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Switch2 Energy Limited
Registered number: 02409803
Annual report and
financial statements
For the year ended 31 March 2025
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SWITCH2 ENERGY LIMITED
COMPANY INFORMATION
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P Ramsden (appointed 26 November 2024)
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Chartered Accountants & Statutory Auditor
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SWITCH2 ENERGY LIMITED
CONTENTS
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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SWITCH2 ENERGY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2025
The directors, in preparing this Strategic Report, have complied with s414C of the Companies Act 2006.
Principal activities and business review
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The principal activities of the Company during the year remain:
−The supply of heating and associated equipment to the district heating market, including Heat Interface Units (HIU's), meters, monitoring equipment and prepayment smart meters.
−The maintenance of heating equipment within both individual properties and energy centres.
−The provision of billing and debt management services on a contract basis to ensure residents are accurately billed for their heat usage.
−Design and build of communal heating systems.
The Company achieved turnover of £28.3m for the current year compared to £26.4m in the previous year. The underlying EBITDA of the Company was £3.2m (2024: £1.0m). Underlying EBITDA is earnings before interest payable, tax, depreciation, amortisation, group management charge and non-recurring costs. The net profit before tax was £1.7m (2024: loss before tax of £0.4m). The balance sheet shows positive cash of £2.8m (2024: £1.7m) and shareholders' funds increased in the year from £9.6m to £10.9m.
Key performance indicators
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The directors consider the key performance indicators to be those noted in the business review above. The directors also review key financial and operational metrics including recurring revenue (value and percentage), net retention rates and client satisfaction scores.
The directors remain positive about the outlook for the Company with increasing momentum from the public sector to introduce more heat networks and to improve the performance of existing networks. The Company continues to invest in new systems and processes in order to improve product development, business services and platform simplification with the aim of enhancing resident and client experience.
The directors consider that the Company has adequate resources to continue operations for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in note 2 to the financial statements.
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SWITCH2 ENERGY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Principal risks and uncertainties
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The directors periodically review and agree objectives for managing risk. These risks, and the way in which the Company seeks to manage them, are summarised below.
Market risk
The Company supplies heating and associated equipment predominantly to mixed tenure developments and provides on-going maintenance, billing and management services. The market is expanding which has led to an increase in the number of competitors offering similar products and services. In order to maintain the Company's market position the Company continues to invest in research and development in new products. The Company is currently enhancing its service operations by implementing new systems and by offering consumers and clients a web portal to provide a superior approach to customer services.
Technology
Technology risk arises due to the rapid rate of change in remote metering and data management applications, and evolving consumer engagement with technology in the home. The Company seeks to manage the obsolescence risk by monitoring market developments via a dedicated research and development team and continuing to invest in its products and service offering.
Liquidity risk and interest rate risk
The Company manages liquidity risk by ensuring sufficient funding is available to meet foreseeable needs.
The Company manages interest risk through ensuring that any interest bearing agreements are at suitable market rates.
Credit risk
The Company's credit risk is minimised by obtaining credit reports for all prospective clients before contracts are signed, and updated reports are regularly reviewed through the duration of each contract.
This report was approved by the board on 8 November 2025 and signed on its behalf.
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SWITCH2 ENERGY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2025
The directors present their report and the financial statements for the year ended 31 March 2025.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent; 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £1,314,687 (2024 - loss £235,619).
During the year, the Company paid dividends of £Nil (2024: £Nil).
Qualifying third party indemnity provisions
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Insurance policies are in place that indemnify the directors against liability when acting for Switch2 Energy Limited.
The directors who served during the year were:
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P M Goodman (resigned 2 August 2024)
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P Ramsden (appointed 26 November 2024)
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SWITCH2 ENERGY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Going concern and post balance sheet events
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The Company's business activities, together with the factors likely to affect its future development, performance and financial position are set out in the Strategic Report, together with a summary of the principal risks and its strategy for managing those risks and uncertainties. The financial position of the Company, its cash flows, liquidity position and borrowing facilities, are further described in the financial statements.
The Company has strong contracted income streams flowing from long-term energy services and maintenance contracts with customers, resulting in significant positive cash flows.
In the prior year, the Company entered into a loan agreement with Major Oak Limited, a related party, for £2m which is repayable with not less than 12 months' notice. During the year ended 31 March 2025, £1m of this was repaid. Following the year end the loan was repaid in full. The purpose of the loan was to provide additional working capital for the growth of the business. Major Oak Limited has agreed to provide further funding as necessary to ensure that there is sufficient working capital in the business.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The auditor, Forvis Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 8 November 2025 and signed on its behalf.
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SWITCH2 ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWITCH2 ENERGY LIMITED
Opinion
We have audited the financial statements of Switch2 Energy Limited (the ‘Company’) for the year ended 31 March 2025 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the 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 FRS 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 March 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’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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SWITCH2 ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWITCH2 ENERGY LIMITED
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters 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 the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which 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.
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SWITCH2 ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWITCH2 ENERGY LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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 intend either to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the Company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, general data protection regulations (GDPR), health and safety regulation and anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation and the Companies Act 2006.
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SWITCH2 ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWITCH2 ENERGY LIMITED
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of override of controls, and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgments and assumptions in significant accounting estimates, in particular in relation to stock provision and amortisation of intangible assets (products), revenue recognition (which we pinpointed to the cut-off assertion, and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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.
Use of the audit 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.
Shaun Mullins (Senior Statutory Auditor)
for and on behalf of
Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
5th Floor
3 Wellington Place
Leeds
LS1 4AP
10 November 2025
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SWITCH2 ENERGY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit/(loss) for the financial year
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There were no recognised gains and losses for 2025 or 2024 other than those included in the statement of comprehensive income.
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There was no other comprehensive income for 2025 (2024: £NIL).
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The notes on pages 15 to 34 form part of these financial statements.
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SWITCH2 ENERGY LIMITED
REGISTERED NUMBER: 02409803
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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SWITCH2 ENERGY LIMITED
REGISTERED NUMBER: 02409803
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MARCH 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 8 November 2025.
The notes on pages 15 to 34 form part of these financial statements.
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SWITCH2 ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
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Comprehensive expense for the year
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Total comprehensive expense for the year
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 15 to 34 form part of these financial statements.
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SWITCH2 ENERGY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
Cash flows from operating activities
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Profit/(loss) for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Impairments of fixed assets
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Decrease/(increase) in stocks
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Decrease in amounts owed to connected companies
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Net cash from investing activities
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SWITCH2 ENERGY LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
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Cash flows from financing activities
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Net cash used in financing activities
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Net increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 15 to 34 form part of these financial statements.
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Switch2 Energy Limited ("the Company") is a private limited company limited by shares and incorporated in England and Wales under the Companies Act 2006, registered number 02409803. The address of the registered office is The Waterfront, Salts Mill Road, Shipley, BD17 7EZ. The nature of the Company's operations and its principal activities are set out in the Strategic Report.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company's business activities, together with the factors likely to affect its future development, performance and financial position are set out in the Strategic Report, together with a summary of the principal risks and its strategy for managing those risks and uncertainties. The financial position of the Company, its cash flows, liquidity position and borrowing facilities, are further described in the financial statements.
The Company has strong contracted income streams flowing from long-term energy services and maintenance contracts with customers, resulting in significant positive cash flows.
In the prior year, the Company entered into a loan agreement with Major Oak Limited, a related party, for £2m which is repayable with not less than 12 months' notice. During the year ended 31 March 2025, £1m of this was repaid. Following the year end the loan was repaid in full. The purpose of the loan was to provide additional working capital for the growth of the business. Major Oak Limited has agreed to provide further funding as necessary to ensure that there is sufficient working capital in the business.
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP, rounded to the nearest £1.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
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. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
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 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.
Where the contract has only been partially completed at the Statement of Financial Position date turnover represents the value of the service provided to date based on a proportion of the total contract value. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included in creditors.
Profit is recognised on long-term contracts, if the final outcome can be assessed with reasonable certainty, by including in the profit and loss accounts turnover and related costs as contract activity progresses. Turnover is calculated by reference to the value of work performed to date as a proportion of the total contact value.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
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 payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
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Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income 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 income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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Over the term of the licence
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Based on product sales volume
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Assets under construction
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Computer software and systems
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- 19 -
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Furniture, fittings and equipment
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.
- 20 -
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Provisions for liabilities
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Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Increases in provisions are generally charged as an expense to profit or loss.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
- 21 -
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
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Financial instruments (continued)
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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 the 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.
Basic financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans and other loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments 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 creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors 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 instruments
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 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 the Company's contractual obligations expire or are discharged or cancelled.
- 22 -
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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Judgments in applying accounting policies and key sources of estimation uncertainty
|
The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are described below.
In the application of the Company's accounting policies, which are described in note 2, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affect both current and future periods.
Critical judgments in applying the Company's accounting policies
The directors do not consider there to be any critical accounting judgments that must be applied.
Key sources of estimation uncertainty
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities within the next financial year are addressed below:
(i) Obsolete stock provisions
Company management perform a detailed analysis of stock at the end of the year, to decide to what extent an obsolescence provision is needed. Consideration is given to the age of stock items, as well as recent sales and expected future sales. Given the nature of stock generally not being perishable and items being able to service customer requirements over a number of years, the net realisable value of stock does not tend to diminish significantly over time.
(ii) Amortisation of development expenditure
Management assess each of the assets for existence of conditions that would require an impairment adjustment on a regular basis.
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An analysis of turnover by class of business is as follows:
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All turnover arose within the United Kingdom.
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- 23 -
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SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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The operating profit/(loss) is stated after charging/(crediting):
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Amortisation of intangible fixed assets
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Intangible asset impairment
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Depreciation of owned fixed assets
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Foreign exchange loss/(profit)
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Operating lease rentals - land and buildings
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Operating lease rentals - plant and machinery
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Business system development
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During the year, the Company obtained the following services from the Company's auditor:
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Fees payable to the Company's auditor for the audit of the Company's financial statements
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Fees payable to the Company's auditor in respect of:
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Taxation advisory and compliance
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All non-audit services not included above
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- 24 -
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|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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|
Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 4 directors (2024 - 4) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £222,606 (2024 - £238,419).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £16,828 (2024 - £17,579).
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In the year to 31 March 2022 the Company issued 21,001 EMI share options to certain directors. In the current year the Company did not issue any additional share options and no existing share options were exercised. The EMI share options are exercisable in 2 to 4 years upon an exit event. Where share options are granted to directors, the fair value of the awards at the date of grant is charged to the Statement of Comprehensive Income over the vesting period. No fair value adjustment has been recognised in the current year or the prior year financial statements on the grounds of materiality.
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- 25 -
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|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
|
|
Interest payable and similar expenses
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustments in respect of previous periods
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Effect of changes in tax rates
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|
- 26 -
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|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
11.Taxation (continued)
|
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Factors affecting tax charge for the year
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|
The tax assessed for the year is lower than (2024 - lower than) the standard rate of corporation tax in the UK of 25% (2024 - 25%). The differences are explained below:
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Profit/(loss) on ordinary activities before tax
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Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2024 - 25%)
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Expenses not deductible for tax purposes
|
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Adjustments to tax charge in respect of prior periods
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Adjustments to tax charge in respect of prior periods - deferred tax
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Remeasurement of deferred tax for change in tax rate
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Other differences leading to an increase in the tax charge
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Total tax charge for the year
|
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|
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Factors that may affect future tax charges
|
There were no factors that may affect future tax charges.
- 27 -
|
|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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Computer software and systems
|
Assets under construction
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Transfer between asset group
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Transfer between asset group
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Assets under construction are new software and systems development costs on projects, and new product development costs on projects that are incomplete at the year end. These assets are not amortised until they become usable, at which time the assets are transferred to the relevant asset class.
Amounts transferred between asset groups relate to computer software assets previously recognised within tangible assets. Capitalised asset costs and associated expense allocations have been reclassified from tangible assets in the current year.
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- 28 -
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|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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Transfer between asset group
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Transfer between asset group
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Amounts transferred between asset groups relate to computer software assets previously recognised within tangible assets. Capitalised asset costs and associated expense allocations have been reclassified to intangible assets in the current year.
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Raw materials and consumables
|
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Finished goods and goods for resale
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|
|
The amount of impairment charge included in the profit or loss is £87,416 (2024: £128,830).
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- 29 -
|
|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
|
|
Due after more than one year
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Prepayments and accrued income
|
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Cash and cash equivalents
|
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Creditors: Amounts falling due within one year
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|
Amounts owed to connected companies
|
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Other taxation and social security
|
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Accruals and deferred income
|
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Amounts owed to connected companies are unsecured, interest free and repayable on demand.
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- 30 -
|
|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
|
|
Creditors: Amounts falling due after more than one year
|
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Accruals and deferred income
|
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During the prior year, the Company entered into a loan agreement with Major Oak Limited, a connected company, for £2,000,000. The outstanding balance as at the year end was £1,000,000 (2024: £2,000,000) which is repayable with not less than 12 months' notice. The loan is unsecured and interest is payable at a rate of 5% over the base rate.
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Charged to profit or loss
|
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The provision for deferred taxation is made up as follows:
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Fixed asset timing differences
|
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|
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Short term timing differences
|
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|
|
Losses and other deductions
|
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|
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|
- 31 -
|
|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
|
|
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Charged to profit or loss
|
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|
From time to time, the Company is subject to claims. The provision represents the directors' estimate of the costs to resolve these claims.
|
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|
Allotted, called up and fully paid
|
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300,000 (2024 - 300,000) Ordinary shares of £1.00 each
|
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18,900 (2024 - 18,900) B Ordinary shares of £0.10 each
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The Ordinary shares are entitled to vote, dividends and distribution arising from winding up of the Company.
The B Ordinary shares are not entitled to vote or dividends.
|
Share premium account
Share premium represents the amount above the nominal value received for issued share capital.
Profit and loss account
This reserve represents the cumulative profits and losses, less dividends paid.
- 32 -
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|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £277,796 (2024: £261,445). Contributions totalling £80,403 (2024: £56,229) were payable to the fund at the reporting date and are included in creditors.
|
|
Commitments under operating leases
|
|
|
At 31 March 2025 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
|
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Related party transactions
|
|
|
During the year, the Company made sales of £Nil (2024: £Nil) and purchases of £342,780 (2024: £352,999) from entities under common control.
During the prior year, the Company entered into a loan agreement with an entity under common control for £2,000,000. The outstanding balance as at the year end was £1,000,000 (2024: £2,000,000).
Amounts due to related parties are shown below.
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Amounts owed to entities under common control
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- 33 -
|
|
SWITCH2 ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
|
|
Post balance sheet events
|
In the prior year, the Company entered into a loan agreement with Major Oak Limited, a related party, for £2m which is repayable with not less than 12 months' notice. During the year ended 31 March 2025, £1m of this was repaid. Following year end the loan was repaid in full. The purpose of the loan was to provide additional working capital for the growth of the business.
Switch2 Energy Limited is owned by a family trust of Mr T Scott, which is considered to be the ultimate controlling party.
- 34 -
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