Utility Bidder Limited
Registered number: 06954978
Annual report and audited financial statements
For the year ended 31 December 2021
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UTILITY BIDDER LIMITED
COMPANY INFORMATION
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Chartered Accountants
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Statutory Auditor
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UTILITY BIDDER 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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UTILITY BIDDER LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their Strategic Report for the year ended 31 December 2021.
Prinicpal activity & review of the business
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The Company is the main trading entity within the Project Steel Topco Group (the 'Group').
The principal activity of the Company is to provide small and medium sized enterprises (“SMEs”) with comparison, switching and intermediary services for utilities and other services. These services are provided either directly by our own sales agents or through our sub broker channel for whom we act as an aggregator. Utility Bidder is one of the leading providers and over the period has continued to grow with more customers using the services.
The growth in the business has been achieved through;
- Seeking to provide a trusted and quality service to all of our customers;
- Through only working with suppliers that will provide suitable pricing and a high standard of service to our customers; and;
- Investment in our digital and call centre channels to maintain standards for our customers.
The Directors plan to maintain the Company’s position as a leading provider through continued training and development of our sales teams and the successful replacement of our CRM and customer contact systems has enhanced the customer journey whether via our call centres or digitally. The new platforms have improved the efficiency of our sales teams and improved the way we market for the benefit of both our sales teams and sub brokers, the Utility Bidder business and our supplier services to our customers.
COVID-19
With the series of lockdowns through 2020 and 2021, the health, safety and wellbeing of our employees and their families was our overriding priority. Where necessary, we organised for our key sales agents and employees to be able to continue to work from home. As each lockdown was lifted, we fully reopened both our offices in Corby & Manchester whilst continuing with our selling and support services to our customers.
During the lockdowns, as seen with many of our competitors, the Company experienced a downturn in business both in terms of commission contract volumes and average contract value. The reduction in contract volumes was seen across both our call centre and digital channels. The reduction in average contract values was due to the utility suppliers no longer offering longer term contracts to our customers beyond 3 years and based on reduced consumptions across the SME business sector during the lockdowns, reducing the contracted levels of consumption on new contracts. At the same time suppliers commenced more frequent consumption reconciliations which resulted in lower receipts from these suppliers.
For the January to March 2021 lockdown, whilst there was again a drop in contract volumes, overall trading and average contract value was ahead of the previous lockdown periods during 2020 and therefore ahead of directors expectations. During the latter part of 2020 our key suppliers reverted back to their original payment terms with the subsequent improvement in cashflow receipts and with the energy consumptions of our customers increasing as their businesses re-opened, the adjustments made by suppliers for consumption reconciliations have been gradually reducing.
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UTILITY BIDDER LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
Energy Prices
During 2021 energy prices for both gas and electricity have been extremely volatile particularly between July and December 2021 and continuing in 2022 with the outbreak of the war in Ukraine. Our agents have sought to work closely to help secure the best possible pricing for our customers to meet both their short and long-term energy requirements. The suppliers to the SME sector have for virtually all of 2021 been able to provide fixed price contracts.
One of our suppliers, CNG Energy Limited (“CNG”), went into administration in November 2021 and has resulted in an exceptional bad debt charge of £3.3 million for the sums owed by CNG and one other small supplier.
The Company proactively responded to the announcement of CNG ceasing to trade and subsequently being placed into administration by contacting all our customers who had energy contracts with CNG and where requested organising new contracts with a new supplier. The new contracts put in place for these ex-CNG customers has mitigated the loss of the future cash receipts from CNG.
Key performance indicators
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The Directors measure and monitor business performance on a weekly and monthly basis using a wide range of key performance indicators to ensure continuous improvement and progress towards achieving the annual targets and strategic objectives.
The Directors believe that the following Key Performance Indicators provide the necessary measures of business performance:
- Revenue
- Growth in customer & contract numbers
- EBITDA before exceptional items
- Operating cashflow
- Customer satisfaction
1. Revenue
The year on year revenue for Utility Bidder Limited grew by 13.7% to £14.7 million. The growth in revenue was due to both increased sales from our own agents 2.7% and the growth in the number of sub brokers during the year. The growth in revenue from our own sales agents included continued year on year growth of 18% from our digital platforms including PPC and SEO revenue activities.
2. Growth in customer & contract numbers
The growth in customer & contract numbers is an important indicator of overall growth and improving market share in addition to future revenue opportunities in providing additional services to our customers and renewing existing contracts when they come up for renewal. The average contract value increased year on year and for the period to 31 December 2021 the number of contracts sold by Utility Bidder Limited and customers increased by 9.5% year on year to 12,192.
3. Adjusted proforma EBITDA before exceptional items
The directors use adjusted proforma EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) before exceptional items as this measure excludes expenditure which is one off in nature.
The directors have disclosed the adjusted proforma EBITDA before exceptional items as they believe this provides a better understanding of the Group’s underlying financial performance and is consistent with the measure used by the directors in monitoring the performance of the business.
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UTILITY BIDDER LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
The Group achieved adjusted proforma EBITDA before exceptional items of:
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Exceptional administrative expenses
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Impact of COVID-19 on prior year trading
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The 14.7% drop in year on year EBITDA was due to the increased costs including investment in digital marketing costs and where the Company has already seen benefits with increasing numbers of digital sales toward the end of 2021 and into 2022.
4. Operating cashflow
The net cash consumed by operating activities for the Group was £(1,177)k, a year on year movement of £(679)k, with a closing cash balance at 31 December of £2,049k.
After the commencement of the first lockdown in March 2020, utility suppliers initially changed their payment terms and commenced more frequent consumption reconciliations. These changes to the terms of trading by the suppliers resulted in the Group experiencing lower receipts from suppliers. During the latter part of 2020 and through 2021 our key suppliers reverted back to their original payment terms and the Group is now seeing a gradual improvement in cashflow receipts.
5. Customer satisfaction
The new CRM system will provide further opportunities to measure customer satisfaction and maintain contact with them over the term of their contracts. Currently customer satisfaction is monitored through our customer services team with measures including Trustpilot where we have consistently achieved high ratings.
Prinicpal risks & uncertainties
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The principal risks and uncertainties faced by the Company are outlined below and include an outline of how these risks are managed and mitigated where applicable.
1. Estimation of revenue by contract & accrued revenue recoverability
The revenue recognised for each contract is based upon assumptions including an estimation of the expected future consumption for utility contracts. This estimation will have inherent uncertainty, particularly with COVID 19 and the extended periods of the lockdowns, and is discussed further in the revenue recognition accounting policy.
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UTILITY BIDDER LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
The Company has controls & processes to continually review and manage the estimation of consumption, including:
- Verification of customer’s consumption levels with either the customers’ or suppliers’ records,
- Stringent review of contract paperwork and supporting records prior to recording the sale,
- Regular reporting and monitoring, including exception reporting, of all the key contract matrices,
- Regular matching of supplier cash receipts for each customer contract with variance reporting and follow up measures,
- Regular management review of the level of provisions made based on historic performance, supplier information and other factors.
2. Cyber security
The Company faces the ongoing risk of being subject to a cyber security attack which if successful could impact operations, customer data and the goodwill of the business. Continuous investment is being made in the IT infrastructure, staff training, processes and procedures to reduce the risk and prevent cyber attacks.
3. Recruitment & retention of key management & staff
The requirement for the recruitment and retention of staff is key to the successful operation and future growth of the business.
To manage this risk, management continues to invest in the recruitment and assessment of personnel joining the Company, including induction training and development programmes as staff gain experience in their roles. Regular feedback and engagement scores are sought from every level of staff and management. Staff benefits, incentives and other initiatives are also in place to support, motivate and engender the culture within the business. This investment is reflected in the Investor in People Silver award held by the Company.
4. Strategic risks
With the COVID-19 pandemic, geopolitical uncertainties including Brexit and the war in Ukraine together with the general economic and regulatory environments, all have the potential to impact the markets in which the Company, our suppliers, competitors and our customers operate. The directors continually monitor the markets and suppliers to ensure that any changes can be quickly addressed.
With regards to the regulatory environment Ofgem recently concluded its microbusiness review and whose recommendations included inter-alia the introductions of the full disclosure of commissions and the Alternative Dispute Resolution process both of which are welcomed by the directors.
This report was approved by the board on 1 August 2022
and signed on its behalf.
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UTILITY BIDDER LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their report and the financial statements for the year ended
31 December 2021
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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:
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select suitable accounting policies for the Company's financial statements and then apply them consistently;
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make judgments and accounting estimates that are reasonable and prudent;
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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 loss for the year, after taxation, amounted to £
1,326,473
(2020 -
loss
£
1,150,270
)
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The directors who served during the year were:
Economic impact of the COVID-19 pandemic
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The COVID-19 pandemic continues to affect the UK and global economies adversely and together with the increasing cost of energy prices and other inflationary increases is suppressing the UK economic recovery, but it is not possible to predict to what degree this will impact the long-term trading of the Group.
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UTILITY BIDDER LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
The Group manages its day to day working capital requirements and the levels of cash and cash equivalents, trade debtors and creditors. As set out in the Directors’ report, the Group through the lockdowns in 2020 and 2021 initially experienced a downturn in business as well as changes to certain supplier payment terms and consumption reconciliations which the directors managed through strict cost controls and cashflow management.
Since the end of the lockdown in 2021 the SME business sector has reopened and the Group has seen strong recoveries in overall trading as well as suppliers reverting back to existing payment terms but with consumption reconciliations continuing to have an effect on cashflow receipts.
The directors regularly prepare forecasts and mitigating actions that would be taken to help manage the Group's cash positions and which included the drawdown of a CBILS loan facility in 2020. The Group's forecasts and projections seek to take account of changes in trading performance and working capital including the effect of the supplier consumption reconciliations and clawbacks arising from the closure of customers’ businesses.
These forecasts show that the Group can continue to operate and after making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern in preparing its' financial statements.
Engagement with employees
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The Directors and Senior Managers engage with its employees continuously and in a number of ways to suit their different working patterns. This includes:
- Monthly company wide meetings
- Line manager briefings
- Communication forums and focus groups
- Email news alerts
- Employee social media groups
Details of sales and economic factors effecting the performance of the company are shared with all employees at the appropriate time using the methods listed above.
We provide opportunities for employees to give their feedback to the company in a number of ways from team meetings, employee forums, focus groups and on-line surveys.
The business also has an online learning platform with interactive courses and videos.
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:
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so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
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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.
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UTILITY BIDDER LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
Post balance sheet events
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The COVID-19 pandemic continues to affect the UK and global economies adversely and together with the increasing cost of energy prices and other inflationary increases is suppressing the UK economic recovery, but it is not possible to predict to what degree this will impact the long-term trading of the Group.
On 24 February 2022 Russian Forces entered Ukraine, resulting in Western Nation reactions including announcements of sanctions against Russia and Russian interests worldwide and an economic ripple effect on the global economy. The Directors have carried out an assessment of the potential impact of Russian Forces entering Ukraine on the business, including the impact of mitigation measures and uncertainties, and have concluded that this is a non-adjusting post balance sheet event with the greatest impact on the business expected to be from the economic ripple effect on the global economy. The Directors have taken account of these potential impacts in their going concern assessment.
The auditor, 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
1 August 2022
and signed on its behalf.
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UTILITY BIDDER LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UTILITY BIDDER LIMITED
Opinion
We have audited the financial statements of Utility Bidder Limited (the ‘Company’) for the year ended 31 December 2021 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, 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:
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give a true and fair view of the state of the Company’s affairs as at 31 December 2021 and of its
loss for the year then ended;
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have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
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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 Strategic 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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UTILITY BIDDER LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UTILITY BIDDER 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:
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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
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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:
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adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
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the financial statements are not in agreement with the accounting records and returns; or
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certain disclosures of directors' remuneration specified by law are not made; or
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we have not received all the information and explanations we require for our audit.
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UTILITY BIDDER LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UTILITY BIDDER LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 6, 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, health and safety regulation, anti-money laundering regulation, non-compliance with implementation of government support schemes relating to COVID-19.
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:
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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;
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Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
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Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
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Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
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UTILITY BIDDER LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF UTILITY BIDDER LIMITED
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, the Companies Act 2006.
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, 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:
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Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
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Gaining an understanding of the internal controls established to mitigate risks related to fraud;
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Discussing amongst the engagement team the risks of fraud; and
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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.
Neil Barton
(Senior Statutory Auditor)
for and on behalf of
Mazars LLP
Chartered Accountants and Statutory Auditor
One St. Peter's Square
Manchester
M2 3DE
2 August 2022
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UTILITY BIDDER LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
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Exceptional administrative expenses
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Impact of COVID-19 on trading
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Interest receivable and similar income
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Interest payable and similar expenses
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Loss for the financial year
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There were no recognised gains and losses for 2021 or 2020 other than those included in the statement of comprehensive income.
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There was no other comprehensive income for 2021 (2020: £
NIL).
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The notes on pages 15 to 32 form part of these financial statements.
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UTILITY BIDDER LIMITED
REGISTERED NUMBER:
06954978
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2021
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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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The financial statements were approved and authorised for issue by the board and were signed on its behalf on
1 August 2022
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The notes on pages 15 to 32 form part of these financial statements.
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UTILITY BIDDER LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2021
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Comprehensive income for the year
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Total comprehensive income 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 32 form part of these financial statements.
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UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Utility Bidder Limited ("the Company") is a company, limited by shares, incorporated in England and Wales. The address of the registered office is Corby Innovation Hub, Bangrave Road South, Corby, England, NN17 1NN.
The financial statements have been presented in Pound Sterling as this is currency of the primary economic environment in which the company operates and is rounded to the nearest pound.
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.
These financial statements have been presented in pound sterling which is the functional currency of the Company.
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:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
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the requirements of Section 7 Statement of Cash Flows;
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the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
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the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
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the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
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the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Project Steel Topco Limited as at 31 December 2021 and these financial statements may be obtained from Corby Innovation Hub, Bangrave Road South, Corby, NN17 1NN.
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UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
The Group manages its day to day working capital requirements and the levels of cash and cash equivalents, trade debtors and creditors. As set out in the Directors’ report, the Group through the lockdowns in 2020 and 2021 initially experienced a downturn in business as well as changes to certain supplier payment terms and consumption reconciliations which the directors managed through strict cost controls and cashflow management.
Since the end of the lockdown in 2021 the SME business sector has reopened and the Group has seen strong recoveries in overall trading as well as suppliers reverting back to existing payment terms but with consumption reconciliations continuing to have an effect on cashflow receipts.
The directors regularly prepare forecasts and mitigating actions that would be taken to help manage the Group's cash positions and which included the drawdown of a CBILS loan facility in 2020. The Group's forecasts and projections seek to take account of changes in trading performance and working capital including the effect of the supplier consumption reconciliations and clawbacks arising from the closure of customers’ businesses.
These forecasts show that the Group can continue to operate and after making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern in preparing its' financial statements.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover 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:
Customer Energy Contracts
Through procuring contracts with energy suppliers on behalf of SME customers, the Group generates revenues by way of commissions received directly from the energy suppliers. Commissions are variable as they are based upon the energy usage of the SME customer at agreed commission rates with the energy suppliers. The expected commission over the full term of the contract is recognised at the point the contract is authorised by the supplier as this is the point at which control of the service is seen to transfer to the customer. The expected commission is calculated based on the historical consumption of the contracted meter point. The revenue recognised is constrained and adjusted by the proportion of the revenue that is expected to reverse over the life of the contract, due to consumption variances and contract attrition.
Finance costs are charged to the Statement of Comprehensive Income 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.
- 16 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
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.
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.
- 17 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
|
|
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.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is calculated using the straight-line method.
Software Development Costs
Software development costs are recognised as an intangible asset when all of the following criteria are demonstrated:
- The technical feasibility of completing the software so that it will be available for use.
- The intention to complete the software and use it.
- The ability to use the software.
- How the software will generate probable future economic benefits.
- The availability of adequate technical, financial and other resources to complete the development and to use the software.
- The ability to measure reliably the expenditure attributable to the software during its development.
Amortisation is charged so as to allocate the cost of intangibles less their residual values over their estimated useful lives, using the straight-line method. Software development costs are amortised over their useful economic life of 3 years.
- 18 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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:
Fixtures & fittings 33% on cost
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 the Statement of Comprehensive Income.
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.
|
|
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.
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.
|
|
Provisions for liabilities
|
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
- 19 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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.
- 20 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
Judgments in applying accounting policies and key sources of estimation uncertainty
|
In applying the Company’s accounting policies, the directors are required to make judgments, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors' judgments, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgments, estimates and assumptions, the actual results and outcomes may differ.
(i) Estimating the value of services delivered
The Company recognises adjustments against turnover for contract attrition where signed customer contracts are ultimately not delivered due to the energy provider being unable to complete the switching process or the contract is terminated at some point after the switching process has taken place. The charge for customers that have not completed the switching process together with the estimate for those that will not complete switching is reviewed and updated on a monthly basis.
For those contracts that terminate after the switching process has taken place, for instance with the closure of the customer’s business, an adjustment is made to the expected revenue for the effect of business closures and other early terminations. With the COVID-19 pandemic, charges relating to business closures have increased during 2020. The charge has been calculated based upon the increased costs that have been incurred during 2020 and to the date of this report together with using early contract termination data provided by suppliers and an assessment of market and credit analysts data.
The Company also monitors the customer energy consumption data that is passed to suppliers and on which the basis of the commission receivable is initially calculated. However, over the course of a contract and particularly with the COVID-19 pandemic, consumption levels fluctuate and to address these consumption variances, an adjustment is applied to the expected revenue at the point of sale based upon historical data and on estimation of future trends.
|
All turnover arose within the United Kingdom.
|
|
Executive management reorganisation costs
|
|
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|
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|
M&A research activity fees
|
|
|
|
Software consultancy fees and IT costs
|
|
|
|
|
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|
|
|
|
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- 21 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
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|
Government grants receivable
|
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|
|
|
|
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|
Impact of COVID-19 on trading
|
|
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|
|
|
Impact of COVID-19 on trading
|
|
|
|
|
|
|
|
In the prior year, the COVID-19 pandemic impacted the book value of the customer contracts due to both current and future energy consumption variances together with the effect of business closures and the early termination of their contracts. Management carried out a detailed exercise to review the adjustments in respect of the value of the contracts. For the contract values at 31 December 2019 the exceptional charge of £3,831k represented a combination of the additional charges incurred during the year ended 31 December 2020 and a forecast for the charges that will be applied by the utility suppliers in future periods.
|
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|
The operating loss is stated after charging:
|
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|
|
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|
|
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|
|
Fees payable to the Company's auditor for the audit of the Company's annual financial statements
|
|
|
|
The Company has taken advantage of the exemption not to disclose amounts paid for non audit services as these are disclosed in the group accounts of the parent Company.
|
- 22 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
|
|
Staff costs, including directors' remuneration, were as follows:
|
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Cost of defined contribution scheme
|
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|
|
|
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|
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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 1 director
(2020 -
1
)
in respect of defined contribution pension schemes.
|
|
Other interest receivable
|
|
|
- 23 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
Interest payable and similar expenses
|
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|
Interest on corporation tax payments
|
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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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|
Effect of tax rate change on opening balance
|
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|
|
Adjustments in respect of prior periods
|
|
|
|
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|
|
|
|
|
|
Taxation on loss on ordinary activities
|
|
|
- 24 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
14.
Taxation (continued)
|
Factors affecting tax charge for the year
|
|
The tax assessed for the year is higher than
(2020 - lower than)
the standard rate of corporation tax in the UK of
19
%
(2020 -
19
%)
. The differences are explained below:
|
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|
|
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Loss on ordinary activities before tax
|
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|
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)
|
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Expenses not deductible for tax purposes
|
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Additional deduction for R&D expenditure
|
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|
Adjustments to tax charge in respect of prior periods
|
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|
Adjustments in respect of prior periods - deferred tax
|
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|
Adjustment in respect of prior year liabilities
|
|
|
|
Dividends from UK companies
|
|
|
|
Remeasurement of deferred tax for changes in tax rates
|
|
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|
Total tax charge for the year
|
|
|
|
Factors that may affect future tax charges
|
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
- 25 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
The capitalised software was ready for use from 1 June 2021 and amortisation commenced from this date.
Included within computer software is £318,195 of finance lease assets, relating to the CRM system.
|
- 26 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 27 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
|
|
|
|
|
|
|
|
Amounts owed by group undertakings
|
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|
|
|
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|
Prepayments and accrued income
|
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|
|
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|
Amounts owed by group undertakings are unsecured, interest free and repayable on demand.
|
|
Cash and cash equivalents
|
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|
Creditors: Amounts falling due within one year
|
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|
Amounts owed to group undertakings
|
|
|
|
|
|
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|
Other taxation and social security
|
|
|
|
Obligations under finance lease contracts
|
|
|
|
|
|
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|
Accruals and deferred income
|
|
|
|
|
|
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|
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|
Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
|
- 28 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
Creditors: Amounts falling due after more than one year
|
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|
Net obligations under finance leases and hire purchase contracts
|
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|
|
|
|
|
|
|
|
|
|
The bank loans are secured by a debenture creating a fixed and floating charge over the assets of the company.
|
|
|
|
Analysis of the maturity of loans is given below:
|
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|
|
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|
Amounts falling due within one year
|
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Amounts falling due 1-2 years
|
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|
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Amounts falling due 2-5 years
|
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- 29 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
|
|
|
Minimum lease payments under hire purchase fall due as follows:
|
|
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|
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|
Charged to profit or loss
|
|
|
|
|
|
|
|
The provision for deferred taxation is made up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
|
|
|
Short term timing differences
|
|
|
|
|
|
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
1,005
(2020 -
1,005
)
Ordinary
shares of £
1.00
each
|
|
|
- 30 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Profit & loss account
This reserve represents the cumulative profits and losses of the Company.
The Company operates a defined contribution pension plan for its employees. The pension cost charged represents contributions payable by the Company to the funds and amounted to £79,127 (2020: £81,894).
|
Commitments under operating leases
|
|
At 31 December 2021 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|
|
|
|
|
|
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|
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|
|
Later than 1 year and not later than 5 years
|
|
|
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|
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|
|
Related party transactions
|
|
The Company has taken advantage of the exemption permitted by Section 33 'Related Party Disclosures' not to provide disclosures of transactions entered into with wholly owned subsidiaries within the Group.
During the year ended 31 December 2021, a director of the Company made an unsecured working capital loan to the Company of £657,115 and is repayable in October 2023. At 31 December 2021 the total outstanding was £663,836.
A director of the Company is also a director of Steel Men Limited. The balance owed at the year end by Steel Men Limited was £77,050 (2020: £77,050).
|
|
Post balance sheet events
|
On 24 February 2022 Russian Forces entered Ukraine, resulting in Western Nation reactions including announcements of sanctions against Russia and Russian interests worldwide and an economic ripple effect on the global economy. The Directors have carried out an assessment of the potential impact of Russian Forces entering Ukraine on the business, including the impact of mitigation measures and uncertainties, and have concluded that this is a non-adjusting post balance sheet event with the greatest impact on the business expected to be from the economic ripple effect on the global economy. The Directors have taken account of these potential impacts in their going concern assessment.
- 31 -
|
UTILITY BIDDER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The immediate parent and controlling party is Utility Bidder Holdings Limited, its registered office address being Corby Innovation Hub, Bangrave Road South, Corby, England, NN17 1NN.
The ultimate parent is Project Steel Topco Limited, its registered office address being Corby Innovation Hub, Bangrave Road South, Corby, United Kingdom, NN17 1NN, and the ultimate controlling party is Sovereign Capital IV Limited Partnership, its registered office address being 25 Victoria Street, London, SW1H 0EX.
- 32 -
|