Company Registration No. 08994981 (England and Wales)
PFP ENERGY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2019
PFP ENERGY LIMITED
COMPANY INFORMATION
Directors
Mr A Gupta
Mr S B S Soin
(Appointed 4 May 2018)
Mr R G Binns
(Appointed 1 January 2019)
Company number
08994981
Registered office
Unit 2 Edward Vii Quay
Riversway
Preston
PR2 2YF
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
PFP ENERGY LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
PFP ENERGY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2019
- 1 -
The directors present the strategic report for the year ended 31 March 2019.
Review of the business
Although the business operates in a challenging environment, strategic focus on customer service levels, retention and new acquisitions, combined with operating cost and margin control will allow the business to deliver its future financial plans. Throughout the period, the Company has continued to develop proprietary systems to continually improve the customer experience and interactions whilst developing new customer acquisition routes in line with an ever-changing competitive market.
During the third full year of trading, the company has further increased the strategic focus on tariffs, cost to supply and operating overheads. A resultant reduction in turnover of £5.3m to £71.0m (2018: £76.3m) delivered an increase in gross profit of £1.1m to £5.1m (2018: £4.0m). Administration expenses were reduced by £0.3m to £7.9m (2018: £8.2m) with the business reducing operating losses by £1.4m to £2.8m (2018: £4.2m).
Results for the period are set out on page
8.
Principal risks and uncertainties
To tackle the dominance of the big six energy suppliers PFP Energy Limited has been engaging with policy makers and influencers at the highest level, campaigning for more transparency in the energy sector.
Wholesale Market Risk
PFP Energy Limited minimises the risk of wholesale cost fluctuations with a sophisticated hedging program which matches forward purchases with forecasted customer requirements. The company does not speculate in the energy market.
The company is neither exposed to nor benefits from market movements in either direction. Purchase contracts, customer demand and pricing and reviewed daily with ongoing adjustments made to minimise the financial impact of variations.
Cash flow Risk
The company considers cash in a professional manner modelling both short and long terms positions and requirements. Daily cashflow models are extended out three months and reviewed weekly by key management, whilst long term models give transparency in the sensitivity impact of movements in key assumptions allowing the company to react and readjust in a timely manner.
Credit risk
The company has a strict credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers before supply is commenced with discounts given on direct debit payment terms. Customer balances and payments are continually reviewed with processes for non-payment in line with licence conditions.
Key performance indicators
The Group’s KPI’s are revenue, gross margin, number of meters and EBITDA. Management continue to monitor performance against these KPIs on a regular basis.
201
9
2018
Revenue
£
71.
0m £
76.3
m
Gross margin
£
5.1
m £
4.0
m
Gross margin %
7.2
%
5.2%
Number of meters
99k
125k
EBITDA
(£2.5m
)
(£3.9m)
PFP ENERGY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 2 -
Future developments
The business financial controls include a three-year rolling business plan that takes into account variations in energy costs and customer pricing, combined with sensitivity analysis to allow for variances in market forces and forecasted growth rates. The business plans demonstrate the going concern of the business with an ongoing reduction in future losses and the ability to operating within its current funding levels.
Mr S B S Soin
Director
5 August 2019
PFP ENERGY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2019
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2019.
Principal activities
The principal activity of the company continued to be that of the supply of electricity and gas to domestic and business customers.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr A Gupta
Mr J E Thomasson
(Resigned 4 May 2018)
Mr S B S Soin
(Appointed 4 May 2018)
Mr R G Binns
(Appointed 1 January 2019)
Mr S Binks
(Appointed 4 May 2018 and resigned 20 November 2018)
Results and dividends
The Company’s loss for the period, after taxation, amounted to £3.4m (2018: £4.8m). A dividend of £nil (2018: £nil) was paid during the period.
Auditor
MHA Moore and Smalley was appointed as auditor to the company and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
T
he company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of
financial risk management and future developments.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr S B S Soin
Director
5 August 2019
PFP ENERGY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2019
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.
PFP ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PFP ENERGY LIMITED
- 5 -
Opinion
We have audited the financial statements of PFP Energy Limited (the 'company') for the year ended 31 March 2019 which comprise the statement of comprehensive income, the balance sheet, 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 2019 and of its loss 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.
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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport 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.
PFP ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PFP ENERGY LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
PFP ENERGY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PFP ENERGY LIMITED
- 7 -
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.
Jonathan Pinder (Senior Statutory Auditor)
for and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
13 August 2019
2019-08-13
PFP ENERGY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2019
- 8 -
2019
2018
Notes
£'000
£'000
Turnover
3
71,022
76,303
Cost of sales
(65,933)
(72,353)
Gross profit
5,089
3,950
Administrative expenses
(7,920)
(8,184)
Operating loss
4
(2,831)
(4,234)
Interest receivable and similar income
7
5
2
Interest payable and similar expenses
8
(595)
(468)
Loss before taxation
(3,421)
(4,700)
Tax on loss
9
-
(82)
Loss for the financial year
(3,421)
(4,782)
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
PFP ENERGY LIMITED
BALANCE SHEET
AS AT
31 MARCH 2019
31 March 2019
- 9 -
2019
2018
as restated
Notes
£'000
£'000
£'000
£'000
Fixed assets
Intangible assets
10
441
485
Tangible assets
11
653
721
Investments
12
100
100
1,194
1,306
Current assets
Debtors
14
16,235
16,303
Cash at bank and in hand
564
1,741
16,799
18,044
Creditors: amounts falling due within one year
15
(24,110)
(30,046)
Net current liabilities
(7,311)
(12,002)
Total assets less current liabilities
(6,117)
(10,696)
Creditors: amounts falling due after more than one year
16
(3,000)
-
Net liabilities
(9,117)
(10,696)
Capital and reserves
Called up share capital
19
-
-
Share premium account
5,000
-
Profit and loss reserves
(14,117)
(10,696)
Total debt
(9,117)
(10,696)
The financial statements were approved by the board of directors and authorised for issue on 5 August 2019 and are signed on its behalf by:
Mr S B S Soin
Director
Company Registration No. 08994981
PFP ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019
- 10 -
Share premium account
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
Balance at 1 April 2017
-
(5,914)
(5,914)
Year ended 31 March 2018:
Loss and total comprehensive income for the year
-
(4,782)
(4,782)
Balance at 31 March 2018
-
(10,696)
(10,696)
Year ended 31 March 2019:
Loss and total comprehensive income for the year
-
(3,421)
(3,421)
Issue of share capital
19
5,000
-
5,000
Balance at 31 March 2019
5,000
(14,117)
(9,117)
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2019
- 11 -
1
Accounting policies
Company information
PFP Energy Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Unit 2 Edward Vii Quay, Riversway, Preston, PR2 2YF.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £'000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash
f
low and related notes and disclosures
;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of Sands Investments Limited. These consolidated financial statements are available from Companies House, Cardiff.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group
.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future.
The directors have produced a 5 year forecast, and reviewed the key assumptions. This has been considered in conjunction with the positive post year end trading activity.
Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
1
Accounting policies
(Continued)
- 12 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of
VAT and sales discounts.
Turnover arises from the supply of electricity and gas and related services, which is recongised based on the date of use by customers according to meter read data and tariff rates. This includes an estimates of the sales value of units supplied to customers between the date of the last meter reading and the year end.
Accrued income, representing electricty and gas supplies since the last billing date, is recognised in the balance sheet and is netted off against deferred income to the extent that it can be matched against specific customer payments.
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Software
5 years straight line
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
10 years straight line
Fixtures and fittings
10 years straight line
Computer equipment
5 years straight line
Motor vehicles
3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.6
Fixed asset investments
Interests in subsidiaries
are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
1
Accounting policies
(Continued)
- 13 -
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.8
Cash at bank and in hand
Cash at bank and in hand
are basic financial assets
and
include cash in hand, deposits held at call with banks
and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
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.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of 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 deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from
fellow group companies, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. Trade creditors are recognised initially at transaction price
.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
The company mitigates its exposure to fluctuation in commodity prices by hedging. When these contracts are initiated as to fulfil the supply requirement for customers, the company classifies them as 'own use' and outside the scope of FRS 102 section 11 and 12. The volume of energy delivered to the company is in line with customer usages and no contracts are entered into on a speculative basis.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
1
Accounting policies
(Continued)
- 15 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of
the cost of fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Revenue recognition - estimation of usage at the year end
Revenue for the supply of electricity and gas is recognised using customer tariff rates and industry usage data for each meter point. There is an inherent risk of estimation involved as not all customer meters have a reading at the year end date, and therefore an element of each customer’s revenue is based upon an estimate. Following the year end, management review updated revenue estimations which are increasingly accurate as meter readings are obtained. Revenue for the year is corrected to take account of any significant variations identified post year end.
Impairment of trade debtors
Impairment against trade receivables are recognised where the loss is probable. Management have based their assessment of the level of impairment on collection rates experienced by the company to date. The estimates and assumptions used to determine the level of provision will continue to be reviewed periodically and could lead to changes in the impairment provision methodology which would impact the statement of comprehensive income in future years.
3
Turnover and other revenue
2019
2018
£'000
£'000
Turnover analysed by class of business
Attributable to the principal activity of the company
71,022
76,303
2019
2018
£'000
£'000
Other significant revenue
Interest income
5
2
All turnover arose from within the United Kingdom
4
Operating loss
2019
2018
Operating loss for the year is stated after charging:
£'000
£'000
Fees payable to the company's auditor for the audit of the company's financial statements
23
51
Depreciation of owned tangible fixed assets
215
182
Amortisation of intangible assets
155
131
Operating lease charges
78
77
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Operational
72
76
Support
28
18
100
94
Their aggregate remuneration comprised:
2019
2018
£'000
£'000
Wages and salaries
2,927
2,893
Social security costs
265
298
Pension costs
190
170
3,382
3,361
6
Directors' remuneration
2019
2018
£'000
£'000
Remuneration for qualifying services
277
328
Company pension contributions to defined contribution schemes
10
10
287
338
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2018 - 3).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2019
2018
£'000
£'000
Remuneration for qualifying services
201
186
Company pension contributions to defined contribution schemes
8
7
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 18 -
7
Interest receivable and similar income
2019
2018
£'000
£'000
Interest income
Interest on bank deposits
5
2
8
Interest payable and similar expenses
2019
2018
£'000
£'000
Other interest on financial liabilities
595
468
9
Taxation
2019
2018
£'000
£'000
Deferred tax
Origination and reversal of timing differences
-
82
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£'000
£'000
Loss before taxation
(3,421)
(4,700)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
(650)
(893)
Tax effect of expenses that are not deductible in determining taxable profit
14
33
Change in unrecognised deferred tax assets
635
810
Effect of change in corporation tax rate
-
82
Depreciation on assets not qualifying for tax allowances
1
-
Other permanent differences
-
50
Taxation charge for the year
-
82
The company has tax losses of £13,988,000 (2018: £10,588,000) carried forward, which are available for use against future taxable profits.
The Chancellor stated his intention to reduce the main rate of corporation tax from 19% to 17% from 1 April 2020. This change was substantively enacted on 6 September 2016.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 19 -
10
Intangible fixed assets
Software
£'000
Cost as restated
At 1 April 2018
706
Additions - separately acquired
111
At 31 March 2019
817
Amortisation as restated
At 1 April 2018
221
Amortisation charged for the year
155
At 31 March 2019
376
Carrying amount
At 31 March 2019
441
At 31 March 2018 as restated
485
11
Tangible fixed assets
Leasehold improvements
Fixtures and fittings
Computer equipment
Motor vehicles
Total
£'000
£'000
£'000
£'000
£'000
Cost as restated
At 1 April 2018
278
99
552
-
929
Additions
-
6
112
29
147
At 31 March 2019
278
105
664
29
1,076
Depreciation as restated
At 1 April 2018
31
23
154
-
208
Depreciation charged in the year
28
20
165
2
215
At 31 March 2019
59
43
319
2
423
Carrying amount
At 31 March 2019
219
62
345
27
653
At 31 March 2018 as restated
247
76
398
-
721
12
Fixed asset investments
2019
2018
Notes
£'000
£'000
Investments in subsidiaries
13
100
100
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
12
Fixed asset investments
(Continued)
- 20 -
Movements in fixed asset investments
Shares in group undertakings
£'000
Cost
At 1 April 2018 & 31 March 2019
100
Carrying amount
At 31 March 2019
100
At 31 March 2018
100
13
Subsidiaries
Details of the company's subsidiaries at 31 March 2019 are as follows:
Name of undertaking
Registered
Nature of business
Class of
% Held
office
shares held
Direct
Indirect
PFP Energy Supplies Limited
England and Wales
Dormant
Ordinary
100.00
14
Debtors
2019
2018
as restated
Amounts falling due within one year:
£'000
£'000
Trade debtors
7,111
3,333
Other debtors
132
557
Prepayments and accrued income
8,992
12,413
16,235
16,303
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 21 -
15
Creditors: amounts falling due within one year
2019
2018
as restated
Notes
£'000
£'000
Other borrowings
17
-
3,000
Payments received on account
1,704
2,042
Trade creditors
9,934
9,233
Taxation and social security
72
77
Other creditors
80
30
Accruals and deferred income
12,320
15,664
24,110
30,046
Included within trade creditors is a balance of £9,119,000 (2018: £8,122,000) which is secured by way of a fixed and floating charge over all assets of the company.
16
Creditors: amounts falling due after more than one year
2019
2018
Notes
£'000
£'000
Other borrowings
17
3,000
-
17
Loans and overdrafts
2019
2018
£'000
£'000
Loans from group undertakings
3,000
-
Other loans
-
3,000
3,000
3,000
Payable within one year
-
3,000
Payable after one year
3,000
-
18
Retirement benefit schemes
2019
2018
Defined contribution schemes
£'000
£'000
Charge to profit or loss in respect of defined contribution schemes
190
170
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 22 -
19
Share capital
2019
2018
£'000
£'000
100,000 (2018: 100) Ordinary shares of 0.1p (2018: £1) each
-
-
24,390 (2018: 0) A Ordinary shares of 0.1p each
-
-
11,111 (2018: 0) B Ordinary shares of 0.1p each
-
-
136,045 (2018: 0) A Preference shares of 0.1p each
-
-
-
-
On 4 May 2018 100 Ordinary £1 shares were split into 100,000 Ordinary 0.1p shares. On 4 May 2018 100,401 A Preference 0.1p shares were issued for a total of £5,000,000. On 31 July 2018 24,390 A Ordinary 0.1p shares, 11,111 B Ordinary 0.1p shares and 35,644 A Preference 0.1p shares were issued at par.
Each class of shares has full voting rights and ranks pari passu in all other respects, other than having different rights to dividends.
20
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Category
Description of
Income
Expenditure
transaction
2019
2018
2019
2018
£'000
£'000
£'000
£'000
Entities with control, joint control or significant influence over the company
Interest paid
182
112
Entities with control, joint control or significant influence over the company
Management charge paid
413
Entities with control, joint control or significant influence over the company
Purchases
36,737
37,752
Key management personnel
Services provided
10
Amounts owed to/by related parties
Category
Amount owed to
Amounts owed by
2019
2018
2019
2018
£'000
£'000
£'000
£'000
Entities with control, joint control or significant influence over the company
11,402
10,867
PFP ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2019
- 23 -
21
Ultimate controlling party
The immediate and ultimate parent company is Sands Investments Limited
.
The registered office
of Sands Investments Limited is Datum House, Electra Way, Crewe, CW1 6ZF.
The largest and smallest group in which the results of the company are consolidated is that headed by Sands Investments Limited. Copies of the accounts can be obtained from Companies House, Crown Way, Cardiff CF14 3UZ.
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£'000
£'000
Within one year
84
97
Between two and five years
114
192
198
289
23
Prior period adjustment
The prior period adjustments made in the year relate to the following reclassifications. £2,042,000 between trade debtors and payments received on account. £485,000 of software costs from tangible fixed assets to intangible fixed assets which resulted in £131,000 from depreciation to amortisation.
There has been no change to the previously reported loss for the prior year or the net liabilities of the company.
2019-03-31
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