Company registration number:
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their strategic report and the audited financial statements for the 12 months period ended 31 March 2024.
Pozitive Energy was established in 2015 and is a leading supplier of power and gas to the UK SME market. As a technology-led business, we take immense pride in our low cost-to-acquire and low cost-to-serve model in a relatively commoditized industry, The directors are pleased to report yet another year of robust operational and financial performance despite the uncertain macro-economic environment during the reporting period.
We continue to offer competitively priced energy supply with value-added services across Great Britain. Whilst our focus has always been on the SME market we have recently formally exited the domestic market by surrendering our domestic license and selling our residual domestic contracts book to EDF Energy. This allows us to continue our expansion without the additional overheads required to serve a non-core customer base. We take immense pride in our technological capabilities and the development and use of proprietary systems to manage our customer servicing, billing, trading as well as debt management. The scalability of our systems is well proven by our ever growing number of customers. Throughout the period, we expanded on our technological and servicing capabilities and invested in people, opening our third location in India in Mumbai in November 2023, with over 75 new colleagues currently in the new office, in addition to the well over 400 staff across Ahmedabad and Chandigarh employed by the wholly-owned subsidiary Pozitive Electricity and Gas (Pvt.) Ltd. Our enhanced customer service capabilities mean that we can even better serve our customers as well as our TPI (third-party intermediaries) partner network. Our partner network comprises of independent agents and is the primary channel through which we approach and manage our customers. We work with over 300 TPIs to cover the UK market. In February 2024, we also re-branded ourselves as PE, the abbreviated but more nimble version of Pozitive Energy, with the objective of creating a brand that becomes the de facto for all our customers’ utilities requirements and not just energy. With this re-branding we are already seeing a significant change in customer perception about our business activities. During the reporting period we also added to our internal and external marketing capabilities. Given the B2B nature of our business, we have not historically engaged in brand marketing but have proactively chosen the route of leveraging PE-branded events, sponsorships, etc. to create customer affinity. We continue to be a lead sponsor of the RFU and Army Sports in the UK as well as the world-renowned TT Races in the Isle of Man. The Pozitive brand was built on the core of our customer service, technological empowerment of our customer base as well as our TPI network, and we are now seeking to benefit from the many different services and products offered under the PE brand. Unlike in the past, in recent years many geo-political issues/conflicts have centered around Europe itself and its periphery – Ukraine, Moldova, Israel, etc. - exacerbating supply-side volatility, which when combined with unpredictable weather, creates the risk of an even bigger impact on energy businesses. Infrastructure issues in the UK and Europe continue to be constraints too with little or no additional gas storage capacity being added and the move to renewables and reliance on nuclear again being questioned, further increasing risk of huge swings should demand rise on account of extreme weather conditions. We remained substantially hedged during the period but actively managed the portfolio to optimize the outcome. High interest rates also remained an ongoing challenge throughout the reporting period as the government struggled to control inflation with further uncertainties created by the political changes due to the impending general elections in July 2024. Exodus from the SME market continued with Opus Energy formally announcing the process of exiting the market and eventually selling the bulk of its portfolio to EDF Energy. We are currently in the process of acquiring a small book of remaining meter points from Opus with a target completion date of April 2025.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
We take immense pride in the successful roll-out and seamless administration of various government introduced schemes like EBDS, EBRS, EBSS, EPG and AFP during the period and before, and making the benefits rapidly available to our customers. We have recently successfully off-boarded from all these schemes having completed all audits during the period. We also successfully met our smart meter roll-out targets for the CY23 period for electricity while narrowly missing our targets for gas smart-meter roll-out which remains plagued by industry issues. We also successfully completed all Ofgem and industry audits during the period including those covering the Smart Energy Code, Balancing & Settlement Code and the Debt & Disconnection Assurance Process.
Energy markets also faced ongoing price volatility in light of various conflicts around the globe even as we dealt with the aftermath of the COVID crisis during the period. The high interest rate environment continued through the reporting period to March 2024 and beyond, resulting in a prolonged difficult period for the wider market with SMEs taking a disproportionate hit to their trading activities. We have correspondingly taken a view that rationalizing our portfolio to account for the unlikelihood of recovering longstanding debts pertaining to the reporting period or earlier, would be the prudent thing to do to future-proof the business. We also continued to leverage our blend-and-extend proposition to support customers who were locked into higher prices and were eager to take advantage of falling prices in the market by extending their contracts with us, allowing us to proactively manage the risk of aged debtors. With greater clarity on government policies, we are adapting our debt collection processes to the new regime with increasing investment in internal and external resources, and actively managing our aged debtor book by taking a write-off where appropriate some of which remains a legacy of the SOLR process in 2021. Our EV roll-out has been slow although we continue to explore ways of expediting the roll-out albeit in a more focused manner targeting sites within our customer base that are more likely to result in a faster ROI. The roll-out has also been impacted by significant uncertainty around green energy/environmental priorities of the government. We are pleased to report that despite the ongoing uncertainties, we continue to build a well diversified and high-quality customer portfolio leveraging the scalability of our platform and our partner network. We streamlined our management structure by combining our separate sales roles for electricity and gas into a commercial director role covering both power and gas, whilst creating a separate UK operation director role to better manage our support and receivables management functions. We also strengthened our finance team with the joining of a Financial Controller in addition to the strengthening of our finance support team in India.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
The Company is subject to multiple external risk factors influencing the energy supply chain. These include for example the turmoil in Europe, Russia and the Middle East, the aftermath of the Covid-19 pandemic, overall macro-economic environment, weather extremities, etc. which have impacted wholesale prices and consumption volumes, resulting in inflation and volatility in the price at which the Company is able to buy and then sell energy to its customers. We monitor these continuously, taking appropriate action where necessary. The principal operating risks of the company include, but are not limited to, the following areas:
1.Wholesale commodity price risk: We mitigate increases in commodity prices by hedging our commodity purchases by using customers' EAC/AQ consumption over the contract term and fine tuning it through active management closer to the time of delivery to reduce our dependence on the imbalanced market. While we do not have any major exposure to flex contracts, we are looking to reduce the need for hedging where appropriate, by introducing framework-based products that offer monthly/daily variable pricing for customers that are not looking to lock themselves to a fixed price over their contract term.
2.Geo-political risks: We continue to be subjected to multiple conflicts involving key energy supply chain sources/routes including Russia and the Middle East which have impacted wholesale prices, resulting in inflation and volatility in the price at which the company is able to sell energy to its customers.
3.Macro-economic environment risk: Interest rates have started to come down in the last few months but remained relatively high during the reporting period backed by very high inflation levels. Although we are shielded from any direct impact of this rise in interest rates due to the absence of any significant borrowings we continue to be impacted indirectly due to its impact on the creditworthiness of our customer base. This was further exacerbated by uncertainties surrounding the timing of UK general elections.
4.Technology risk: The use of proprietary technology solutions for our core operations, a private cloud environment for hosting our key software assets, AI and deep data capabilities have been key to our scalability and security. The Company also maintains a business continuity plan wherein all the systems are mirrored which ensures that they can all be re-started within 15 minutes, resulting in a return to 'business as usual' with no effect on operations.
5.Customer creditworthiness risk: Slower than expected recovery following COVID, geopolitical uncertainties and higher interests rates that have created uncertainties for the business sector. Whilst we do not have a single point of failure by virtue of reliance on any particular sector(s) or TPI(s), we are not immune to the challenges faced by our customer base. We are taking measures to enhance the credit quality of our portfolio by leveraging Open Banking not just for onboarding but also for ongoing real-time monitoring of the financial health of our customer base and better debt management through outsourcing of legal processes and debt collection to enhance our portfolio quality.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
The business actively tracks the proportion of its supply for both power and gas that is hedged as a measure of risk mitigation in volatile markets. This is also a measure that is required to be reported to OFGEM and our trading partners on a monthly basis. Additionally, we continue to see significant growth in the number of meter points as a measure of revenue diversification across both electricity and gas.
The Board recognises the importance of the company's wider stakeholders when performing their duties under Section 172 (1) of the Companies Act 2006, and their duties to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members, and in doing so have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term; (b) the interests of the company's employees; (c) the need to foster the company's business relationships with suppliers, customers, and others; (d) the impact of the company's operations on the community and the environment; (e) the desirability of the company maintaining a reputation for high standards of business conduct, and (f) the need to act fairly between members of the company. The company has offices in UK and India. For its UK operations, the company is a low energy user.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The Directors present their report and the financial statements for the year ended 31 March 2024.
The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are 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.
The profit for the year, after taxation, amounted to £143,907,635 (2023 - £22,782,376).
A dividend in specie of £4,892,314 was declared in the year (2023 - nil).
The Directors who served during the year were:
The Company is aiming to expand its market coverage through the roll-out of public EV chargers at customer sites, which has the potential to significantly enhance energy supplied over the coming years, as adoption of electric vehicles ramps up.
Further, the roll-out of smart meters across the customer base will progressively reduce the proportion of billing that is reliant on industry estimates, bringing down the reconciliation time from 14 months to 4 months and correspondingly better working capital management.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
The Company has chosen in accordance with Section 414C(II) of the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 to set out within the Company’s Strategic Report, the information required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the Directors' Report, such as the business review and details of the principal risks and uncertainties.
There have been no significant events affecting the Company since the year end.
The auditor, Menzies LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF POZITIVE ENERGY LTD
We have audited the financial statements of Pozitive Energy Ltd (the 'Company') for the year ended 31 March 2024, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, including a summary of 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).
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 United Kingdom, including the Financial Reporting Council'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.
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 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.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The Directors are 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF POZITIVE ENERGY LTD (CONTINUED)
In our opinion, based on the work undertaken in the course of the 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.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF POZITIVE ENERGY LTD (CONTINUED)
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.
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 Company is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation. We determined that the following laws and regulations were most significant including:
∙Companies Act 2006;
∙Financial Reporting Standard 102;
∙Criminal Finances Act;
∙OFGEM regulations;
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial
statement items.
We understood how the Company is complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures. We corroborated our inquiries through our review of relevant documentation.
The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. No issues were identified in this area. We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
∙Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
∙Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; and
∙Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
∙Posting of unusual journals and complex transactions; or
∙The use of management override of controls to manipulate results, or to cause the Company to enter into transactions not in its best interests.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF POZITIVE ENERGY LTD (CONTINUED)
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.
for and on behalf of
Chartered Accountants
Statutory Auditor
95 Gresham Street
EC2V 7AB
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 26 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Pozitive Energy Ltd is a private company limited by shares and incorporated in England and Wales. Its registered office is located at Floor 10 (North West), One Canada Square, Canary Wharf, London, E14 5AB. The Company's registered number is 09523048.
The principal activity of Pozitive Energy Ltd is that of energy supplier selling power and offering gas tariffs to a range of businesses in the UK.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Pozitive Holdings Limited as at 31 March 2024 and these financial statements may be obtained from Companies House.
The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
This includes an estimate of the sales value of units supplied to customers between the date of the last meter reading and the year-end. Any unbilled revenue is included in accrued income to the extent that is it considered recoverable, based on historical data.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The computer software is fully amortised in the year of purchase.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of Financial Position 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.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. In making this judgement the company uses volume date provided by industry bodies which form the basis of the sales invoices raised. An adjustment is made for line-loss in respect of the electricity volumes and the net figure is used in the accrued income calculation. This is compared to the total value of invoices raised in the period and the difference is accrued, and assumes to be billable post year end. Bad Debt A provision against bad debt is calculated based on the aging of debts, whether accounts are still active, along with other knowledge by management of the likelihood of debts being paid.
The whole of the turnover is attributable to the principal activity specified in note 1 and arose solely within the United Kingdom.
Included within turnover is £66,235,328 (2023 - £202,500,148) in relation to the government's Energy Price Guarantee and Energy Bills Relief Scheme.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
11.Taxation (continued)
There were no factors that may affect future tax charges.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
19.Deferred taxation (continued)
Share premium account
new shares issued.
Profit and loss account
23.Other financial commitments
There is a fixed and floating charge over the assets of the Company as security of continuing trading activity with a supplier and associated credit facility.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
The Company's immediate and ultimate parent company is Pozitive Holdings Ltd to which consolidated accounts include this company. The consolidated accounts are available from Companies House for the year ended 31 March 2024.
There is not considered to be one controlling party.
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