The Directors present the strategic report for the year ended 31 December 2024.

The profit for the financial year was £326k (2023 - £761k). The Directors do not recommend payment of an ordinary dividend (2023 - £Nil).

The directors believe the business has delivered the best possible return on the turnover achieved, considering the very difficult geopolitical events which continue to cause economic hardship around the world. Sales have increased by 41.94% (2023 – 23.12%). There are two key drivers being a full year of turnover from the Liverpool manufacturing site and some inflationary increases in selling prices linked to the ongoing high cost of raw materials, energy & wages. The turnover for the year was at the same time impacted by a significant drop in turnover related to Sainsburys, who had begun a process of closing all in store bakeries (ISB) across their retail estate. This resulted in closure of many ISB units, and quite a few of these were ahead of the anticipated Sainsburys schedule due to resulting labour issues. This will continue to be an impact in 2025 as the closure plan continues, however we continue to ‘follow the product’ into the relevant industrial partners who will now supply product into Sainsburys.

Gross profit percentage has decreased by 1% to 17.4% (2023 - 18.3%), which is linked to the full year production at the Liverpool manufacturing site. The company invested capital of £2,929k (2023 - £1,684k) toward improving the productive capability of the business to facilitate operational improvements and development of energy efficiencies to help mitigate the high cost of energy, which remains volatile.

Due to the continued impact of the war in Ukraine, the Company has had to react to the operational and financial impacts. Management and the Directors have acted to, where possible, try and mitigate the financial impact and continue to work on maintaining a solid foundation with which to move the business forward.

Principal risks and uncertainties

The principal risks facing the Company can be broadly grouped as competitive, operational, legislative, and financial. Given the ongoing war in Ukraine the Directors are continually reviewing the risk environment and have reflected their current considerations in the summary below:

Competitive risks

The company operates in a competitive marketplace and accordingly the actions of competitors can influence this market. The company faces competition from other ingredients companies in the same marketplace, and to some extent from competitors in mainland Europe. The company's results have been affected, by increases in energy costs, wages and raw materials costs. The directors regularly review performance against company plans and market intelligence to enable them to adapt to such competition. During the current economic downturn in the UK, we continue to work extremely closely with our customer base, as they evolve their businesses to appropriately service the needs of their customers.

Operational risks

As the economic pressure has continued through 2024, we have looked to continue supporting our workforce colleagues. The physical & mental health of our colleagues in conjunction with retention of staff in an already depleted marketplace has become of prime importance.

Whilst COVID 19 is less of an issue, it has not gone away and will likely continue to impact our lives for many years to come and we are confident that our existing stringent hygiene rules continue to provide the necessary protection for our colleagues and the wider business.

Legislative risks

Failure to comply with applicable new or changed laws, regulations or governance standards or new or changed regulatory interpretation thereof may harm the business or the company's reputation. Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure cause and may continue to cause uncertainty for companies affected by them unless they are or become sufficiently certain. Continuing uncertainty regarding compliance matters and higher costs of compliance could result from ongoing revisions to such laws, regulations, and governance standards. Senior management are therefore involved in industry groups and pressure groups to ensure that they are aware of any potential impacts on the Company's business.

BREXIT continues to be a topic of discussion, specifically around goods in / out of Northern Ireland although another new protocol is now in place to help ease the difficulties and enable the Northern Ireland Assembly to reconvene. We continue to utilise the global Bakels Group to help identify potential future non-EU suppliers, which will provide dual supply coverage for any critical raw materials. We do not consider the operational or financial risk to be significant given our structure and planning considerations in action.

Financial Risks

The company's main financial instruments comprise cash and various items such as trade debtors and creditors and a loan from the parent company. The main purpose of these instruments is to support working capital for the company's operations.

Whilst the impact of the war in Ukraine continues to have a worldwide impact, the effect on inflation has softened, the potential for subsequent credit risks is being monitored closely and the company is working closely with the wider global Bakels Group. With the inauguration of President Trump and his persistent threat of annexation of sovereign countries in conjunction with punitive tariffs in the 25% region, the impact on costs could be significant in 2025 and beyond. The financial risk management policies have remained unchanged from the previous year, although there is an increased emphasis on credit risk as the level of business failure is still a concern within the UK economy.

Financial risk management objectives and policies

Credit risk

The company seeks to minimise any credit risk by dealing only with established or financially sound clients. It also establishes clear contractual relationships and identifies any credit issues in a timely manner. The directors are increasing their scrutiny of the financial situation of key customers to ensure that this risk is adequately managed to protect the company. The company also seeks to limit the credit risk linked to any single customer; by ensuring they have a broad customer base in all sectors.

Liquidity risk

The company seeks to manage and minimise financial risk by ensuring that sufficient liquidity is always available to meet foreseeable needs and by investing cash assets safely and profitably. With the increasing difficulty of obtaining funding through conventional credit lines, the ability of the company to fund its own operations is a key strength in the market as it currently exists, and a substantial factor in the strategy of the directors. These risks are closely managed daily by the company's finance team.

Exchange risk

Where applicable, the company uses forward foreign exchange contracts to reduce exposure to the variability of foreign exchange rates by selling sterling to buy euros at a fixed forward rate.

Interest rate risk

The interest rates on the loans from the parent company undertaking are fixed, thereby giving certainty over the interest payable on the company's borrowings.

Resources and relationships

Our policy is to strive to enhance shareholder value, whilst balancing this with the interest of all other stakeholders in the company - our employees, customers, consumers, suppliers and all the communities in which we operate.

We do recognise that we have a responsibility to manage the environmental impact of our operations and believe that we should operate in an ethical and socially responsible manner. By doing this, we are confident that we will be enhancing the interests of all our stakeholders.

Food safety and healthy eating

We are absolutely committed to ensuring the highest standards apply throughout our organisation to ensure that everything we produce is safe and of a consistently high quality.

We continue to invest in technical resources and our technical audit processes are of the highest standards. We carry out regular, formal technical reviews to ensure that all appropriate procedures and regulations are being complied with and work closely with our customers' technical teams. We have a very effective central purchasing team who work closely with our technical teams to ensure the safety and quality of all the ingredients that we use throughout the food chain.

We develop our products in such a way that they provide our customers and the consumers with the taste and quality that they demand, but we are also conscious of the increasing focus on healthy eating.

Customers

The company's relationship with its customers is valued above anything else. The company wants to continue to provide our customers with good quality products at competitive prices and support these key attributes by high levels of customer service. Our corporate core values that we have consistently built on over the years also underpin much of our thinking and the way that we operate.

Our new product development teams are working closely with our customers to ensure that consumers can buy products that have lower fat, sugar and salt contents. (HFSS).

Suppliers

We are absolutely committed to operating to the highest standards of integrity and business ethics. We expect all our people to abide by our code of ethics as they apply to issues such as bullying and harassment, and the use of company assets. Through our purchasing team we seek to ensure that similar standards are maintained by our suppliers, particularly in relation to the employment practices that they apply.

The company utilises dual supply contracts were possible for core raw materials, as well as maximising the buying power of the global Bakels Group, to ensure the integrity of the supply chain.

2024 2023

Operating margin                          2.6%      -1.2%

Gross profit percentage                         17.4%     18.3%

Turnover per employee                         £223k     £277k

Profitability/Operating Margin

The management of gross margin and overhead expenditure are key to effective performance. These are regularly monitored by management including an analysis of labour cost ratios, variable costs of raw materials, direct labour and packaging, along with overhead costs such as production, distribution and storage, sales, administration, salaries and depreciation.

The Company also measures a number of non-financial key performance indicators which are summarised below:

Customer level services

Service levels of inbound product deliveries to customer regional distribution centres are monitored and reported daily and acted upon.

New Product Development (“NPD” tracking)

NPD is the lifeblood of the business - our continuing success depends on achieving the launch of new products

on time and the delivery of solid sales growth. An NPD tracking document is reviewed monthly by managers of all significant customers and measured against agreed customer expectations and additional action taken if remedy is required.

Waste management

The management of maximising finished product yields is important to the Company. We endeavour to minimise waste of any kind and therefore measure waste daily across all our production facilities and highlight actions required to minimise its impact wherever possible.

Staff turnover

Minimising the potential impact of high levels of staff turnover is a business priority as the cost of not doing so could be onerous and disruptive. Therefore, staff turnover is measured regularly by operations management who adopt a keen approach to ensuring that staff are motivated and remain with the business.

Capacity utilisation

Capacity utilisation and planning forms an integral part of the Company's planning regime. This considers an element of contingency planning and the desire to operate the Company's plant and equipment as efficiently as possible. To assist in achieving this objective, sales forecasts are used to drive forward looking manufacturing requirements and manpower planning.

Given the external environment the Directors are pleased with the performance of the business during the year with respect to each of the financial and non-financial key performance indicators.

The Board of British Bakels Ltd consider that they have adhered to the requirements of section 172 of the Companies Act 2016 and have, in good faith, acted in a way they consider would be most likely to promote the success of the company for the benefit of its shareholder, and in doing so have had regards to and recognised the importance of considering all stakeholders and other matters in its decision-making.

The long- term success of British Bakels depends on the engagement with and support of its key stakeholders, including its shareholder.

This is reflected within our mission statement, which is “To be a technically based company, whose objective is to assist our customers develop, produce and sell (more) bakery products. We will do this by presenting concepts and ingredients which the baker can use to increase their sales and improve quality and efficiency. We will back this up with technical support and training.”

This sits alongside our vision, “To operate as a dynamic and successful organisation, while providing best-in-class services to become customers’ first choice for bakery ingredients.”

In line with our Group strategy, British Bakels always plans to the long-term and never the short.

Our People

We treat each other as more than just colleagues, a strong family culture drives us to work closely to get the most out of every day. Respect for not only each other, but for Bakels’ long history and heritage runs through the veins of everyone in the group. Trust in each other forms a crucial role in achieving integrity across all Bakels companies, inspiring a clear collective vision in all the markets we operate. There is a full programme of communication including quarterly Town Hall meetings for all staff, a mid-year strategy day for all staff, a staff intranet and site-based screens with updated business information. We constantly look at development for our staff, with the aim to strengthen our abilities as employees and people. We also provide ongoing health screening and access to help lines covering everything from mental health issues to financial difficulties.

Our commitment to the baking industry stems from our dedication to the roles we play within the organisation. The collective philosophy of each member of staff is what gives Bakels its’ family culture. Whilst customers are the heart of the business, the employees are the soul!

Customers

We pride ourselves on the level of technical service that we provide to our customers, we ensure our Technical Sales team are on-hand to help regardless of market sector. We lead innovative development with our customers, to ensure they are in alignment with current trends across their markets. This in turn provides a wider understanding of their needs, and better allows us to support them over the longer term. We can also call on specific expertise from across the wider Bakels group, should it be required.

Suppliers

We believe in building long-term relationships with key suppliers, to ensure a collaborative approach to uninterrupted supply of ingredients. Alongside this we strive to agree mutually favourable payment terms which can ensure that the suppliers are promptly compensated for their goods supplied. This collaborative approach and the excellent reputation we have with our suppliers ensures that our supply chain flows smoothly, even when ‘bumps in the road’ are encountered, ie. BREXIT, COVID-19 & the war in Ukraine.

Regulators/Government

We work alongside all the regulatory and Government bodies to ensure that we maintain the highest standards within our facility, which in turn ensures that our product is of the highest quality.

Community/Environment

We are very conscious of our impact on the environment and are constantly reviewing our performance, this extends from energy efficient lighting to food waste. We have already moved our vehicle fleet over to hybrid vehicles and are slowly moving to full electric vehicles where we can, with 27% of our fleet now full EV. We have installed nearly 2,000 solar panels at our site as part of our renewable energy plans. We strive to assist our customers with food waste, whether this be by aligning packaging formats to their production requirements or developing recipes to utilise potential waste foods (ie. Banana bread mix to utilise end of life bananas). We are involved with local business groups, as well as maintaining ties with local schools/colleges by supplying free ingredients for students to utilise during their Food Technology studies. We support local charities, including sponsorship of a local football team and sponsor awards within the baking industry to help highlight the exceptional quality of people within the industry.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2024.

The principal activity of the company continued to be that of the manufacturing and supply of food ingredients, primarily to the bakery sector. The customer base consists of industrial bread and confectionary bakeries, wholesalers, artisan bakeries, supermarkets and food service companies.

The results for the year are set out on page 13.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The Company maintains Directors' and officers' liability insurance which gives appropriate cover for any legal action brought against its Directors. The Company has put in place qualifying third party indemnity provisions for all of the Directors of the Company. These provisions remain in force at the reporting date.

The Company continues to invest in research and development. This has resulted in new products being introduced to the market this year. Costs in respect of research and development have been written off to the statement of comprehensive income as incurred.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.

There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.

The auditor, Shaw Gibbs (Audit) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

The company has consumed more than 40,000 kWh of energy in this reporting period and therefore the emissions, energy consumption and energy efficient activities are reported below.

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2022 UK Government’s Conversion Factors for Company Reporting.

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per metric tonne of production, the recommended ratio for the sector.

The company has installed 2,000 solar panels across the roof area of the buildings, which was completed early June 2023. This contributes in excess of 20% of our electricity requirement at our Bicester site. We have a program on site based improvements, like the installation of new energy efficient boilers to feed the factory, installation of LED lighting across the site & light sensors so that lighting is on where and when required.

All manufacturing equipment is maintained to ensure optimum efficiency during use, and new technologies are investigated to determine potential application within the business. All end-of-life equipment is replaced with new energy efficient equipment as appropriate.

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.

The 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.

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.

We have audited the financial statements of British Bakels Limited (the 'company') for the year ended 31 December 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, 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.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

1. 1.    At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how the management seek to comply with those laws and regulations. This helps us to plan appropriate risk assessments.

2. 2.    During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation such as certificates of conformity for Food Hygiene requirements etc.

3. 3.    We assess the risk of material misstatement in the financial statements including as a result of fraud and undertook procedures including:

   1. a.    Reviewing the controls set in place by management;

   2. b.    Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;

   3. c.    Challenging management assumptions with regard to accounting estimates; and

   4. d.    Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

There are no recognised gains and losses other than those passing through the statement of total comprehensive income.

British Bakels Limited is a private company limited by shares incorporated in England and Wales. The registered office is Granville Way, Off Launton Road, Bicester, OX26 4JT.

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 amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of investment properties at fair value. 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. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: 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 EMU AG. These consolidated financial statements are available from its registered office, EMU AG, Buzibachstrasse 19, Rothenburg, Luzern, 6023, Switzerland.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources, despite ongoing economic uncertainties regarding the current economic climate to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on receipt of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets may be recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that it's cost can be reliably measured. The capitalised development costs are subsequently amortised to 'administrative expenses' on a straight line basis over their expected useful lives, which range from 3 to 6 years.

The expected useful economic life of development costs are estimated based on business plans which set out the development plan and time to market for the associated project.

If it is not possible to distinguish between the research phase and the development phase of an internal project the expenditure is treated as if it were all incurred in the research phase only.

Goodwill represents the difference between the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

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.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. Cost is based on the cost of purchase on a first in, first out basis. Standard costing is used to value stock.

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, 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, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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.

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.

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, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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 payments 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. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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 subsequently 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 through 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.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

The tax expense represents the sum of the tax currently payable and deferred 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 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.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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 stock or 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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

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 leases asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

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.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Goodwill recognised represents the difference between fair value and directly attributable costs of the purchase consideration over the fair values to the company's interest in the identifiable assets acquired. The fair values have been attributed using the balance sheet figures of those assets at the time of acquisition, taking into consideration any necessary provisions.

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.

Stocks are stated at the lower of cost incurred in bringing each product to its present location and condition and estimated selling price less costs to complete and sell. In calculating the costs incurred management apply a standard costing methodology to incorporate a labour and overhead element within finished goods, representing their best estimate of costs incurred in bringing the stock to its current location and condition.

In calculating net realisable value stocks are assessed for impairment. If stock is deemed to be slow moving based on stock reports an estimate is made of the value of the impairment and the carrying amount is reduced to selling price less costs to complete and sell.

Trade debtors are reviewed for impairment on an annual basis and a provision is made for any balances where there is uncertainty against the recoverability of the balance, typically based on current knowledge of trading difficulties of customers. This methodology is applied on a customer by customer basis.

Investment property is held at fair value at the reporting date. Where appropriate, professional valuations are carried out and any adjustment to the fair value is recorded in the profit and loss.

Rebates are payments back to customers of a portion of the full purchase price of the goods offered to them. The payment is typically triggered by the cumulative amount of purchases made within a certain period of time. Different customers have different terms and conditions, such as rates, volume etc. used in the rebates calculations which have been agreed via signed contracts.

The average monthly number of persons (including directors) employed by the company during the year was:

The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

Investment property comprises property owned by the company rented to third parties. The fair value of the investment property has been arrived at on the basis of a valuation carried out in January 2023 by Brown & Co - Property and Business Consultants LLP, who are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.

The results for the year ended 31 December 2023 have been restated to more accurately allocate stock between the categories of “Raw materials and consumables” and “Finished goods and goods for resale.” This adjustment has resulted in an increase of £1,965,080 in Finished goods and goods for resale, while Raw materials and consumables have been reduced by £1,965,080.

The loan from the related party is unsecured, interest is charged at 2.25% per annum and the balance is repayable with a twelve month notice period for both parties.

The loan from the related party is unsecured, interest is charged at 2.25% per annum and the balance is repayable with a twelve month notice period for both parties.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

The Ordinary A shares have full voting rights and the Ordinary B shares have no voting rights.

The capital redemption reserve contains the nominal value of own shares that have been acquired by the company and cancelled.

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.

Contributions totalling £165,393 (2023: £142,163) were payable to the fund at the reporting date and are included in other creditors.

The profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments including a fair value adjustment on investment property.

The operating leases represent leases to third parties. The leases are negotiated over terms of 9 years and rentals are fixed for 3 years. All leases include a provision for three-yearly upward rent reviews according to prevailing market conditions. There are no options in place for either party to extend the lease terms.

At the reporting end date the company had contracted with tenants for the following minimum lease payments:

The parent undertaking of the largest and smallest group of undertakings for which group financial statements are drawn up and of which the company is a member is EMU AG, a company incorporated in Switzerland. The financial statements of the company are consolidated in the financial statements of EMU AG. These consolidated financial statements are available from its registered office, EMU AG, Buzibachstrasse 19, Rothenburg, Luzern, 6023, Switzerland.

In the directors' opinion, the company ultimate parent undertaking and controlling party is EMU AG.

The company has taken advantage of the exemption provided under Section 33 of FRS 102 'Related Party Disclosures' not to disclose transactions and outstanding balances with related parties where a subsidiary undertaking is a wholly owned member of the group.