Fair Heat Holding Company Limited - Period Ending 2025-12-31

Company Registration number: 12054307

Fair Heat Holding Company Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2025

Fair Heat Holding Company Limited

Contents


Company Information	1

Strategic Report	2 to 3

Directors' Report	4

Statement of Directors' Responsibilities	5

Independent Auditor's Report	6 to 9

Consolidated Profit and Loss Account	10

Consolidated Balance Sheet	11

Balance Sheet	12

Consolidated Statement of Changes in Equity	13

Statement of Changes in Equity	14

Consolidated Statement of Cash Flows	15

Notes to the Financial Statements	16 to 32

Fair Heat Holding Company Limited

Company Information

Directors

Mr C Cole

Mr G Jones

Company secretary

Mr B Sparrow

Registered office

Unit Tr1
Trowbray House
108 Weston Street
LONDON
SE1 3QB

Auditors

Albert Goodman LLP Goodwood House
Blackbrook Park Avenue
Taunton
Somerset
TA1 2PX

Fair Heat Holding Company 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.

Group reconstruction
On 19 December 2019 the company acquired the entire share capital of Fair Heat Limited in a share for share exchange. As a result of satisfying the conditions for applying merger accounting, the consolidated financial statements report the results and financial position of the group as if the group structure had always been in place. Whilst the group has existed since this date this is the first year that the group has been required to prepare group consolidated financial statements.

Principal activity

The principal activity of the company is a specialist energy consultancy company - 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 company was acquired by the Fair Heat Employee Ownership Trust (the 'Trust'). This has resulted in the company and group, becoming an Employee Owned Trust (EOT) Group.

The results of the group 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 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 Group's key performance indicators are revenue, gross profit and profit before taxation. In the 12-month period ended 31 December 2025, the Group 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 Holding Company Limited

Strategic Report for the Year Ended 31 December 2025

Principal risks and uncertainties

The management of the business and the execution of the Group'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 Group 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 Group 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 Group's finance facilities are held in Sterling, with a small volume of transactions in EUR and USD. The Group 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 7 September 2026 and signed on its behalf by:

Mr G Jones
Director

Fair Heat Holding Company Limited

Directors' Report for the Year Ended 31 December 2025

The directors present their report and the consolidated financial statements for the year ended 31 December 2025.

Directors of the group

The directors who held office during the year were as follows:

Mr C Cole

Mr G Jones

Disclosure of information to the auditor

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 auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Future Developments

The future developments of the business are included within the strategic report.

Approved by the Board on 7 September 2026 and signed on its behalf by:

Mr G Jones
Director

Fair Heat Holding Company 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 group and the company and of the profit or loss of the group 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 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 group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Fair Heat Holding Company Limited

Independent Auditor's Report to the Members of Fair Heat Holding Company Limited

Opinion

We have audited the financial statements of Fair Heat Holding Company Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, 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 group's and the parent company's affairs as at 31 December 2025 and of the group's 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 group 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 Holding Company Limited

Independent Auditor's Report to the Members of Fair Heat Holding Company 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 group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
•	the parent company 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 group’s and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Fair Heat Holding Company Limited

Independent Auditor's Report to the Members of Fair Heat Holding Company 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.

Fair Heat Holding Company Limited

Independent Auditor's Report to the Members of Fair Heat Holding Company Limited

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;
•	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.

Christopher Walford BSc FCA (Senior Statutory Auditor)
For and on behalf of Albert Goodman LLP, Statutory Auditor

Goodwood House
Blackbrook Park Avenue
Taunton
Somerset
TA1 2PX

11 September 2026

Fair Heat Holding Company Limited

Consolidated Profit and Loss Account
for the Year Ended 31 December 2025

	Note	2025 £	2024 (Unaudited) £
Turnover	3	20,428,348	14,068,455
Cost of sales		(15,253,065)	(9,882,556)
Gross profit		5,175,283	4,185,899
Administrative expenses		(3,183,003)	(2,759,871)
Operating profit	4	1,992,280	1,426,028
Interest payable and similar charges	5	(3,805)	(10,301)
Profit before tax		1,988,475	1,415,727
Taxation	9	(609,533)	(529,281)
Profit for the financial year		1,378,942	886,446
Profit/(loss) attributable to:
Owners of the company		1,378,942	886,446

Fair Heat Holding Company Limited

(Registration number: 12054307)
Consolidated Balance Sheet as at 31 December 2025

	Note	2025 £	2024 (Unaudited) £
Fixed assets
Tangible assets	10	261,957	156,325
Current assets
Debtors	12	4,717,079	2,246,969
Cash at bank and in hand		2,845,102	1,027,002
		7,562,181	3,273,971
Creditors: Amounts falling due within one year	14	(6,596,856)	(2,621,291)
Net current assets		965,325	652,680
Total assets less current liabilities		1,227,282	809,005
Provisions for liabilities	15	(51,582)	(12,247)
Net assets		1,175,700	796,758
Capital and reserves
Called up share capital	17	128	128
Share premium reserve		19,217	19,217
Capital redemption reserve		27	27
Retained earnings		1,156,328	777,386
Equity attributable to owners of the company		1,175,700	796,758
Shareholders' funds		1,175,700	796,758

Approved and authorised by the Board on 7 September 2026 and signed on its behalf by:

Mr G Jones
Director

Fair Heat Holding Company Limited

(Registration number: 12054307)
Balance Sheet as at 31 December 2025

	Note	2025 £	2024 (Unaudited) £
Fixed assets
Investments	11	19,373	19,373
Current assets
Debtors	12	15,736	-
Creditors: Amounts falling due within one year	14	-	(9,264)
Net current assets/(liabilities)		15,736	(9,264)
Net assets		35,109	10,109
Capital and reserves
Called up share capital	17	128	128
Share premium reserve		19,217	19,217
Capital redemption reserve		27	27
Retained earnings		15,737	(9,263)
Shareholders' funds		35,109	10,109

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes as it prepares group accounts. The company made a profit after tax for the financial year of £1,025,000 (2024 - profit of £996,510).

Approved and authorised by the Board on 7 September 2026 and signed on its behalf by:

Mr G Jones
Director

Fair Heat Holding Company Limited

Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2025

	Share capital £	Share premium £	Capital redemption reserve £	Retained earnings £	Total £	Total equity £
At 1 January 2025	128	19,217	27	777,386	796,758	796,758
Profit for the year	-	-	-	1,378,942	1,378,942	1,378,942
Capital contribution to the employee ownership trust	-	-	-	(1,000,000)	(1,000,000)	(1,000,000)
At 31 December 2025	128	19,217	27	1,156,328	1,175,700	1,175,700

	Share capital £	Share premium £	Capital redemption reserve £	Retained earnings £	Total £	Total equity £
At 1 January 2024 (Unaudited)	128	19,217	27	893,939	913,311	913,311
Profit for the year	-	-	-	886,446	886,446	886,446
Dividends	-	-	-	(502,999)	(502,999)	(502,999)
Capital contribution to the employee ownership trust	-	-	-	(500,000)	(500,000)	(500,000)
At 31 December 2024 (Unaudited)	128	19,217	27	777,386	796,758	796,758

Page 13

Fair Heat Holding Company Limited

Statement of Changes in Equity
for the Year Ended 31 December 2025

	Share capital £	Share premium £	Capital redemption reserve £	Retained earnings £	Total £
At 1 January 2025	128	19,217	27	(9,263)	10,109
Profit for the year	-	-	-	1,025,000	1,025,000
Capital contribution to the employee ownership trust	-	-	-	(1,000,000)	(1,000,000)
At 31 December 2025	128	19,217	27	15,737	35,109

	Share capital £	Share premium £	Capital redemption reserve £	Retained earnings £	Total £
At 1 January 2024 (Unaudited)	128	19,217	27	(2,774)	16,598
Profit for the year	-	-	-	996,510	996,510
Dividends	-	-	-	(502,999)	(502,999)
Capital contribution to the employee ownership trust	-	-	-	(500,000)	(500,000)
At 31 December 2024 (Unaudited)	128	19,217	27	(9,263)	10,109

Page 14

Fair Heat Holding Company Limited

Consolidated Statement of Cash Flows
for the Year Ended 31 December 2025

	Note	2025 £	2024 (Unaudited) £
Cash flows from operating activities
Profit for the year		1,378,942	886,446
Adjustments to cash flows from non-cash items
Depreciation and amortisation	4	119,687	90,576
Finance costs	5	3,805	10,301
Income tax expense	9	609,533	529,281
		2,111,967	1,516,604
Working capital adjustments
Increase in trade debtors	12	(2,470,110)	(544,836)
Increase in trade creditors	14	3,218,845	337,230
Increase in deferred income, including government grants		282,911	511,443
Cash generated from operations		3,143,613	1,820,441
Income taxes paid	9	(15,351)	(376,390)
Net cash flow from operating activities		3,128,262	1,444,051
Cash flows from investing activities
Acquisitions of tangible assets		(225,319)	(69,598)
Capital contribution to the employee ownership trust		(1,000,000)	(500,000)
Net cash flows from investing activities		(1,225,319)	(569,598)
Cash flows from financing activities
Interest paid	5	(3,805)	(10,301)
Repayment of bank borrowing		(81,038)	(51,856)
Dividends paid		-	(502,999)
Net cash flows from financing activities		(84,843)	(565,156)
Net increase in cash and cash equivalents		1,818,100	309,297
Cash and cash equivalents at 1 January 2025		1,027,002	717,705
Cash and cash equivalents at 31 December 2025		2,845,102	1,027,002

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

1	General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Unit Tr1
Trowbray House
108 Weston Street
LONDON
SE1 3QB

2	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 (£).

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2025.

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

On 19 December 2019 the company acquired the entire share capital of Fair Heat Limited in a share for share exchange. As a result of satisfying the conditions for applying merger accounting, the consolidated financial statements report the results and financial position of the group as if the group structure had always been in place.

The profit and loss account and cashflow statement included within these accounts therefore record activity for the year ended 31 December 2025 with the year ended 31 December 2024 as comparatives.

No profit and loss account is presented for the company as permitted by Section 19 of FRS 102.

Where merger accounting is not applied, the purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill. The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full. Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

Going concern

The Directors have a reasonable expectation that the Group 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 Holding Company 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 amount of revenue can be measured reliably;
- It is probable that the Group 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
- 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 group 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 consolidated financial statements and on unused tax losses or tax credits in the group. 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 profit.

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 Holding Company 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.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or 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 group will not be able to collect all amounts due according to the original terms of the receivables.

Trade 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 group 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 group 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 Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

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.

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.

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.

Defined contribution pension obligation

The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group 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 group in independently administered funds.

Reserves

Called up share capital represents the nominal value of shares that have been issued.

Profit and loss account includes all current and prior period profits and losses.

Share premium reserve represents excess amount received from share holders over the normal (par) value of share capital issued.

Capital contribution reserve represents amounts received from shareholders or other parties for which no shares have been issued and no repayment is required.

Capital Contribution to the employee ownership trust
Capital Contribution to the employee ownership trust is recognised as a distribution in the financial statements in the reporting period in which the contributions are declared.

Fair Heat Holding Company 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.

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

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Turnover

The analysis of the group's Turnover for the year from continuing operations is as follows:

	2025 £	2024 (Unaudited) £
Sale of goods	20,422,862	14,049,450
Other revenue	5,486	19,005
	20,428,348	14,068,455

4	Operating profit

Arrived at after charging/(crediting)

	2025 £	2024 (Unaudited) £
Depreciation expense	119,687	90,576
Operating lease expense - property	458,553	330,714

5	Interest payable and similar expenses

	2025 £	2024 (Unaudited) £
Interest on bank overdrafts and borrowings	-	573
Interest expense on other finance liabilities	3,805	9,728
	3,805	10,301

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

6	Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	2025 £	2024 (Unaudited) £
Wages and salaries	5,684,776	3,608,669
Social security costs	713,219	407,306
Other short-term employee benefits	38,537	14,028
Pension costs, defined contribution scheme	683,469	306,411
Other employee expense	369,273	303,229
	7,489,274	4,639,643

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

	2025 No.	2024 (Unaudited) No.
Administration and support	15	8
Engineers	92	60
	107	68

7	Directors' remuneration

The directors' remuneration for the year was as follows:

	2025 £	2024 (Unaudited) £
Remuneration	83,831	56,427
Contributions paid to money purchase schemes	60,000	60,136
	143,831	116,563

8	Auditors' remuneration

	2025 £	2024 (Unaudited) £
Audit of these financial statements	5,750	-
Audit of the financial statements of subsidiaries of the company pursuant to legislation	14,750	-
	20,500	-

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Taxation

Tax charged/(credited) in the consolidated profit and loss account

	2025 £	2024 (Unaudited) £
Current taxation
UK corporation tax	498,443	350,529
UK corporation tax adjustment to prior periods	71,755	178,752
	570,198	529,281
Deferred taxation
Arising from origination and reversal of timing differences	39,335	-
Tax expense in the income statement	609,533	529,281

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2024 - the same as the standard rate of corporation tax in the UK) of 25% (2024 - 25%).

The differences are reconciled below:

	2025 £	2024 (Unaudited) £
Profit before tax	1,988,475	1,415,727
Corporation tax at standard rate	497,119	353,932
Increase in UK and foreign current tax from adjustment for prior periods	71,755	178,602
Tax increase from effect of capital allowances and depreciation	185	6,521
Effect of revenues exempt from taxation	-	(623)
Effect of expense not deductible in determining taxable profit (tax loss)	13,639	65,292
Tax decrease arising from group relief	-	(672)
Tax increase/(decrease) from other tax effects	26,835	(73,771)
Total tax charge	609,533	529,281

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

10	Tangible assets

Group

	Land and buildings £	Office Equipment £	Computer Equipment £	Total £
Cost or valuation
At 1 January 2025	141,618	133,438	130,630	405,686
Additions	100,616	46,896	77,807	225,319
At 31 December 2025	242,234	180,334	208,437	631,005
Depreciation
At 1 January 2025	127,634	63,398	58,329	249,361
Charge for the year	38,719	30,551	50,417	119,687
At 31 December 2025	166,353	93,949	108,746	369,048
Carrying amount
At 31 December 2025	75,881	86,385	99,691	261,957
At 31 December 2024	13,984	70,040	72,301	156,325

Included within the net book value of land and buildings above is £75,881 (2024 - £13,984) in respect of long leasehold land and buildings.

11	Investments

Company

	2025 £	2024 (Unaudited) £
Investments in subsidiaries	19,373	19,373

Subsidiaries	£
Cost or valuation
At 1 January 2025	19,373
Carrying amount
At 31 December 2025	19,373
At 31 December 2024	19,373

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Undertaking	Registered office	Holding	Proportion of voting rights and shares held
			2025	2024

Subsidiary undertakings
Fair Heat Limited	Unit Tr1, Trowbray House, 108 Weston Street, LONDON, SE1 3QB	Ordinary	100%	100%

Subsidiary undertakings

Fair Heat Limited

The principal activity of Fair Heat Limited is providing quality assurance for heat networks and building performance.

Debtors

	Group		Company
Current	2025 £	2024 (Unaudited) £	2025 £	2024 (Unaudited) £
Trade debtors	3,844,996	1,684,011	-	-
Amounts owed by group undertakings	-	-	15,736	-
Other debtors	140,439	108,186	-	-
Prepayments	236,208	128,350	-	-
Accrued income	495,436	326,422	-	-
	4,717,079	2,246,969	15,736	-

13	Cash and cash equivalents

	Group		Company
	2025 £	2024 (Unaudited) £	2025 £	2024 (Unaudited) £
Cash at bank	2,845,102	1,027,002	-	-

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Creditors

		Group		Company
	Note	2025 £	2024 (Unaudited) £	2025 £	2024 (Unaudited) £
Due within one year
Loans and borrowings	18	-	81,038	-	-
Trade creditors		2,030,190	680,182	-	-
Amounts owed to group undertakings		-	-	-	9,264
Social security and other taxes		1,077,954	190,103	-	-
Other creditors		47,396	183,096	-	-
Accrued expenses		1,796,969	680,283	-	-
Corporation tax	9	849,993	295,146	-	-
Deferred income		794,354	511,443	-	-
		6,596,856	2,621,291	-	9,264

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

15	Provisions for liabilities

Group

	Deferred tax £	Total £
At 1 January 2025	12,247	12,247
Increase (decrease) in existing provisions	39,335	39,335
At 31 December 2025	51,582	51,582

Deferred tax

Group

Deferred tax assets and liabilities

2025	Asset £	Liability £
Accelerated capital allowances	-	51,582
	-	51,582

2024 (Unaudited)	Asset £	Liability £
Accelerated capital allowances	-	12,247
	-	12,247

16	Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £683,469 (2024 - £306,411).

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

17	Share capital

Allotted, called up and fully paid shares

	2025		2024
	No.	£	No.	£
Ordinary A Shares of £0.0002 each	270,000	54.00	270,000	54.00
Ordinary C Shares of £0.0002 each	101,250	20.25	101,250	20.25
Ordinary D Shares of £0.0002 each	32	0.01	32	0.01
Ordinary E Shares of £0.0002 each	270,000	54.00	270,000	54.00
	641,282	128	641,282	128

Rights, preferences and restrictions

Ordinary A Shares have the following rights, preferences and restrictions:
Full voting rights, right to receive a dividend and rights to participate in a distribution of income and capital.

Ordinary C Shares have the following rights, preferences and restrictions:
No voting rights but do have the right to receive a dividend at the discretion of the board. No right to receive a distribution of capital upon winding up or a capital event.

Ordinary D Shares have the following rights, preferences and restrictions:
No voting rights but do have the right to receive a dividend and rights to participate in a distribution of income and capital.

Ordinary E Shares have the following rights, preferences and restrictions:
Full voting rights, right to receive a dividend and rights to participate in a distribution of income and capital.

18	Loans and borrowings

Current loans and borrowings

	Group		Company
	2025 £	2024 (Unaudited) £	2025 £	2024 (Unaudited) £

Bank borrowings	-	81,038	-	-

The loan is government secured and interest is charged at 9%. The loan was fully repaid in July 2025.

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

19	Obligations under leases and hire purchase contracts

Group

Operating leases

The total of future minimum lease payments is as follows:

	2025 £	2024 (Unaudited) £
Not later than one year	500,963	88,837
Later than one year and not later than five years	612,375	-
	1,113,338	88,837

The amount of non-cancellable operating lease payments recognised as an expense during the year was £458,553 (2024 - £330,714).

Dividends

	2025	2024
	£	£
Interim dividend of £Nil (2024 - £502,999.00)	-	502,999

21	Parent and controlling undertaking

The majority of the company's share capital 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.

22	Related party transactions

Group

Summary of transactions with parent

Transactions with Fair Heat Employee Ownership Trust On 28 October 2024, the shareholders of Fair Heat Holding Company Limited sold their 100% shareholding to a newly formed entity, Fair Heat Employee Ownership Trust. Ultimate control of Fair Heat Employee Ownership Trust now rests with the trustees of Fair Heat Employee Ownership Trust.

Contributions of £1,000,000 (2024: £500,000) were paid to the employee ownership trust during the year.

Summary of transactions with other related parties

During the year the group generated £4,224 (2024: £nil) in turnover and made purchases of £42,174 (2024: £23,207) from Guru Systems Limited, a company with common directors.

Fair Heat Holding Company Limited

Notes to the Financial Statements
for the Year Ended 31 December 2025

Company

Summary of transactions with subsidiaries

Where the company has trading transactions and debtor and creditor balances with other wholly owned subsidiaries within the group, the company has taken advantage of the exemption in FRS 102 paragraph 33.1A from disclosure as consolidated accounts are available.