Company Registration number:
Fair Heat Limited
for the Year Ended 31 December 2025
Fair Heat Limited
Contents
|
|
|
|
Company Information |
|
|
|
|
|
Strategic Report |
|
|
|
|
|
Directors' Report |
|
|
|
|
|
Statement of Directors' Responsibilities |
|
|
|
|
|
Independent Auditor's Report |
|
|
|
|
|
Profit and Loss Account |
|
|
|
|
|
Balance Sheet |
|
|
|
|
|
Statement of Changes in Equity |
|
|
|
|
|
Notes to the Financial Statements |
Fair Heat Limited
Company Information
|
Directors |
Mr C Cole Mr G Jones |
|
Company secretary |
Mr B Sparrow |
|
Registered office |
|
|
Auditors |
|
Fair Heat Limited
Strategic Report for the Year Ended 31 December 2025
The directors present their strategic report for the year ended 31 December 2025. In preparing the Strategic Report, the directors have complied with s414C of the Companies Act 2006.
Principal activity
The principal activity of the company during the period was as a specialist energy consultancy - focussed entirely on heat networks and building performance.
Fair review of the business
Fair Heat’s mission is to deliver solutions that enable the market to design, build, deliver and operate building systems that work for end users and the environment.
During 2024, the entire share capital of the previous parent company was acquired by the Fair Heat Employee Ownership Trust (the 'Trust'). This has resulted in the company and its previous parent, Fair Heat Holding Company Limited (together the 'group') becoming an Employee Owned Trust (EOT) Group.
The results of the company for the 12 month period show turnover of £20.4m (2024: £14.1m), gross profit of £5.2m (2024: gross profit of £4.2m) and a profit before taxation of £2.0m (2024: £1.4m).
The growth in turnover has been driven primarily by an increase in consulting activity as the sector transforms to becoming a regulated utility, with FairHeat able to leverage its position as market leader, together with increased contracting revenues off the back of an increase focus on performance in light of increased energy prices and the cost of living crisis.
Financial Key Performance Indicators
The Company currently carries the Group's Delivery side Subcontractor costs as well as internal engineers costs within its cost of sales, Business support staff costs are included within administration expenses.
On a standalone basis, the Company's key performance indicators are revenue, gross profit and profit before taxation. In the 12-month period ended 31 December 2025, the Company increased revenue by 45% to £20.4m (2024: £14.1m) leading to a 24% increase in gross profit to £5.2m (2024: £4.2m) and generating a profit before taxation of £2m (2024: £1.4m).
Fair Heat Limited
Strategic Report for the Year Ended 31 December 2025
Principal risks and uncertainties
The management of the business and the execution of the Company's strategy are subject to several risks. The process of risk acceptance and management is addressed through a framework of policies, procedures and internal control. Compliance with regulation, legal and ethical standards is a high priority of the Group's Senior Leadership Team.
The key business risks and uncertainties affecting the Company are considered to relate to poor economic conditions, delays in UK government legislation or funding, the associated risk of non payment by customers and the business' reliance on several large customers.
These risks are partly mitigated by strong account management, strong credit control and vetting procedures. Liquidity risk is managed by closely monitoring the cash flow generation of the Company and maintaining sufficient cash headroom which is reinforced by the availability of a significant credit facility with Santander, and this is monitored by the directors on a regular basis.
Trade debtors are monitored for credit worthiness and new clients' credit risk is assessed before any orders accepted. At the balance sheet date there were no significant considerations of customers at risk.
The Company's finance facilities are held in Sterling, with a small volume of transactions in EUR and USD. The Company therefore does not currently enter into any hedging arrangements and has minimal exchange rate risk but this is under continual review.
Future developments
Fair Heat’s core market of focus, heat networks, is undergoing significant change as the industry becomes regulated. Developments such as the Heat Network Technical Assurance Scheme and Heat Network Zoning are expected to influence the wider market and the standards required across the sector.
Fair Heat continues to support clients across heat network design, delivery, assurance and performance, maintaining appropriate governance arrangements where the business has contributed technical expertise to sector-wide standards or policy development. While the precise commercial implications of the evolving regulatory framework remain uncertain, the directors expect the transition to a more formalised regulatory environment to increase the market’s focus on quality, compliance and operational performance.
Approved by the Board on
|
|
Fair Heat Limited
Directors' Report for the Year Ended 31 December 2025
The directors present their report and the financial statements for the year ended 31 December 2025.
Directors of the company
The directors who held office during the year were as follows:
Disclosure of information to the auditors
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Future Developments
The future developments of the business are included within the strategic report.
Approved by the Board on
|
|
Fair Heat Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
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 apply them consistently; |
|
• |
make judgements and accounting estimates that are reasonable and prudent; |
|
• |
state whether applicable United Kingdom 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.
Fair Heat Limited
Independent Auditor's Report to the Members of Fair Heat Limited
Opinion
We have audited the financial statements of Fair Heat Limited (the 'company') for the year ended 31 December 2025, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, and Notes to the Financial Statements, 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).
In our opinion the financial statements:
• | give a true and fair view of the state of the company's affairs as at 31 December 2025 and of its profit for the year then ended; |
• | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion
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 responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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.
Fair Heat Limited
Independent Auditor's Report to the Members of Fair Heat Limited
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
|
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
|
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
In the light of our 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 and the Directors' Report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• | the financial statements are not in agreement with the accounting records and returns; or |
• | certain disclosures of directors' remuneration specified by law are not made; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 5, 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 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 company or to cease operations, or have no realistic alternative but to do so.
Fair Heat Limited
Independent Auditor's Report to the Members of Fair Heat Limited
Auditor Responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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 extent to which the audit was considered capable of detecting irregularities including fraud
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 heat network installation and consultancy 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 the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental 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 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; and |
|
• |
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. |
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:
Fair Heat Limited
Independent Auditor's Report to the Members of Fair Heat Limited
|
• |
agreeing financial statement disclosures to underlying supporting documentation; |
|
• |
reading the minutes of meetings of those charged with governance; 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 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.
Other matters which we are required to address
In forming our opinion on the financial statements, which is not modified, we note the prior period financial statements were not audited. Consequently, International Standards of Auditing (UK & Ireland) require the auditor to state that the corresponding figures contained within these financial statements are unaudited.
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.
For and on behalf of
Goodwood House
Blackbrook Park Avenue
Somerset
TA1 2PX
Fair Heat Limited
Profit and Loss Account
for the Year Ended 31 December 2025
|
Note |
2025 |
2024 |
|
|
Turnover |
|
|
|
|
Cost of sales |
( |
( |
|
|
Gross profit |
|
|
|
|
Administrative expenses |
( |
( |
|
|
Operating profit |
|
|
|
|
Interest payable and similar charges |
( |
( |
|
|
Profit before tax |
|
|
|
|
Taxation |
( |
( |
|
|
Profit for the financial year |
|
|
Fair Heat Limited
(Registration number: 09408296)
Balance Sheet as at 31 December 2025
|
Note |
2025 |
2024 |
|
|
Fixed assets |
|||
|
Tangible assets |
|
|
|
|
Current assets |
|||
|
Debtors |
|
|
|
|
Cash at bank and in hand |
|
|
|
|
|
|
||
|
Creditors: Amounts falling due within one year |
( |
( |
|
|
Net current assets |
|
|
|
|
Total assets less current liabilities |
|
|
|
|
Provisions for liabilities |
( |
( |
|
|
Net assets |
|
|
|
|
Capital and reserves |
|||
|
Called up share capital |
|
|
|
|
Capital contribution reserve |
|
|
|
|
Retained earnings |
|
|
|
|
Shareholders' funds |
|
|
Approved and authorised by the
|
|
Fair Heat Limited
Statement of Changes in Equity
for the Year Ended 31 December 2025
|
Share capital |
Capital contribution reserve |
Retained earnings |
Total |
|
|
At 1 January 2025 |
|
|
|
|
|
Profit for the year |
- |
- |
|
|
|
Dividends |
- |
- |
( |
( |
|
At 31 December 2025 |
|
|
|
|
|
Share capital |
Capital contribution reserve |
Retained earnings |
Total |
|
|
At 1 January 2024 (Unaudited) |
|
|
|
|
|
Profit for the year |
- |
- |
|
|
|
Dividends |
- |
- |
( |
( |
|
At 31 December 2024 (Unaudited) |
1 |
19,238 |
786,649 |
805,888 |
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
|
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.
Basis of preparation
These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.
These financial statements are presented in Sterling (£).
Summary of disclosure exemptions
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by 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; and
- The requirements of Section 33 Related Party Disclosures paragraph 33.7.
Going concern
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. As a result the Directors believe that the going concern basis is appropriate. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
Turnover recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
-The amounts of revenue can be measured reliably;
- It is probable that the Company will receive the consideration due under the contract;
- The stage of completion of the contract at the end of the reporting period can be measured reliably and;
- The costs incurred and the costs to complete the contract can be measured reliably.
Finance income and costs policy
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Deferred tax is recognised on timing differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable
Deferred tax liabilities are presented within provisions for liabilities on the balance sheet.
Tangible assets
Tangible assets are stated at cost, less accumulated depreciation and accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
|
Asset class |
Depreciation method and rate |
|
Office Equipment |
20% straight line |
|
Computer Equipment |
33% straight line |
|
Leasehold Improvements |
33% straight line or up to life of current lease |
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Debtors
Trade debtors are amounts due from customers for services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Assets held under hire purchase agreements are capitalised as tangible fixed assets with the future obligation being recognised as a liability. Finance costs are recognised in the Profit and Loss Account calculated at a constant periodic rate of interest over the term of the liability.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to profit or loss on
a straight-line basis over the period of the lease.
Defined contribution pension obligation
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payments obligations.
The contributions are recognised as an expense in the profit and loss account when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
Financial Instruments
The Company has elected to apply the provisions of Section 11 "Basic Financial Instruments " of FRS102 to all of its financial instruments.
Financial instruments are recognised in the Company's Balance sheet when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs 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 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 receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual agreements entered into. An equity instruments contract that evidences a residual interest in the assets of the Company after the deduction of its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument 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.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest-method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of the ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
Financial Instruments
The Company has elected to apply the provisions of Section 11 "Basic Financial Instruments " of FRS102 to all of its financial instruments.
Financial instruments are recognised in the Company's Balance sheet when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs 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 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 receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual agreements entered into. An equity instruments contract that evidences a residual interest in the assets of the Company after the deduction of its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument 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.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest-method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of the ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Judgements in applying accounting policies and key sources of estimation uncertainty
In applying the Company's accounting policies, the directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors' judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
The critical judgements that the directors have made in the process of applying the Company's accounting policies that have the most significant effect on the amounts recognised in the financial statements are discussed below.
(i) Assessing indicators of impairment
In assessing whether there have been any indicators of impairment of the assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairments identified during the current financial year.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(ii) Recoverability of debtors
The directors establish a provision for debtors that are estimated not to be recoverable. When assessing recoverability the directors consider factors such as the aging of debtors, past experience of recoverability, and the credit profile of individual or groups of customers.
(iii) Revenue recognition
Revenue from district energy and build services is recognised as the service is provided.
A monthly application for works performed is approved by the client and a monthly invoice is raised.
Full provision is made for changes to final project margins on a monthly basis and reviewed in detail at year end.
Revenue is recognised on a gross basis in terms of retention held by clients. Historical recovery of retentions has been excellent.
|
Turnover |
The analysis of the company's Turnover for the year from continuing operations is as follows:
|
2025 |
2024 |
|
|
Sale of goods |
|
|
|
Other revenue |
|
|
|
|
|
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
Operating profit |
Arrived at after charging/(crediting)
|
2025 |
2024 |
|
|
Depreciation expense |
|
|
|
Operating lease expense - property |
|
|
|
Employees |
The aggregate payroll costs (including directors' remuneration) were as follows:
|
2025 |
2024 |
|
|
Wages and salaries |
|
|
|
Social security costs |
|
|
|
Other short-term employee benefits |
|
|
|
Pension costs, defined contribution scheme |
|
|
|
Other employee expense |
|
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
|
2025 |
2024 |
|
|
Engineers |
|
|
|
Administration and support |
|
|
|
|
|
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
|
2025 |
2024 |
|
|
Remuneration |
|
|
|
Contributions paid to money purchase schemes |
|
|
|
143,831 |
116,563 |
|
Auditors' remuneration |
|
2025 |
2024 |
|
|
Audit of the financial statements |
|
- |
|
Taxation |
Tax charged/(credited) in the profit and loss account
|
2025 |
2024 |
|
|
Current taxation |
||
|
UK corporation tax |
|
|
|
UK corporation tax adjustment to prior periods |
|
|
|
570,198 |
529,281 |
|
|
Deferred taxation |
||
|
Deferred tax charge |
|
- |
|
Tax expense in the income statement |
|
|
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2024 - the same as the standard rate of corporation tax in the UK) of
The differences are reconciled below:
|
2025 |
2024 |
|
|
Profit before tax |
|
|
|
Corporation tax at standard rate |
|
|
|
Increase in UK and foreign current tax from adjustment for prior periods |
|
|
|
Tax increase from effect of capital allowances and depreciation |
|
|
|
Effect of revenues exempt from taxation |
- |
( |
|
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
|
Tax decrease arising from group relief |
- |
( |
|
Tax increase/(decrease) from other tax effects |
|
( |
|
Total tax charge |
|
|
|
Dividends |
|
2025 |
2024 |
|||
|
£ |
£ |
|||
|
Interim dividend of £ |
1,025,000 |
1,003,000 |
||
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
Tangible assets |
|
Land and buildings |
Office Equipment |
Computer Equipment |
Total |
|
|
Cost or valuation |
||||
|
At 1 January 2025 |
|
|
|
|
|
Additions |
|
|
|
|
|
At 31 December 2025 |
|
|
|
|
|
Depreciation |
||||
|
At 1 January 2025 |
|
|
|
|
|
Charge for the year |
|
|
|
|
|
At 31 December 2025 |
|
|
|
|
|
Carrying amount |
||||
|
At 31 December 2025 |
|
|
|
|
|
At 31 December 2024 |
|
|
|
|
|
Debtors |
|
2025 |
2024 |
|
|
Trade debtors |
|
|
|
Other debtors |
|
|
|
Prepayments and accrued income |
|
|
|
Amounts owed by group undertakings |
- |
9,264 |
|
|
|
Amounts owned by group undertakings are interest free and repayable on demand.
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
Cash and cash equivalents |
|
2025 |
2024 |
|
|
Cash at bank |
|
|
|
Creditors |
|
Note |
2025 |
2024 |
|
|
Due within one year |
|||
|
Loans and borrowings |
- |
|
|
|
Trade creditors |
|
|
|
|
Amounts owed to group undertakings |
|
- |
|
|
Social security and other taxes |
|
|
|
|
Other creditors |
|
- |
|
|
Accrued expenses |
|
|
|
|
Corporation tax |
|
|
|
|
Deferred income |
|
|
|
|
|
|
Amounts owned to group undertakings are interest free and repayable on demand.
|
Provisions for liabilities |
|
Deferred tax |
Total |
|
|
At 1 January 2025 |
|
|
|
Additional provisions |
|
|
|
At 31 December 2025 |
|
|
|
|
||
Deferred tax
Deferred tax assets and liabilities:
|
2025 |
Asset |
Liability |
|
Fixed asset timing differences |
- |
|
|
- |
|
|
2024 (Unaudited) |
Asset |
Liability |
|
Fixed asset timing differences |
- |
|
|
- |
|
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
Loans and borrowings |
Current loans and borrowings
|
2025 |
2024 |
|
|
Bank borrowings |
- |
|
The loan is government secured and interest is charged at 9%. The loan was fully repaid in July 2025.
|
Share capital |
Allotted, called up and fully paid shares
|
2025 |
2024 |
|||
|
No. |
£ |
No. |
£ |
|
|
1 Ordinary share of £1 each |
1 |
1 |
1 |
1 |
|
Obligations under leases and hire purchase contracts |
Operating leases
The total of future minimum lease payments is as follows:
|
2025 |
2024 |
|
|
Not later than one year |
|
|
|
Later than one year and not later than five years |
|
- |
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Fair Heat Limited
Notes to the Financial Statements
for the Year Ended 31 December 2025
|
Related party transactions |
Summary of transactions with parent
Summary of transactions with other related parties
|
Parent and controlling undertaking |
The majority of the share capital of Fair Heat Holding Limited is held by the Fair Heat Employee Ownership Trust, with the sole trustee being Fair Heat EOT Trustee Limited, a company incorporated in England and Wales. Fair Heat EOT Trustee Limited is considered to be the controlling party.
The most senior parent entity producing publicly available consolidated financial statements is Fair Heat Holding Company Limited. These financial statement are available upon request from Companies House, Crown Way, Cardiff, CF14 3UZ.
|
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £