The directors present the strategic report for the year ended 31 December 2024.
Principal activities
The principal activity of SQE Energy Limited (previously Squeaky Clean Energy Limited) is the supply of clean electricity to Industrial and Commercial (I&C) consumers of electricity.
There have not been any significant changes in the company’s principal activities during the year under review.
The Company's mission is to help accelerate the World’s transition to clean energy. SQE has been at the forefront of development of services that support I&C and public sector organisations on their net zero journey and products that enable generators and traders to actively participate in the I&C market.
SQE is committed to having a positive impact on society and the environment and as part of this commitment continued its certification as the only Industrial and Commercial (I&C) supplier certified as a BCorp.
Trading Performance
During 2024 the Group expanded the number of market participants by onboarding two of Europe’s largest power trading businesses. This increased market liquidity and product offerings for our wholesale and retail I&C customers which in turn drove some new client wins in SQE including a global telecoms company.
Lower wholesale power prices during 2024, competition from the CFD and increased levelized costs of energy for new to earth renewable projects meant that demand for corporate power purchase agreements fell sharply.
During the year, the business continued to invest in its trading and billing platform, SQE OS, introducing a number of enhancements designed to increase customer self-service and improve control and transparency over trading activity and costs. These investments have further strengthened the company’s operational leverage, supporting growth in customer numbers without a commensurate increase in the cost base for customers served by SQE.
During the period, company turnover increased from £115.4m in 2023 to £128.1m in 2024.
Gross Margin increased year on year to £0.6m in 2024 from £0.5m in 2023 due to the increase in customer base and introduction of more profitable products.
Operating losses increased year on year with a loss of £3.06m during the year (2023: £1.78m) despite the increase in revenue due to investment in the team to deliver the directors’ long-term strategy to be the leading supplier of energy supply products to the I&C market. Although underlying operating costs increased because of business expansion, a more significant contributor to the higher SQE Energy Limited operating cost in 2024 was the reallocation of overheads. In 2023, these overheads were primarily assigned to SQE Energy Trading Limited and SQE OS Technology Limited; however, they were redirected back to SQE Energy Limited in 2024 to reflect the growing scale of product and market expansion within the customer segment.
Balance sheet and working capital
The balance sheet for the year reflects a movement in payment terms of a key customer (2023 early payment) and business development with current net liabilities of £10.4m (2023: £7.8m).
Debtors increased due to the timing of invoice collection towards the end of the year. Cash has decreased year on year at the financial year end in line with this timing difference in debtors. The provision for doubtful debts remains minimal at £0.1m (2023: £0.1m) and wholly related to the legacy microbusiness base with historic debts recovered or written off post year end. This reflects the company’s low risk approach to credit control with most of the payment exposure covered by credit insurance and specific insurance policies in relation to our corporate customers.
Creditors increased year on year, reflecting the growing customer base.
Principal risks and uncertainties
The Company faces a number of risks and uncertainties. The directors believe that the key risks are in respect of wholesale market prices, competition, and availability of credit cover.
Wholesale market prices
The Company operates a unique risk management approach that insulates it from exposure to changes in the wholesale market by transferring this risk to our Wholesale Counterparties. The addition of two new Wholesale Counterparties in the Group during the year provided not only additional liquidity on our platform but also enabled the Company to offer longer term deals and new products.
Competition
The Company operates in a highly competitive environment and I&C consumers are typically supplied under long term arrangements that generally come up for renewal every three years. Whilst SQE has a strong proposition, low cost operating model, and offers a number of unique products that deliver cost effective and low carbon energy supply, incumbent suppliers fight hard to retain customers.
Availability of credit insurance
SQE only takes on supply customers where we can obtain payment credit insurance. During 2024 we moved our credit insurance arrangements to a new provider which improved our pricing and flexibility.
Recovery of doubtful debts
The Company takes a low risk approach to doubtful debts with the vast majority of its potential exposure covered by credit insurance. The directors regularly review the Company’s remaining exposure and apply a prudent policy of provisioning for bad and doubtful debts.
Liquidity and cashflow
Liquidity and cashflow risk is the risk that the company will not be able to meet it’s financial obligations in the future as they fall due from it’s available cash resources. Detailed cashflow forecasts and analysis are prepared and reviewed by management on a weekly basis. Cashflow is monitored and controlled closely by management and the directors consider that the Company will meet it’s expected commitments in the foreseeable future from existing cash and future operating cashflows.
The management team responsible for the operation of the business uses a number of financial KPls in order to manage and develop the business to achieve the Company's strategic objectives. The Company has a wide range of metrics which are measured on a periodic basis.
The Company's main KPls include both financial targets which are reviewed periodically:
Financial KPls
Gross Margin % - Value from our contracts is regularly compared to forecasts and reviewed by management. The company achieved a gross margin of 0.48% during the period. This has increased from 0.40% achieved during 2023 due to the increase in customer base and focus on more profitable products.
Operating profitability - The Company assesses operating profit as profit before tax and interest. During the year, the Company made an operating loss of £3.06m in the year (2023 - £1.78m) reflecting the investment in developing our other renewable energy products.
The events in Ukraine and the resulting power price volatility have fundamentally reshaped the UK energy industry and whilst power price volatility reduced significantly in 2024 liquidity, particularly along the forward curve, remains very low and market spreads high. Against this backdrop a supply platform that allows generators to cross that spread and sell directly to I&C buyers makes increasing sense. This massive market opportunity is not lost on the investment community and during 2024 the Group Board had several conversations with various investors which culminated in a decision in 2025 to proceed with a funding round with existing and new investors which closed recently and was oversubscribed, and the board took the decision to raise further capital from existing and new investors.
Under s172 of the Companies Act 2006 directors of UK companies have a duty to promote the success of their company for the benefit of the members as a whole and, in doing so, have regard to:
The likely consequences of any decision in the long term;
The interests of the company's employees;
The need to foster the company's business relationships with suppliers, customers and others;
The impact of the company's operations on the community and the environment; and
The desirability of the company maintaining a reputation for high standards of business conduct.
The Directors of Squeaky Clean Energy Limited consider the following areas to be of key importance in their fulfilment of this duty:
Carrying out detailed planning and forecasting to ensure the ongoing financial safety of the business;
Monitoring the business plan in order to control deviation and achieve continued growth;
Seeking opportunities, by finding new locations to grow the business for the benefit of current and future employees, customers and suppliers as well as the wider UK economy;
Supervising the overall strategy of the Company and maintaining the highest standards of integrity and honesty in the Company's dealing with employees, suppliers, the general public and local and national government; and
Ensuring that we are vigilant in reducing the environmental impact of the business.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 11.
SQE continued and is committed to having a positive impact on society and the environment and as part of this commitment continued its certification as the only industrial and commercial supplier certified as a B-Corp.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
The financial statements have been prepared on the going concern basis as the Directors have assessed that there is a reasonable expectation that SQE will be able to continue in operation and meet its commitments as they fall due over the going concern period.
Like other energy suppliers, the key risk to the going concern basis of preparation is a lack of working capital to manage the seasonality of the business' cash flows. SQE as a part of the Group has developed a sophisticated cashflow analysis tool that enables it to forecast daily cash balances under various scenarios.
These scenarios are a combination of price and demand-based impacts reflecting changes in the wholesale market plus growth of our customer base over the coming year. In addition, the Company has flexible payment facilities and payment insurance cover or letters of credit for all its customers. The worst-case scenario test prudently assumes the retention of existing customers alongside a small number of new contract wins next year.
Looking to the future, SQE as part of the Group has performed a going concern review, forecasting out until at least 12 months beyond the date of signing the accounts considering both a base case and worst-case scenario using various externally provided scenarios. These scenarios are provided to Ofgem on a quarterly basis as part of their ongoing review into the financial stability of UK Energy suppliers. Having reviewed this forecast, and having applied various stress tests, the cash position of the Group remains sufficient to meet all commitments as they fall due without additional mitigations being implemented. That said, if the Directors felt it was necessary to reduce the Group's cash burn there are a number of mitigants that could be implemented that would not put the day-to-day operation of the business at risk.
The Group has demonstrated excellent progress in the development of its operating platform and this investment gives SQE as part of the wider business significant operating leverage enabling us to scale without a material increase in our operating costs.
Detailed cashflow modelling has been completed for SQE as part of the Group which has confirmed that there are sufficient funds in place to sustain operational targets for the immediate period. In addition, the Group continues to have the support of its investors and to attract interest from a number of institutional investors. The Group continues to weigh up its options and constantly review its capital requirements to meet its ambitious growth targets.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies 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; and
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 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.
We have audited the financial statements of SQE Energy Limited (the 'company') for the year ended 31 December 2024 which comprise the statement of comprehensive income, the balance sheet, the 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
Emphasis of matter - Net liabilities
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 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.
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the green energy sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including environmental legislation, renewable energy certification, electricity licensing and the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal and regulatory correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation; and
enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SQE Energy Limited is a private company limited by shares incorporated in England and Wales. The registered office is 151 Wardour Street, London, W1F 8WE.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of SQE Energy Group Limited (previously named Squeaky Clean Energy Group Limited). These consolidated financial statements are available from its registered office, 151 Wardour Street, London, England, W1F 8WE.
At the time of approving the financial statements, the directors have a reasonable expectation that the company as part of the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Like other energy suppliers, the key risk to the going concern basis of preparation is a lack of working capital to manage the seasonality of the business' cash flows. SQE as a part of the Group has developed a sophisticated cashflow analysis tool that enables it to forecast daily cash balances under various scenarios.
These scenarios are a combination of price and demand-based impacts reflecting changes in the wholesale market plus growth of our customer base over the coming year. In addition, the Company has flexible payment facilities and payment insurance cover or letters of credit for all its customers. The worst-case scenario test prudently assumes the retention of existing customers alongside a small number of new contract wins next year.
Looking to the future, SQE as part of the Group has performed a going concern review, forecasting out until at least 12 months beyond the date of signing the accounts considering both a base case and worst-case scenario using various externally provided scenarios. These scenarios are provided to Ofgem on a quarterly basis as part of their ongoing review into the financial stability of UK Energy suppliers. Having reviewed this forecast, and having applied various stress tests, the cash position of the Group remains sufficient to meet all commitments as they fall due without additional mitigations being implemented. That said, if the Directors felt it was necessary to reduce the Group's cash burn there are a number of mitigants that could be implemented that would not put the day-to-day operation of the business at risk.
The Group has demonstrated excellent progress in the development of its operating platform and this investment gives SQE as part of the wider business significant operating leverage enabling us to scale without a material increase in our operating costs.
Detailed cashflow modelling has been completed for SQE as part of the Group which has confirmed that there are sufficient funds in place to sustain operational targets for the immediate period. In addition, the Group continues to have the support of its investors and to attract interest from a number of institutional investors. The Group continues to weigh up its options and constantly review its capital requirements to meet its ambitious growth targets.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
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 are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, 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 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Revenue includes an estimate of the sales value of units supplied to customers between the date of the last meter reading and the period end. This is calculated by reference to the data received through third party settlement systems, together with estimates of consumption not yet processed through settlements and selling price estimates. These estimates are sensitive to the assumptions used in determining the portion of sales not billed and based on meter readings at the reporting date.
SQE Energy Limited applies critical judgements and estimates in financial reporting, particularly in calculating key costs such as Commodity, Balancing Services Use of System (BSUoS), Transmission Network Use of System (TNUoS), Distribution Use of System (DUoS), Capacity Market (CM), Feed-in-Tariff (FiT), Contracts for Difference (CfD), Renewable Obligations (RO), and Renewable Energy Guarantees of Origin (REGO). Estimates are based on market data, regulatory frameworks, and historical patterns. For Commodity costs, forecasts include wholesale price trends and hedging outcomes, while BSUoS, TNUoS, and DUoS costs are based on network operator charges. CM costs reflect forecasted auction results and supplier obligations, and FiT, CfD, and RO liabilities are calculated based on generation volumes and regulated rates. REGO estimates are informed by renewable energy production and market pricing.
The company has one class of turnover, that being the supply of electricity, and one geographical market, the UK.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The primary reason for the SQE Energy Limited year-on-year increases to salaries and directors' remuneration was the basis of overhead allocation.
In 2023, these overheads were primarily assigned to SQE Trading Limited and SQE OS Technology Limited; however, they were redirected back to SQE Energy Limited in 2024 to reflect the growing scale of product and market expansion within the customer segment.
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
The actual 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 carried forward tax losses of £10,724,266 (2023: £7,998,573). A deferred tax asset has not been recognised as it is not considered sufficiently probable that they will be recovered against the reversal of future taxable profits.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The shares rank pari passu in all respects except that the directors may at any time resolve to declare a dividend on one class of shares and not the other class and to pay different amounts of dividends on each class.
The company has taken advantage of the exemption available in Paragraph 33.1A of FRS102 whereby it has not disclosed transactions with other companies that are wholly owned within the Group.
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
The other related parties are fellow subsidiary undertakings of the group the entity belongs to.
In 2019 a loan was made at market rate to an employee who subsequently became a director.
Interest has been charged on this loan in line with the rate agreed.
Along with other expenses paid for by the company on behalf of the directors, the balance owed by the directors is £72,736 as at 31 December 2024 (2023: £70,040).
The smallest and largest group into which the entity is consolidated is headed by SQE Energy Group Limited. Copies of the accounts can be obtained from the above address.