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

JW Froehlich Limited is a manufacturing company supplying primarily to the automotive market. Principal activities during the year were the design, manufacture, installation and service of leak test equipment, automatic in-process assembly machines and end of assembly line function test machines. Our customer base is predominantly comprised of major passenger vehicle manufacturers.

The Company’s turnover for the year was £15.3M (2023: £16.3) – 6.1% lower than the prior year. The gross loss incurred in the year was £3.2M (2023: £1.8M profit). The decrease in both turnover and gross profitability in comparison to 2023 is reflective of the operational challenges the Company has experienced in 2024. The machinery being manufactured has, in some cases, taken significantly longer to develop than previously forecasted. The ensuing additional labour requirements, difficulties in the recruitment of qualified staff, along with the Company’s commitment to minimise disruption to customer delivery timings, have resulted in the Company depending heavily on external subcontract labour during the year. These additional labour costs are the prime reason for the loss incurred in the year.

Towards the end of 2024 the Company undertook an organisational restructure to aid in addressing the operational challenges experienced over the past few years and to better prepare the company for the future. The restructure was completed before the year end and all associated costs are recorded in the 2024 accounts as presented.

In the preparation of the move towards electrification within the automotive industry, the Company invested heavily in research and development. Part of this investment related to the manufacture of two large scale machines to prove out our technology and approach with respect to battery and EDU testing. The costs associated with these machines were previously capitalised and subsequently recorded as finished goods. Whilst the development of these machines were invaluable in preparing the Company to meet the current and future requirements of customer orders, the related technology has moved on quickly. The Directors have therefore recorded a full impairment of these machines in the 2024 accounts.

During the year the Company changed accounting policy with respect to the valuation of property owned by the Company. The basis of valuation was changed to the revaluation model to better reflect the true value of the Company’s assets.

For 2025 and 2026 the company is targeting a reduced level of turnover in line with the expected reduction in the market. The company is working more closely with its parent company in Germany to pool resources to better position the JW Froehlich Group to take advantage of larger programmes, which are typical of Electric Vehicle production lines. For 2025, the company has order coverage to achieve its target level of turnover.

Whilst the Electric Vehicle market continues to grow and long term projections remain strong, some markets are experiencing slower growth than expected. The reduced number of programmes has intensified competition in the market in the short term. The Company is working more closely with its parent company to pool resources and ensure that the JW Froehlich Group can take advantage of programmes covering a larger remit. The Group is also reviewing the potential to enter markets outside of the automotive sector.

Recruitment of talent remains challenging due to shortages of qualified engineers in the industry, particularly within electrical and software engineering. To address this, the Company is working more closely with its parent company and subsidiary entities to take a global approach to recruitment. The JW Froehlich Group is also engaging with universities, colleges and apprenticeship programmes to help source new employees in engineering. In addition, the Company is committed to further improving the learning and development of current employees.

The wider geopolitical environment presents some principal risks to the Company. Government mandates with respect to electrification and current uncertainties around tariffs over the automotive sector have a large influence on the investment decisions of our customer base. The JW Froehlich Group remains committed to supporting our customer base globally, both in their own investment decisions and through research and development.

The Key Performance Indicators used to review and monitor the company are shown below:

The Directors of the company meet monthly to review key business decisions and additional meetings are scheduled as required. The executive Directors have daily contact with the operations team to ensure operational matters are addressed speedily. When taking decisions, in particular with regard to customer programmes and investment opportunities, the Directors consider the long term plans for the business.

The Directors review the impacts of key decisions on all stakeholders of the business to ensure the interests of customers, suppliers, employees, and shareholders as well as the wider community are considered. The Directors aim to treat all parties fairly in their dealings with them.

The Directors and operations team focus on maintaining a safe operating environment for employees.

On behalf of the board

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

The principal activity for the company during the year was the design, development and manufacture of machinery for the automotive industry.

The results for the year are set out on page 10.

The loss for the year, after taxation, amounted to £8,093,317 (2023 - £1,663,859).

No dividend was recommended for the year ended 31 December 2024.

The Directors who served during the year were:

The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.

The company’s principal financial instruments include bank overdrafts and loans, the main purpose of which is to raise finance for the company’s operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from operations.

The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on bank overdrafts and loans. The company continually assess the use of interest risk derivation to manage if needed the mix of fixed and variable rate debt, to reduce its exposure to changes in interest rates.

The company’s principal foreign currency exposures arise from trading operations with suppliers in overseas jurisdictions. This risk is balanced by invoicing customers in foreign currencies where appropriate.

Investment of cash surplus and borrowings are made through banks.

All customer who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary.

The company’s activities involve the manufacture of bespoke machinery and the provision of integrated system solutions. Consequently, the company is at the forefront of innovation, including incorporation of the latest technologies. The company is committed to a policy of future investment through expenditure on product development and improvement.

There have been no significant events since the year end.

The Directors believe that the company has an excellent reputation for providing quality products and services on a global basis. They consider that investment in recent years in the development of automotive drive testing products and the associated skills related to carbon neutral technologies continues to mean that the company is well placed to take advantage of any future market opportunities and remain confident of long term profitability.

The auditor, Rickard Luckin Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

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; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.

Each of the persons who are Directors at the time when this Directors’ report is approved has confirmed that:

• so far as the Director is aware, there is no relevant audit information of which the company’s auditor is unaware; and

• the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the company’s auditor is aware of that information.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

We have audited the financial statements of JW Froehlich UK Limited (the 'company') for the year ended 31 December 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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 loss for the year then ended;

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

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

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.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company’s regulatory and legal correspondence.

We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the company.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the company is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution, relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Secondly the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; data protection legislation; anti-bribery and anti-corruption legislation.

ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations to the procedures, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance which laws and regulations that could have a material impact on the financial statements.

In relation to fraud, we performed the following specific procedures in addition to those already noted:

• Challenging assumptions made by management in its significant accounting estimates in particular long term contracts, cost to complete estimates, valuation of freehold property, depreciation, amortisation, stock provision and deferred taxation;

• Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations, journal entries crediting cash or any revenue account;

• Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud;

• Ensuring that testing undertaken on both the performance statement, and the Balance Sheet includes a number of items selected on a random basis;

• Discussion with management;

• Reviewing board minutes.

These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.

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.

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

JW Froehlich UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Sable Way, Southfields Business Park, Laindon, Essex, SS15 6TU.

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. The principal accounting policies adopted are set out below.

The financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for at least the next twelve months from the approval of the financial statements. true

Whilst the company has made losses this year and previous years, it still has the support of its parent company and has, in the year, received a capital contribution of £3.5m from them to support ongoing projects. At the end of the current financial year, the company restructured the business with a view to improve profitability going forwards. Looking into 2025, the company plan to limit the size of their order book so it matches their maximum internal capacity, thus reducing their use of subcontract labour and improving profitability on projects.

It is on this basis that the directors consider it appropriate to prepare the financial statements on the going concern basis.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

The company recognises revenue when the amount of revenue can be measured reliably, when it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the company's activities, as described below.

The company manufactures and sells a range of spare parts for automotive leak test equipment, automatic in-process assembly machines and end of engine assembly line function test machines. Sales of goods are recognised on sale to the customer, which is considered the point of delivery. The risk of obsolescence and loss of the parts are considered to have been transferred to the customer when the products are shipped.

The company designs, manufactures and installs leak test equipment, automatic in process assembly machines and end of engine assembly line function test machines. When the outcome of a contract can be estimated reliably in terms of its stage of completion, future costs to complete and collectability of billings, the company recognises revenue and expenses on the contract by reference to the stage of completion of the contract at the end of the reporting period. When a contract is loss making, full provision for the loss is made in the financial year. Where the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

The company sells service and calibration testing for leak test equipment, together with support services on the machines it designs and manufactures. Revenue is recognised in the accounting period in which the services are rendered.

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Intangible assets comprise software enhancement and prototype development costs and are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

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

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.

Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.

Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity; such gains and losses 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.

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 determined on the first in, first out (FIFO) method. Cost includes the purchase price, including taxes and duties and transport and handling directly attributable to bringing the inventory to its present location and condition. The cost of work in progress includes design costs, raw materials, direct labour and other direct costs and related production overheads (based on normal operating capacity).

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.

If an item of inventory is impaired, the identified inventory is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is required the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account.

A provision against specific stock lines is made where it is deemed that the stock is unlikely to be able to be sold directly or used in future manufacturing projects. A general provision is then applied to the remainder of the stock value to cover the potential for other obsolete stock items.

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.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

Specific provisions:

Cost to complete on long term contracts

The company estimates the costs to complete on contracts before they are fully invoiced at the year end. Costs to complete includes the costs directly related to the equipment sold plus a systematic allocation of fixed and variable production overheads that are incurred in the design, build and installation process. The allocation of overheads is based on the level of capacity (in working hours) in the factory in a given year. Where a contract is forecast to make an overall loss, the loss is fully recognised in the current year.

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.

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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The company designs and manufactures machines, which are viewed as long term contracts. Due to the nature of the contracts, it is necessary to consider the stage of completion and cost to complete on all open contracts. The company makes an estimate of the costs required to complete the contracts and reviews the estimated profitability of each contract and makes necessary provision to reflect current estimates. If the project is estimated to be loss making then the full loss is recognised in the current year.

The cost to complete estimate is based on the management's knowledge of the projects being undertaken by the company and the time and resources which will be needed to complete these. Labour costs to complete are calculated using an overhead absorption calculation which take the average of costs incurred by the company in the financial year.

Amortisation is provided for on all intangible assets at the point they meet the definition of an intangible asset and provide an economic benefit to the company. Amortisation rates used are the management's best estimate of the useful economic life of these assets.

The valuation of property is initially taken from a professional valuation and subsequently revalued at each year end by management to ensure the property continues to be held at its market value. The market value is arrived at by consideration of the value of other similar premises. Depreciation continues to be charged on the building element of the property and is calculated based on the estimate useful economic life of the property.

Stock is provided for where items are considered unlikely to be able to be used in ongoing projects. The calculation of the provision involves management's best estimate of the ongoing projects of the company. A general stock provision is then applied to the remainder of the stock balance to cover the potential for further obsolete items.

An analysis of the company's turnover is as follows:

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 4).

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

In addition to the amount charged/(credited) to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

The company has estimated losses of £15,127,813 (2023: £7,336,934) available for carry forward against future trading profits

Intangible assets contain one material asset being the E-Prime project, which is intellectual property to produce electric drive components. This is used daily on other projects and continues to be included in intangible assets at the year end. The carrying value of the E-Prime knowledge is £513,195 (2023:£583,980) and has an amortisation period of 7 years remaining.

Development costs have been capitalised because they have provided skills and knowledge which are used daily on other projects and will become commercially viable in winning future projects.

Freehold land and buildings were revalued in November 2023 by a firm of independent Chartered Surveyors. The valuation was made on an open market basis. The directors have reviewed this valuation as at the 31 December 2024 and concluded that this has not materially changed and therefore land and buildings should continue to be held at a value of £5,430,000.

The historic cost of the property at the year end was £2,342,970 (2023: £2,316,243).

The historic carrying value of the property at the year end was £638,855 (2023: £643,491).

Amounts due to group undertakings are unsecured, are at an interest rate of 2% plus the German base rate; have no fixed date of repayment and are repayable on demand of one month's notice.

The Barclays Trade Cycle loan at the balance sheet date is secured by a fixed charge over the company's assets, is at an interest rate of 2.75% above the bank's base rate, and each drawdown request has a maximum 180 day maturity period.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The revaluation reserve relates to the revaluation of freehold land and buildings included within tangible fixed assets. Each year, the additional depreciation incurred as a result of the revaluation is transferred from Retained Earnings to the Revaluation Reserve and set off against the revaluation surplus on the land and buildings.

During the year the parent company made a capital contribution of £3,500,000 which is shown in a separate reserve. This reserve is distributable.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

In accordance with FRS102 the company has not disclosed transactions with wholly owned members of the group.

At the balance sheet date there were amounts totalling £1,735,284 (2023: £634,188) owed to and amounts totalling £31,100 (2023: £1,120) owed from companies under common control.

The immediate parent undertaking is J W Froehlich Maschinenfabrik GmbH. J W Froehlich Maschinenfabrik GmbH is wholly owned by J W Froehlich Vermögensverwaltung GmbH. The ultimate controlling party is Josef Froehlich, by virtue of his 100% holding in the ultimate parent company. Copies of the accounts of J W Froehlich Vermögensverwaltung GmbH can be obtained from www.bundesanzeiaer.de.

As part of the revaluation of freehold property, the depreciation policy for freehold buildings has been amended from 25 years straight line to a UEL of 25 - 40 years from the date of the revaluation as the UEL was considered to be too short, given the nature of the building. This has been corrected retrospectively as the original depreciation policy was not considered to give a true and fair view of the property value.

In the year ended 31 December 2024, the company opted to change their accounting policy to account for Freehold Land and Buildings under the fair value model. the change in accounting policy has been adjusted retrospectively. The value of freehold land and buildings has been increased to its deemed market value of £5,430,000 which was arrived at based on a professional valuation. The revaluation reflects the uplift in the property value from cost less accumulated depreciation to this fair value.

Following the revaluation of the property, additional depreciation of £66,050 has been incurred by the company. This has been transferred from retained earnings and offset against the surplus in the revaluation reserve.

Deferred taxation has been recognised in relation to the potential gain on disposal of freehold property which is calculated as 25% of the difference between the fair value of the property and the historic cost plus indexation allowance.