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

L.B. Foster Rail Technologies (UK) Limited (“LBF”, “us” or “we”) is actively engaged in delivering technologically engineered solutions to rail, power generation, facilities, transport, warehouse & logistics, and food & beverage industries.

The business is structured in two clearly defined streams, Technology Solutions and Technology Services. Operations are managed through individual business locations which are split by technology competency, with additional support provided from central functional departments such as finance, HR, IT, supply chain, HSQE and marketing. Whilst these financial statements are prepared for LBF only, this Strategic Report is written with the UK group in mind as the operations across all UK business teams are closely aligned.

Our business is driven by a core volume of sales in the Rail sector. We specialise in the design & manufacture of innovative Friction Management systems, rail lubrication and services for the rail transit market. This business is complemented by our Control & Display division which delivers unique solutions for rail signalling, passenger display and a variety of condition monitoring applications, where we excel as an integrator of multiple solutions. Our primary activities are centred around customer information systems (CIS), digital signage, mobile totems, telecoms contract services, fire safety systems including detection & suppression, remote performance & condition monitoring, safety & security solutions and rail signalling mosaic control panels.

Other activities in the Rail Sector include, a Track Components business which forms a smaller proportion of overall sales, but provides a range of products to niche markets where we are a regular supplier. Outside of Rail, we support the Energy sector where we provide control room display solutions in particular utilising our mosaic mimic product line to the power generation market.

Our innovative digital display solutions featuring our Inform software is a growing area of our business. Our team of designers, developers and project managers provide bespoke hardware & software solutions to support our a select group of blue-chip customer in the Rail, Retail, Leisure and Digital out of Home (DOOH) markets. Our operations include in-house fabrication and assembly activities, mechanical & electrical design, software design, electronics & controls expertise and electrical assembly.

Key customers such as Network Rail, Crossrail and TFL are heavily linked to government and future spending plans. As such the level of our activities are affected by government policies around these.

We are a subsidiary of L B Foster Company Inc., which is listed on Nasdaq, with the strategy set by the group CEO. Key management personal for the UK group and related subsidiaries include UK based Directors who oversee how best to execute and implement the strategy in their respective divisions.

Our key objectives for generating success are:

·    Increase scale in the business, and improve capital efficiency

·    Leverage and strengthen our technology solutions offer

·    Grow technology service sales

·    Establish a more prominent market share in Europe

Our strategic planning is prepared in rolling 5-year cycles, with particular attention given to the 1-3 year period. We monitor the effect of domestic and global economic conditions, competitor activity and sector trends as they influence our business activities. Many of our major customers are linked with government future spending plans. As such, certain areas of the business, such as rail, can be affected by the level of spending from government. We have a diversified portfolio of products and services and as such are not so heavily influenced by cyclical trends.

Enquiry levels in the year were high, and whilst the markets we serve appear highly active conversion of these opportunities into firm orders remains a significant challenge.

The major subsidiary of the UK group has continued to experience working capital pressure in the year. This is directly related to servicing our major project activities, many of which continued to experience extended completion dates which has put pressures on cashflow. The levels of working capital are monitored regularly throughout each division, especially those relating to our major projects, to make sure they remain at acceptable levels and to help the Board manage business activities. LBF provides support, by means of funding, to help finance these activities.

Damage to reputation represents a key risk due to the competitive nature of the market and large contracts that can be awarded. If contracts are executed poorly, it can impact relationships with customers and present an opportunity for competitors. We communicate extensively with our customers to establish their requirements and implement controlled procedures to help ensure that customers receive the product or service they desire. We aim to maintain good relationships with customers and will endeavour to settle any issues that our customers may feel. We have embarked on a series of Partner and Collaboration activities which we feel will help us access larger, higher value projects as well as enhancing our reputation.

Network Rail and Train Operating Companies (TOCS) are the primary focus areas within the rail business with reasonable forward project visibility, based around lifetime extension campaigns by our customers, we feel confident that business levels will improve over the next 18-24 months as the new funding control period accelerates and provides certainty. This division is complemented by the wider L.B. Foster group, and the spread of our activities does provide cover for downturns in activity in certain sectors.

Digital Display is an increasingly attractive market sector. Unlike most companies in this sector, our offer is a combined hardware and content software solution supported by life-cycle maintenance support from our highly qualified support staff. We specialise in unique, mobile applications, specifically aimed at disruption management. All mobile totems are IP65 rated and compliant to ASIAD 2017 PBIED Blast standard.

Control Panel solutions for Power Generation and Railway Signaling applications are built using Mosaic Mimic technology. There are a limited number of direct competitors for Mosaic Systems with product acceptance being a key barrier to entry. Most competition comes from alternative digital solutions, against which Mosaic Systems offer high reliability and scalability/expansion benefits at lower costs to the operator.

There are many businesses that operate friction management services in Europe. This represents a threat to our ability to penetrate geographic areas we currently do not serve. We have assessed our competitors and many only provide either single product solutions, limited portfolios or third-party service offerings. We provide both an extensive product offering and comprehensive service solutions to provide our customers with a complete portfolio which will help to distinguish ourselves from our competitors and grow sales in Europe.

At LBF, we strive to be the integrator & specialist provider of choice. We aim to expand our range to include commissioning & design services, control room systems, digital display and specialist contract services aligned to the Telecoms and M&E sector. The focus on the provision of specialist products and services has the benefit of higher margins which will inevitably drive profitability.

The pressure on operating costs, the strain on the global supply chain and the tight labour market are the areas we are most concerned about. Lots of work is being carried out across the business to organise operations to provide clarity and enable the delivery of our various plans. Operating in a tough macro-economic environment is expected to be felt for some years across all markets and as such it may take longer to reach our objectives. Succession planning is in place to ensure the strategic development of the business in the mid-term.

Emphasis will be placed on operations in the United Kingdom, but global growth through our control & displays offerings are also a key focus. In Europe we aim to double sales driven primarily by our specialist friction management services although recently our Visual Communication products are generating healthy interest levels in Rail and Airport environments. In the UK market our Rail, Electrical Wiring, Power Generation & Visual Communications businesses has a positive outlook reflecting customer spending plans.

Following the acquisitions of Skratch and Intelligent Video we have recognised improvements in product development lead-time and leverage from new supply chain partners and we are now able to move into new adjacent markets (airports, retail etc) and widen our scope and offer in our traditional markets. We remain cautiously optimistic about the future business and believe we are in a good position to execute on these plans.

Our Remote Condition Monitoring strategy, launched in 2019, is centred around a core portfolio of sensor technology and exploiting our reach in Europe and the Americas. During 2024 we continued to make inroads with our new solutions in the North American market.

Our combined portfolio presentation to train operating companies is generating new works with a combined installation and solutions offer.

Our key performance indicators (KPI) are set through our divisional alignment plan, being driven by the US. Programmes are set to a strategic theme based on the plan and quarterly targets are set with KPI’s such as market penetration or cost saving measures. It is an annual process with quarterly assessment and review. We have shifted our assessment of performance from being heavily financial based to more substantive goals and objectives driven.

Financial KPI’s

Non-financial key performance indicators

At LBF we strive to continuously improve our procedures and processes not only for the benefit of our customers but for all stakeholders in the business. We have instilled this as a core belief in the business which is evident across all levels. We have a Director of Operational Efficiency to ensure our procedures are to the highest standard and most employees have some form of self-improvement as one of their objectives which is reviewed through our appraisal system.

We have implemented various methods to assess non-financial improvements across the business. An operational excellence (OPEX) scorecard is applied across the group and includes both qualitative and quantitative indicators which help to drive improvements. Sites are assessed on a site by site basis and compared to benchmarks which focus on improvement. These are reported monthly to the Board for regular in-depth assessment of performance. Hourly paid staff are incentivised through our bonus system which is based on the outcome of this scorecard.

Our key performance indicators are:

1.    On time delivery – 95% or higher

2.    Safety: RIDDOR Recordable accidents/incidents lost time accidents – Less than 0.17 per month

We routinely track staff turnover and look to identify trends wherever possible to support a proactive approach to staff retention. Although our turnover metrics increased in the year, we are below the UK average based on our benchmarking of businesses operating in similar sectors. The continued use of flexible working across all business locations has been positively received by our employees. We are aware of the pressures many of our staff have in the current economic environment and that this situation will be an ongoing challenge going into 2025.

The group is exposed to the usual credit risk and cash flow risk associated with selling on credit and manages this through credit control procedures. The group also undertakes sales and purchases in foreign currencies, which exposes it to foreign exchange rate risk. The group does not use any formal hedging techniques and, accordingly, assumes all associated risks of foreign currency fluctuations.

The company does lend to, and have an investment in, L.B. Foster GmbH, which operates in Euros. It also has a Chinese subsidiary which operates in US Dollars. Both provide a natural hedge through the use of local bank accounts, and whilst the company takes the foreign exchange risk on lending to Germany this has resulted in an overall foreign exchange gain.

The UK based executive team is comprised of 3 full-time UK Directors and other senior leaders who bring a diverse range of key experience and skillsets, in addition to the skills and leadership offered by the US Executive Team. The Directors consider the combined team’s breadth of experience and knowledge to be strong enough to be able to discharge collective obligations thoroughly.

The UK based team is supported by a group-wide matrix management structure, support functions such as Finance, HR, IT, Marketing, Environment, Supply Chain, Health & Safety (EHS) and Quality staff report centrally to a functional head based at head office in Pittsburgh.

We retain a strong focus on the longer-term impact of our decisions, which are typically strategic in nature. We are focused on being at the forefront of technology to drive a strong position in the market. As a business we aim to not only meet our objectives but exceed them. Our strategy involves continuous investment in research and development to create the best products and services which will help to set us apart from the competition.

All directors are heavily involved in the regular management of the business, and the executive team holds its own regular meetings, as well as meeting regularly with Heads of Department and the wider management team. Any operational and strategic decisions are debated in this environment on a democratic basis to ensure management have input in the best way to execute on strategy. The directors believe that this process spreads the risk and ensures that decisions made are fair and balanced in the context of all business and stakeholder priorities. Any decisions taken in accordance with the Companies Act 2006 are voted on as described in our Memorandum and Articles of Association.

The Directors do not consider there to have been any key decisions taken during 2024 that may materially impact the stakeholders of the business.

We are aware of the environmental issues faced by our industry in the long term and as such we aim to minimise our impact on the environment from our activities. We are accredited in the UK to ISO14001:2015 for environmental management, and comply with all relevant standards, representing our commitment to sustainability. There is a group-wide environmental committee based in the US which sets the group wide policy with implementation and management set locally. This is monitored on a division and site basis and includes performance measures such as tracking of water, fuel and electrical usage as well as waste materials, waste produce and emissions.

We are committed to the continued security of our employees and place safety of paramount importance across all sites. Observations are the leading indicators used to prevent accidents and employees are encouraged to report any possible issues. Each observation is entered on a central portal and is attended to as soon as possible. Observations are raised through seniority if needed; however, this is rarely necessary.

LBF is committed to the highest standards with registration for ISO 9001:2015 for quality management and ISO 45001:2018 for occupational health and safety. The group as a whole are committed to these standards which helps to ensure compliance of the highest quality through all operations. From a financial perspective, the group complies with the requirements of the Sarbanes-Oxley Act around its financial controls and processes, although only some of its UK operations are within scope for detailed testing of this.

Our business is able to counteract fraud throughout the different layers of our operations. We delegate authority through the different levels of management and encourage staff to take ownership without opening too much fraud risk. If processes are not followed, then this gets recorded as a non-conformance and is investigated. Depending on the results of the investigation, individuals will be provided with appropriate feedback and where necessary be required to undertake further training as required. In the most serious of cases disciplinary action may be taken against individuals.

We capture internal data to anticipate issues that may arise for customers before they become a major issue. We will consider the root cause of each case including investigating trends and how they may have arisen. Our staff are encouraged to actively promote capturing the data. This includes highlighting problems during production, before they reach completion. This helps to ensure we produce the highest quality product and shows our commitment to provide the best for our customers. We aim to highlight issues as earlier in the process as possible and inform the customer as soon as they arise. We communicate extensively with our customers to establish their requirements and implement controlled procedures to help ensure that customers receive the product or service they desire. We aim to maintain good relationships with customers and will endeavour to settle any issues that our customers may feel.

On behalf of the board

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

The principal activities of the business are the sale of friction management products and services to the UK passenger rail network, the sale of material handling products and systems to the manufacturing, distribution, garment and food industries, and the manufacturing of process automation equipment.

The results for the year are set out on page 14.

No interim ordinary dividends were paid (2023 - £11,844,248). 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 auditor, Azets Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

We are aware of the environmental issues faced by our industry in the long term and as such we aim to minimise our impact on the environment from our activities. We are accredited in the UK to ISO14001:2015 for environmental management, and comply with all relevant standards, representing our commitment to sustainability. There is a group-wide environmental committee based in the US which sets the group wide policy with implementation and management set locally. This is monitored on a division and site basis and includes performance measures such as tracking of water, fuel and electrical usage as well as waste materials, waste produce and emissions.

In relation to our Statutory Requirement to provide information on Carbon Emissions under SECR and Energy Usage ESOS, initial evaluation has been completed and data collection and submission to the Environment Agency

The Streamlined Energy and Carbon Reporting disclosure presents our carbon footprint inside the UK across Scope 1, 2 and 3, appropriate intensity metric, the total energy use of electricity and gas and an energy actions summary of actions taken during this financial year.

Opportunities for continual improvement 

• Gradual replacement of lighting from Fluorescent Tubes to LED - ongoing programme.

• We will be evaluating the requirement of our vehicle fleet, both company vans and cars. We will be setting targets for conversion of the fleet to Hybrid or Electric Vehicles and with that the provision of charging points at our facilities.

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.

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, 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.

We have audited the financial statements of L.B. Foster Rail Technologies (UK) 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 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.

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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias; and

• Performing audit work over the timing and recognition of revenue and in particular whether it has been recorded in the correct accounting period.

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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

L.B. Foster Rail Technologies (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is c/o Mincoffs Solicitors LLP, 5 Osbourne Terrace, Jesmond, Newcastle Upon Tyne, Tyne and Wear, NE2 1SQ.

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 £1.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments 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 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;

• 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’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.

The company has taken advantage of the disclosure exemptions of Section 33.1A of FRS 102 which permit it to not present details of its transactions with members of the group headed by L.B. Foster Company where relevant group companies are all wholly owned.

The company has taken advantage of the exemption under section 401 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

The immediate parent company is L.B. Foster Rail Products Inc and the ultimate parent company and controlling party is L.B. Foster Company, both incorporated in the United States of America. The consolidated accounts of L.B. Foster Company, into which this group is consolidated, are available from the registered office L.B. Foster Company, 415 Holiday Drive, Pittsburgh, PA 15220.

The directors have considered all factors, including in the wider economy, as part of their assessment of going concern. Although the current economic climate creates both cashflow and profitability risks for the company, the company continues to trade satisfactorily. Budgets and cashflows have been prepared using assumptions for customer demand and supply chain costs as well as expectations for legal and regulatory environmental impacts. These budgets and cashflows indicate profitable trading and cash generation, supported by group funding where necessary. Consequently the directors believe on balance that they have sufficient resources to enable trading to continue for a period of at least one year from the date of approval of the financial statements. Accordingly, these financial statements have been prepared on the going concern basis.true

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.

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 dispatch 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.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

Revenue from the provision of construction contracts is recognised by reference to the stage of completion, when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by assessing project costs incurred as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

Research and development expenditure is written off against profits in the year in which it is incurred.

Goodwill represents the excess of 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.

Goodwill created on the hive-up of Tew Automation is being amortised over a 10 year period, whilst other goodwill is being amortised over a 20 year period, based on management's expectation of useful life as at the point of acquisition.

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.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

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:

Patents are valued at cost less accumulated amortisation. Amortisation is calculated to write off the cost in equal instalments over their estimated useful lives.

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.

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

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.

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.

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.

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.

Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

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 and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future 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.

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 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.

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

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

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.

The company operates a defined contribution pension scheme and a defined benefit scheme which is paid up. The pension costs charged in the financial statements represent the contributions payable by the company during the year in accordance with Section 28 of FRS 102. The defined benefit scheme is accounted for in accordance with FRS 102 with full details in note 22 below.

The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.

Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.

The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.

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.

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.

The accounting treatment of Coronet Rail Limited and Tew Engineering Limited Automation department, as detailed in note 13, is considered to be a key area of judgement.

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.

A proportion of the company's activities are undertaken via long-term contracts spanning more than one accounting period. These contracts are accounted for in accordance with FRS 102 which requires estimates to be made for the contract costs and revenue.

Management base their judgement of contract costs and revenue on the latest available information, which includes detailed contract valuations. Contract costs and revenue are affected by a variety of uncertainties that depend on the outcome of future events and often need to be revised as events unfold and uncertainties are resolved. The estimates are updated regularly and any impact reflected as appropriate.

The company has a defined benefit pension scheme, which has been closed to new entrants for a number of years. The directors use external specialists to determine both the present value of the obligation under the scheme, and also the fair value of assets owned, to determine the overall deficit in the scheme that must be made good. Full disclosure of the assumptions used by the independent third party is provided in note 22.

Investments in subsidiaries are assessed for any indicators of impairment at the reporting date. Any impairment losses are recognised within the profit and loss account.

Stocks must be values at the lower of cost and NRV less costs to sell. As the costing of stock impacts all balances that are not raw materials, there is a high potential magnitude of impact from misstatement.

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

Grants received relate to Research and Development Expenditure Credit ("RDEC"), which is considered taxable income and recognised within other operating income. An associated tax charge is recorded in the taxation line.

In addition to the above, the company also covers audit fees on behalf of its UK subsidiary companies with the same statutory auditor totaling £77,300 (2023 - £72,950). Of the non-audit services provided by the current auditor, £19,000 (2023 - £17,920) relate to services provided to subsidiary companies.

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

Their aggregate remuneration comprised:

In addition to the above, redundancy costs of £216,299 (2023 - £231,944) were incurred as reported in note 4.

The above represents the impairment of certain fixed asset investments.

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

Deferred tax balances at the reporting date are measured at 25% (2023: 25%).

The interim dividend was paid before the indicators of impairment in fixed asset investments arose.

Goodwill primarily represents amounts acquired on hive up of a division of Tew Engineering Limited, Tew Automation, and was deemed from the point of acquisition to have an estimated useful life of 10 years. The goodwill represents a number of underlying intangible assets associated with the Automation division, including customer lists and brand, and that synergies and other group benefits arising from the acquisition and subsequent hive-up to this company should estimate to the premium paid for the company, and hence to this goodwill. Management have assessed the carrying value of the goodwill in light of the ongoing trade of the division as a cash-generating unit and are satisfied that the goodwill retains value to the company.

Other goodwill acquired in earlier years was determined to have a useful life of 20 years, and continues to be amortised over this longer period. An impairment review is performed annually and no impairment deemed necessary at the year end.

Amounts owed by group undertakings are interest free, unsecured and repayable on demand.

Bank loans bear a variable interest rate which is based on the SONIA, spread and reserve rate and are repayable in full in 2026. The loan is secured by way of fixed and floating charges over the assets of the company and a group guarantee with UK subsidiary companies.

In the prior year, a sweep account was set up where the cash in each UK subsidiary is swept daily into a bank account held by the company. As a result the cash balance at the year end represents cash held on behalf of TEW Plus Limited, Skratch Enterprises Limited and TEW Engineering Limited in addition to the company.

Other creditors includes deferred consideration payable of £578,125 (2023 - £nil) and £nil (2023 - £191,998) relating to the acquisitions of Skratch Enterprises Limited and Intelligent Video Limited respectively.

Amounts owed to group undertakings are interest free, unsecured and repayable on demand.

Other creditors includes deferred consideration payable of £349,260 (2023 - £856,521) relating to the acquisition of Skratch Enterprises Limited.

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.

The company operates a defined benefit pension scheme; the Portec Rail Products (UK) Limited Pension Scheme, which is paid up. The liabilities shown for this valuation represent an update of the latest Triennial Actuarial calcuation as at December 2023 and was carried out by a qualified independent actuary, and was updated on an approximate basis to 31 December 2024.

Defined benefit pension schemes - recent court case

In July 2024 the Court of Appeal upheld a June 2023 High Court ruling that may have consequences for defined benefit pension schemes. The case, brought by the trustees of the NTL Pension Scheme against Virgin Media Ltd, considered the implications of section 37 (s37) of the Pension Schemes Act 1993, which required an actuary to certify amendments to scheme benefits for contracted-out schemes. Under section 9(2B) of the Act, schemes that were contracted out of the additional state pension were required to provide benefits at least equivalent to a minimum level laid out in a hypothetical "reference scheme". This was known as the reference scheme test. When amendments were subsequently made, s37 of the Act required scheme actuaries to certify that the scheme still met this standard.

According to the court's decision, any amendments to scheme benefits that affect members' section 9(2B) rights during the relevant period will be void unless confirmation from the scheme actuary was obtained, in writing, when the amendment was made. The ruling may affect schemes that were contracted out of the additional state pension at any point between April 1997 and April 2016, when contracting out was abolished.

The Scheme was contracted out between April 1997 and April 2016, and therefore the ruling may affect the Scheme. However, the position remains uncertain. For example, the DWP may consider retrospective action to remove the impact of the ruling, and another Court case is due in 2025 which may have implications on the impact of the Virgin Media ruling. Given this uncertainty, it is not yet possible to quantify the potential impact of this ruling on the Scheme or on the Defined Benefit Obligation.

The pre and post mortality table used for the current and comparative year was was S3PMA/FA with Continuous Mortality Investigation Project Model 2019 subject to minimum improvement levels of 1.25% for males and 1.25% for females.

Amounts recognised in the profit and loss account

The profit and loss account also includes amounts of £10,000 (2023 - £2,000) relating to expenses paid from the scheme.

Amounts taken to other comprehensive income

The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:

Movements in the present value of defined benefit obligations

The defined benefit obligations arise from plans which are wholly or partly funded.

Movements in the fair value of plan assets

The actual return on plan assets was £119,000 (2023 - £256,000).

Fair value of plan assets at the reporting period end:

The company is party to a cross company guarantee in respect of the bank facilities of all UK group companies. At the year end, the UK group had a liability of £18,000,000 (2023 - £11,000,000) under the guarantee.

As at the date of approval of the financial statements, no default has occurred which would trigger the above liability, nor is one anticipated. As such, the directors consider that the fair value of this obligations is £nil and there is no recognition of a liability on the balance sheet.

As at 31 December 2024, the company has ongoing letters of credit of £718,638 (2023 - £1,783,762).

Operating lease payments represent rentals payable by the company for certain of its properties and for motor vehicles.

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 May 2025, the directors approved a plan to restructure the operations of the company by winding down the Automation and Materials Handling product lines. With the support of the US parent company, the process to cease these operations began with identifying efficiencies and synergies in the wider L.B. Foster group structure to benefit the profitability of the remaining product lines. Any open contracts and outstanding obligations within the Automation and Materials Handling divisions have been moved over to the Sheffield division and other group companies.

The company has taken advantage of the disclosure exemptions of Section 33.1A of FRS 102 which permit it to not present details of its transactions with members of the group headed by L.B. Foster Company where relevant group companies are all wholly owned. Details of outstanding balances as at the year end are given in notes 17 and 20.

The company does not have any transactions with staff who are considered to be key management personnel other than its directors, details of which are given in note 30.

The immediate parent company is L.B. Foster Rail Products Inc and the ultimate parent company and controlling party is L.B. Foster Company, both incorporated in the United States of America. The consolidated accounts of L.B. Foster Company, into which this group is consolidated, are available from the registered office L.B. Foster Company, 415 Holiday Drive, Pittsburgh, PA 15220.

These financial statements are separate company financial statements for L.B. Foster Rail Technologies (UK) Limited.

Details of the company's subsidiaries at 31 December 2024 are as follows:

All equity investments in subsidiary companies are accounted for at cost less impairment.

Registered offices of the companies listed above are as follows:

1. As for this company.

2. Westring 295, 44629, Herne, Germany.

3. 172 Brunswich Boulevard, Pointe-Claire, Quebec, H9R 5P9, Canada.

4. 4041 Remi Place, Burnaby, British Columbia, V5A 4J8, Canada.

5. Suite 900, 1959 Upper Water Street, Halifax, Nova Scotia, B3J 2X2, Canada.

6. Regus Lufthansa Centre C203, Lufthansa Office Building, 50 Liangmaqiao Road, Chaoyang District, Beijing, 100125, Peoples' Republic of China.

Included in the above is £64,875 (2023 - £34,074) of directors' redundancy costs were incurred during the year, as detailed in note 4.

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2023 - 3).

The number of directors who are entitled to receive shares under long term incentive schemes during the year was 0 (2023 - 2).