs highly experienced people to ensure that our approach is appropriate and robust. It continues to invest in internal teams that provide monitoring and oversight to act as an effective mitigant to this risk.
Systems risk
The company offers products and services through a sophisticated technology platform. There is a risk of system failure preventing the business from operating or causing negative customer experiences.
The company has invested in its technology team to continually enhance systems and processes and build a robust environment.
People risk
People risk reflects the risk of key person dependencies, attrition risk and the risk of not being able to hire new team members quickly enough.
The group has invested significantly in subject matter expertise and leadership roles, reducing key dependencies and mitigating the risk of attrition in key roles.
Hometree is a UK based residential energy services company operating across the entire home decarbonisation lifecycle - from installing and financing renewable hardware to ongoing maintenance and servicing. We are on our mission to decarbonise 1m UK homes by 2030.
Today, we run our business in three business units, which benefit from shared expertise and experience.
Our Home Cover business unit helps homeowners prevent, mitigate and solve home emergency breakdowns. Our comprehensive cover plans offer peace of mind with annual boiler servicing, ongoing maintenance and repairs, including a wide range of other home emergencies, all carried out by trusted local expert engineers.
Our Renewable Installation business unit assesses our customers’ homes and helps them decide to install the home energy hardware that best suits their needs and budgets. Our leading regional based installers, which become part of the Hometree Group through our buy & build M&A model, are able to install all renewable hardware and ancillary products, from heat pumps, solar, batteries to A-grade energy-efficient boilers and underfloor heating. As mentioned in the accounting notes below, in the current financial year we acquired our first installer in the North East (Geowarmth Heat Pumps Limited).
Our Financing business unit offers point of sale financing to our customers. Our innovative payment options are tailored to the green retrofit industry, and available through our own installers and trusted local installation partners.
We made tremendous progress in the year successfully growing the Home Cover business unit, in addition to completing and integrating two acquisitions in each of the Renewable Installation and Financing business units, this allowed us to reach a run rate revenue at year end of £18.4m.
Post year end we have continued to make great strides with a further three acquisitions in the North and South of England of profitable companies in the Renewable Installation business unit, increasing our revenue run rate to exceed £40m, significantly increasing the scale of the Group and bringing us closer to profitability. Within the Financing business unit we have introduced the first ever UK Asset Backed securitisation facility on renewable hardware with Barclays for £250m which will allow us to offer point of sale financing to tens of thousands of homeowners across the UK to decarbonise their homes. And in the Homecover business unit we reached over 100,000 customers following the acquisition of a book of insurance customers in June.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditors, Moore Kingston Smith LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting in accordance with section 485 of the Companies Act 2006.
The Group recorded net assets of £19.8m (2023 - £27.1m) and a loss for the year of £7.6m (2023 - £7.7m). The Group focused on investment in growth initiatives, which can be seen as the group revenues increased by 28% to £14.9m (2023 - £11.7m). Going forward the group will continue to benefit from these investments and significantly increase the scale of the group while bringing us closer to profitability. Given this, and for the reasons set out below, the financial statements have been prepared on a going concern basis, which the Directors consider to be appropriate.
Post year end, as outlined in Note 29, the Group completed three acquisitions continuing the expansion into the renewable installation space. The acquisitions were in part financed by the existing debt facility which was further drawn post year end. In order to prepare for future acquisition opportunities and growth, the Group issued a Convertible Loan Note for the sum of £13.8m. Lastly, to facilitate the growth of the financing business unit, the group entered into a £250m asset-backed debt facility with Barclays, which will be used to finance over 28,000 residential solar panel systems, batteries and heat pumps across the UK over the next two years.
The Directors of the Group have prepared forecasts of future profitability, cash-flow and capital adequacy of the Group for the period up to 31 March 2026 to assess whether the Group has sufficient funds to meet its liabilities as they fall due for that period. These forecasts included the modelling of scenarios including consideration of:
Consideration of positive and negative indicators by business unit and across the group:
Positive factors including areas such as new sales channels, new product launches, efficiency gains on customer acquisition strategies, and synergies across the group.
Negative factors including slower growth driven by macro economic factors or government intervention
Accelerated growth trajectory for all business units and the group based on organic growth across the group coupled with the acquisitions noted in Note 29, the Group is expecting to double turnover in 2025, split evenly between organic and acquisition growth. The organic growth is driven by the introduction of new sales channels across the business units, new product launches, and the expansion of the financing business unit following the implementation of the asset backed security facility.
The group has modelled three downside scenarios which focus on reducing growth impacted by demand in the market for various business units, including modelling a material decline in the renewable energy market following changes in market sentiment or government policy resulting in a 30% decline in turnover in 2026.
Various scenarios have also been considered in relation to the M&A strategy for the Group, one of which includes the latest acquisition noted in Note 29, as well as the impact of further acquisitions on the net assets of the business and the corresponding impact they will have on revenue and profitability
The Directors also prepared forecasts in relation to the Company reviewing positive indicators such as launching new sales channels and products and gains in operational efficiencies, all of which are drivers expected to drive 25% annualised growth in 2025 and 2026. The Directors considered negative indicators such as competition in the market which could impact customer acquisition and retention.
Based on the information available, considering the above factors, and after making appropriate enquiries, the Directors conclude that there is a reasonable expectation that the Group and parent company have adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, and for at least 12 months from the date of signing of these financial statements. The Directors consider there are no material uncertainties that would lead to significant doubt upon the Group's or parent company's ability to continue as a going concern and will continue to closely monitor the financial position and performance of the Group and parent company. Accordingly, the Directors have adopted the going concern basis in preparation of these financial statements.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group'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 credit risk, liquidity risk, competitive risk, systems and people risk, regulatory and compliance risk and future developments.
Qualifying third party indemnity provision
The Group maintained liability insurance for its directors and officers during the period under review and up to the date of signing the financial statements. This is a qualifying third-party indemnity provision for the purposes of the Companies Act 2006.
We have audited the financial statements of Hometree Marketplace Limited (the ‘parent company’) and its subsidiaries (the ’group’) for the year ended 31 March 2024 which comprise the Group Profit and Loss Account, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group 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 FRS 102 ‘The Financial Reporting Standard Applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
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.
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 group's and parent 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 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 strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company. Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are [the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Other matters
The figures included within these financial statements for the comparative accounting period were not audited as the Group and Company did not require a statutory audit under the Companies Act 2006 in the prior year.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the 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 company and the 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 £7,237,286 (2023 - £7,124,722 loss).
Hometree Marketplace Limited (“the company”) is a private limited company limited by shares, domiciled and incorporated in England and Wales. The registered office is Hamilton House, 4 Mabledon Place, King's Cross, London, WC1H 9BB.
The group consists of Hometree Marketplace Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
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.
Financial Reporting Standard 102 - reduced disclosure exemptions
The Company has taken advantage of the following permitted exemptions;
allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements;
from Section 7 of FRS102 in relation to Statements of Cash Flows.
The Group has taken advantage of the disclosure exemptions in respect of the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d) in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland’.
The consolidated group financial statements consist of the financial statements of the parent company Hometree Marketplace 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 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The Group recorded net assets of £19.8m (2023 - £27.1m) and a loss for the year of £7.6m (2023 - £7.7m). The Group focused on investment in growth initiatives, which can be seen as the group revenues increased by 28% to £14.9m (2023 - £11.7m). Going forward the group will continue to benefit from these investments and significantly increase the scale of the group while bringing us closer to profitability. Given this, and for the reasons set out below, the financial statements have been prepared on a going concern basis, which the Directors consider to be appropriate.
Post year end, as outlined in Note 29, the Group completed three acquisitions continuing the expansion into the renewable installation space. The acquisitions were in part financed by the existing debt facility which was further drawn post year end. In order to prepare for future acquisition opportunities and growth, the Group issued a Convertible Loan Note for the sum of £13.8m. Lastly, to facilitate the growth of the financing business unit, the group entered into a £250m asset-backed debt facility with Barclays, which will be used to finance over 28,000 residential solar panel systems, batteries and heat pumps across the UK over the next two years.
The Directors of the Group have prepared forecasts of future profitability, cash-flow and capital adequacy of the Group for the period up to 31 March 2026 to assess whether the Group has sufficient funds to meet its liabilities as they fall due for that period. These forecasts included the modelling of scenarios including consideration of:
Consideration of positive and negative indicators by business unit and across the group:
Positive factors including areas such as new sales channels, new product launches, efficiency gains on customer acquisition strategies, and synergies across the group.
Negative factors including slower growth driven by macro economic factors or government intervention
Accelerated growth trajectory for all business units and the group based on organic growth across the group coupled with the acquisitions noted in Note 29, the Group is expecting to double turnover in 2025, split evenly between organic and acquisition growth. The organic growth is driven by the introduction of new sales channels across the business units, new product launches, and the expansion of the financing business unit following the implementation of the asset backed security facility.
The group has modelled three downside scenarios which focus on reducing growth impacted by demand in the market for various business units, including modelling a material decline in the renewable energy market following changes in market sentiment or government policy resulting in a 30% decline in turnover in 2026.
Various scenarios have also been considered in relation to the M&A strategy for the Group, one of which includes the latest acquisition noted in Note 29, as well as the impact of further acquisitions on the net assets of the business and the corresponding impact they will have on revenue and profitability
The Directors also prepared forecasts in relation to the Company reviewing positive indicators such as launching new sales channels and products and gains in operational efficiencies, all of which are drivers expected to drive 25% annualised growth in 2025 and 2026. The Directors considered negative indicators such as competition in the market which could impact customer acquisition and retention.
Based on the information available, considering the above factors, and after making appropriate enquiries, the Directors conclude that there is a reasonable expectation that the Group and parent company have adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, and for at least 12 months from the date of signing of these financial statements. The Directors consider there are no material uncertainties that would lead to significant doubt upon the Group's or parent company's ability to continue as a going concern and will continue to closely monitor the financial position and performance of the Group and parent company. Accordingly, the Directors have adopted the going concern basis in preparation of these financial statements.
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.
Revenue from cover sales is recognised on a straight line basis over the period of cover provided.
Revenue from contracts for the provision of installation services is recognised by reference to the value of work completed, which is assessed and agreed with the customer. At period ends, income is accrued or deferred accordingly. Costs incurred to date are also recognised as incurred and accrued as appropriate to match the recognition of revenue.
Revenue under the Heating and Solar Plan model consists of an operating lease which is recognised over the life of the lease in accordance with the payment schedule for each lease.
Revenue recognised for each service line is as follows:
Income from Home emergency breakdown plans will be recognised on a monthly basis over the life of the contract net of VAT.
Income from Customer Hire activities is recognised over the contracted term and released monthly net of VAT.
Income from Installation activities is recognised on a percentage of completion basis net of VAT.
Revenue from interest on loans is calculated using the effective interest rate method which allocates any interest, fees and subsidies receivable over the expected life of the asset and represents the return on credit risk faced by the entity. The effective interest method required the Group to estimate future cash flows, in some cases based on experience of behaviour, the terms of the loan agreement and the expected lives of the receivables. The effective interest rate is calculated at the time of initiating the loan facility and the calculation is based on estimating future cash flows over the contractual life of the loan.
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.
Fixed asset investments are measured at cost. Any impairment is written off to the profit and loss account when identified. Fixed asset investments are measured annually for impairment by the directors.
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.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
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).
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.
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.
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.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
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, loans from fellow group companies and preference shares that are classified as debt, 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. Fees paid on establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. The fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility of which it relates to 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.
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 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. 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.
The Group acts as a lessor for Heat & Solar leases offered under the Hometree Finance brand. These leases are classified and accounted for as operating leases, and are recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Deferred Income
The company recognises deferred revenue when consideration for the goods and services have been transferred but the risks and rewards of ownership have not been transferred, or the service has been provided to the buyer.
Deferred income is measured at the fair value of the consideration received or receivable for goods to be supplied and services to be rendered, and is shown net VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume discounts.
The preparation of the financial statements requires management to make estimates, judgments and assumptions that affect the amounts reported in the group financial statements and accompanying notes. If, in the future, such estimates and assumptions, which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. The Group evaluates on an ongoing basis its assumptions, including those related to these items.
In preparing these financial statements, the following key judgements and/or sources of estimation, which have, or could have, a material impact on the financial statements are relevant:
Operating leases and revenue recognition
Since acquiring BeWarm in September 2023, Hometree has provided home energy equipment to its customers via leases under the regulated consumer hire framework. These leases enable the customer to benefit from a working boiler or solar energy system in their home.
Hometree has determined that the lease product, which enables customers to benefit from a working boiler or solar energy system in their home, should be accounted for as one combined performance obligation and as an operating lease. There are two key judgements supporting this determination:
The service is considered to be one combined performance obligation, because the two elements of providing the service are highly interrelated; ie the installation of the heat source and the promise to maintain it, and it would not be viable to provide a 12 year fixed price service plan and a separable lease would still have financial obligations if the system is not working; and,
The service transfers the rewards of owning the asset to the customer, but the material risks of the system not working remain with Hometree in terms of repair costs and termination of the contract if it cannot be repaired.
Intangible assets, goodwill and impairment
Determine whether intangible assets acquired in business combinations meet the criteria for separate recognition, and if so, judgements have been applied in determining the value of individually recognised intangible assets. Intangible assets are amortised over their estimated useful life on a straight line basis. The useful life of intangible assets, including goodwill, has been determined based on management's best estimate, considering the period the intangible assets are expected to contribute to the Group's future cash flows. management's judgement has been used in determining factors such as typical product life cycles, technical obsolescence, market demand, and expected usage of the intangible asset. This judgement affects the amortisation period and, consequently, the annual amortisation charge.
Determine whether there are indicators of impairment of the Group's tangible and intangible assets, including goodwill. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Share based payments and warrants
Determine the fair value of share-based payments by selecting an appropriate valuation model, and judgement in estimating various input parameters, such as volatility, risk free rates, forfeiture rate, discount rates, and growth factors, to ensure appropriate for the recognition of share-based payments and warrants.
Revenue in relation to leasing is included in Service and Repair turnover on the basis of the directors considering it commercially sensitive at this stage of development.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The company has tax losses of £24,529,877 (2023: £18,352,899) available for carry forward. There are additional losses of £1,696,820 (2023: £300,138) available elsewhere within the group.
Details of the company's subsidiaries at 31 March 2024 are as follows:
All subsidiaries referenced above, held directly or indirectly, are exempt from statutory audit by virtue of a guarantee pursuant to section 479A of the Companies Act 2006, with exception of Your Repair Limited which is dormant.
The Group holds £336,777 of restricted cash, presented within cash and cash equivalents, which is held in a trust account on behalf of the Underwriters and cannot be used for the Company's operations.
The other debtors balance contains cash of £1,036,205 which has a maturity greater than 90 days.
During the year the company entered into a secured loan agreement with Kreos Capital VII (UK) Limited. The loan provides the company with the facility to drawdown up to £7.5m and, as at 31 March 2024, the company had drawn down £5.5m, which is secured over the assets of the company. The loan matures in June 2027 and interest is payable on a monthly basis, current at the rate of 11.5% per annum. The loan contains a financial covenant which is monitored on a monthly basis, and the company was in compliance with this under the terms of the loan as of 31 March 2024.
In addition, the Group (through HTG Finance 1 Limited) has a £3m revolving credit facility with Conister Finance & Leasing Limited. The facility provides the Group with a revolving credit facility of £100,000, plus up to £4.9m in additional commitments. The facility matures in December 2027 and interest accrued is payable on a monthly basis, currently at the rate of 9.5% per annum.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The Ordinary Shares each carry one voting right and are eligible for dividends and liquidation preference in the order and priority as defined in the Distribution Preference below.
The Preference Shares each carry one voting right and are eligible for dividends and liquidation preference in the order and priority as defined in the Distribution Preference below.
The Deferred Shares carry no voting rights and dividends are distributed in the order and priority as defined in the Distribution Preference below.
Distribution Preference -
Holders of Deferred Shares and Unvested Growth Shares rank first and are paid a total of £1.00 for the entire class of shares.
Holders of Series B+1 and Series B+2 shares rank second.
Holders of Series A+1, Series A+2, New Preference and A Ordinary shares rank third.
Holders of Ordinary Shares, Seed Preferred Shares, Series A Shares, and Vested Growth Shares rank last.
The company operates an equity settled share based payment plan for certain employees using the Enterprise Management Incentive (EMI) scheme framework.
Each employee in the scheme has been awarded an option to acquire ordinary shares in the company over a vesting period. The conditions of the agreement require the employee to remain employed by the company throughout this period. The maximum term of the options is 10 years from the grant date.
At the start of the period, options over 10,037,286 shares were outstanding. During the period, 5,518,489 options were granted, 767,493 options were forfeited/cancelled and 878,296 options were exercised, leaving a total of 13,909,986 options outstanding at the balance sheet date. 9,187,172 of these options were exercisable at the balance sheet date. The weighted average exercise price for each event was £0.017.
The underlying shares were subject to a valuation agreement process with HMRC. Prior to March 2023 the company had agreed a nominal value of the shares with HMRC of £0.001. For options granted in year, the company agreed a market value of £0.05 and £0.07 with HMRC.
The company also operates two non-tax advantaged share based payment arrangements for non-employees and employees who do not qualify for the EMI share option scheme. Each individual has been awarded an option to acquire ordinary shares in the company over a vesting period. The conditions of the option agreements require the individuals to continue providing services to the company throughout this period. The maximum term of the options is 10 years from the grant date.
At the start of the period, options over 975,203 options were outstanding across both schemes. During the period, no further options were granted, no options were forfeited/cancelled and no options were exercised, leaving a total of 975,203 options outstanding at the balance sheet date. All 975,203 of these options were exercisable at the balance sheet date. The weighted average exercise price for each event was £0.001.
The fair value of the services provided by these individuals cannot be estimated reliably, so the fair value has been measured with reference to the fair value of the underlying shares. These shares were not subject to a valuation agreement process with HMRC, however due to the proximity of the option grant dates to recent share issues the directors consider the market value of the share options to be £0.001 - the par value of the shares.
The company agreed to issue up to 1,082,501 warrants to a third party as part of a deal to take £7.5m of venture debt. As such, the company has recognised a provision amounting to £142,890, based on 793,834 warrants at a fair value of £0.18.
On 13 September 2023, the Company acquired 100% of the ordinary share capital of BeWarm Group Limited, BeWarm Limited, and Home Infrastructure Technology Limited (“BeWarm”) for a total consideration of £1,574,399 consisting of cash and share based consideration all paid upfront. BeWarm has operated as a specialist provider in boiler leases, having developed a bespoke lending platform allowing it to enter the green leasing space.
The intangibles of £750,000 is attributable to the bespoke leasing software developed by BeWarm which will be used for the future scaling of the business as well as introduction of new products. Management has estimated the useful life of this intangible to be 5 years.
The goodwill of £1,548,476 arising from the acquisition is attributable to the expertise and experience of the workforce and economies of scale that will arise from combining the operations into the group. Management has estimated the useful life of this goodwill to be 10 years.
The following amounts of assets, liabilities, and contingent liabilities were recognised at the acquisition date:
On 28 February 2024, the Company, through its wholly owned subsidiary Hometree Group Limited, acquired 100% of the ordinary share capital of Geowarmth Heat Pumps Limited (“Geowarmth”) for a total consideration of £1,384,000, with £430,000 paid upfront, and £953,000 due in deferred consideration. Geowarmth has operated as a heat pump and solar installer since 2007 and brings specialist installation experience into the Group, increasing the geographic footprint of the Group to the North-West of England. The goodwill of £1,118,240 arising from the acquisition is attributable to the expertise and experience of the workforce and economies of scale that will arise from combining the operations into the group. Management has estimated the useful life of this goodwill to be 10 years.
The following amounts of assets, liabilities, and contingent liabilities were recognised at the acquisition date:
The company issued 1,135,526 growth shares in September 2023. These were issued at nominal value and are due to vest over a 48 month period, subject to share price hurdles.
The company has recognised a cost of £11,284 in respect of these growth shares.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The Group provides leases ("Heat Plan" and "Solar Plan") for customers ranging from 3 - 20 years in duration. These leases are classified and accounted for as operating leases in these accounts. The lease payments are collected on a monthly basis and increase in accordance with RPI, or 2.5% depending on the lease product.
At the reporting end date the group had contracted with customers for the following minimum lease payments:
Acquisitions:
In April 2024, the Group acquired The Little Green Energy Company Limited ("Little Green"), which is a domestic and commercial Solar installer in the South of England.
In May 2024, the Group acquired IMS Heat Pumps Limited ("IMS"), which is a domestic and commercial Heat Pump installer in the North of England, and Scotland.
In January 2025, the Group acquired Greengen UK Limited ("GreenGen"), which is a domestic and commercial Heat Pump installer in the South West of England.
These acquisitions enhance the Group's ability to provide these services to customers in these areas. The Group paid an aggregate consideration of £12.8m, with further deferred consideration due in each case in subsequent periods post-acquisition. The exercise to identify the fair value of the assets acquired has not yet been completed.
Capital and financing:
In April 2024, the Company issued 314,906 Series B+1 shares to a director. Between April 2024 and June 2024 the Companies issued 11,857,425 Growth Shares to directors and key management personnel.
In June 2024, the Group also secured a £250m asset-back debt facility with Barclays PLC, which the Group plans to utilise to finance over 28,000 residential solar panel systems, batteries and heat pumps across the UK over the next two years.
In July 2024, the Company drew down a further £925,000 from the loan facility with Kreos Capital VII (UK) Limited (see Note 20) on the same terms as the existing agreement.
In September 2024, the Company issued Convertible Loan Notes to the sum of £13.75m
The remuneration of key management personnel is as follows.
Under FRS102 section 33.6, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director of the entity.
Key management totalled 8 (2023: 5).
The company has taken advantage of the exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.