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

Executive Summary

PA Moody Recycling Ltd delivered strong results for 2024, achieving turnover of £11.86 million (17.5% growth) with impressive expansion in market reach and operational capability. The company continues to serve as a core part of the GAP Group service proposition, combining innovative recycling processes and high sustainability standards with a dedication to workforce development, secure financial positioning, and integrity in governance.

Company Overview

Based at GAP House, Nest Road, Gateshead, the company operates as a recognised specialist in WEEE recycling and general haulage. With a strong workforce and exceptional senior leadership team, PA Moody Recycling Ltd functions as the principal subsidiary of GAP Group Northeast Ltd, underpinning group ambitions in circular economy leadership and sector innovation.

Business Model and Strategic Operations

The company provides high quality collection, processing, and recycling of WEEE which includes any electrical item with a plug, cable or battery, including specialist hazardous streams. This is supplemented by a comprehensive transport services. Operations span granular material recovery, cable and appliance depollution and material recovery shredding lines. Strategic partnerships and supplier relationships fuel its mission to be the preferred destination for WEEE and partner recycling activities.

The Company's business activities, financial condition, results and operations could be affected by any or all of the principal risks or uncertainties. These are set out in the Directors report.

No dividend recommended, earnings reinvested for strategic expansion.

The firm maintained prudent financial management, reducing liabilities and securing additional credit facilities to support growth. Despite a gross margin compression, resilience in operating profit and expansion of asset base highlight robust stewardship.

Market Dynamics and Sector Analysis

PA Moody Recycling operates in a resilient WEEE and hazardous waste sector with steady demand for compliant recycling and responsible disposal. Ongoing market expansion is supported by technological innovation, regulatory alignment, and disruption ready processes including rare earth metals recovery. Strategic investments in processing and market research position PA Moody Recycling to capture additional market share and deliver sustainable growth.

Risk Management and Mitigation Strategies

• Commodity and price volatility are actively monitored, but exposure is limited by service diversification.

• Financial risk is controlled via careful cash flow management, regular covenant monitoring, and credit controls.

• Compliance risk across environment, health, and safety is mitigated through ISO’s 45001, 14001, 9001, and WEEELABEX accreditations, plus robust control frameworks.

Environmental Impact and Sustainability Leadership

The company supports national policy targets in carbon reduction and circular economy adoption. Advances in plastics and white goods recycling, coupled with strict handling of POPs and CFCs, ensure leadership in environmental responsibility. New operational development and innovation projects will further bolster environmental outcomes in the coming year.

Community Engagement and Social Impact

Workforce development, health and safety improvement, and active engagement in local employment drive the company’s social value. Charitable giving, sector partnership, and continuous investment in skills and welfare reinforce PA Moody Recycling Ltd.’s role as a socially responsible employer and sustainability champion.

Key priorities for 2025:

• Plant upgrades for improved WEEE throughput and recyclate quality.

• Deepening B2B and municipal partnerships for sustained feedstock and market access.

• Initial deployment of advanced sorting automation and analytics, following industry trends toward digital and AI-driven operations.

• Training, market development and operational investment.

• Expansion in SDA and plastics recycling volumes for strategic partner supply.

• Ongoing adoption of best available technologies and disruptive innovation in rare earth metals recovery (REMs).

• Strengthened compliance and financial security with expanded credit lines and asset upgrades.

• Developments in cost effective, compliant and efficient recycling services for all stakeholders.

Section 172 of the Companies Act 2006 (Section 172) requires a Director of a Company to act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole.

Exercising reasonable care, skill and due diligence, the Directors' collectively act to make decisions on behalf of the company. They make the strategic and operational decisions and are responsible for ensuring that the company meets its statutory obligations.

Additionally, the role of the Statutory Directors is to promote the success of the company, giving due regard to:

• the likely consequences of any decision in the long term.

• the interests of the company's employees;

• the need to foster the company's business relationships with suppliers, customers and others;

• the impact of the company's operations on the community and the environment;

• the desirability of the company maintaining a reputation for high standards of business conduct; and

• the need to act fairly between members of the company.

During the year the Directors have sought to improve and strengthen its company practices.

Customers

We focus on providing the best service for our customers, whether for Haulage or WEEE and to keep our customers happy. We empower our people to make the right decisions, not necessarily the easy ones, to deliver for our customers and partners.

Suppliers/ Partnerships

We work closely with a valued group of PCS organisations and a network of suppliers, from small local firms to large international businesses.

Our mission is to be the destination for WEEE recycling for all our trading partners.

We are innovative and forward thinking to look at and come up with improved and new processes to streamline the processing of WEEE to provide the best solution possible.

Shareholders

We aim to provide fair, balanced and understandable information to shareholders and analysts including our strategy, business model, culture, performance, governance.

Climate

The aim for GAP Group North East is to provide a full circular/360 solution to our customers.

Our Corporate culture and strategy is to always do the right thing and be the best at what we do.

We take our customers' concerns about sustainability and changing government regulation, implementing them well in advance which means that sustainability is at the core of our culture.

Through our operations we manage our high-quality recycling plants providing not only excellent sustainable operations for third-party customers, but handle packaging waste, waste electricals {"WEEE") plastics and metals as well as Haulage to incredibly high standards.

Employees

Our dedicated workforce is the cornerstone of our success. We invested in employee development, health, and well-being, resulting in high employee satisfaction and a continued culture of innovation and collaboration.

The culture at P A Moody Recycling’s is how we deliver for our customers and our people have continued to deliver an excellent service.

Our people are at the heart of P A Moody Recycling whether that is in the innovation they develop or the very human way we Interact with our customers, suppliers and each other. We care deeply about what we do and our people.

At P A Moody Recycling we create an environment for our people to grow and flourish.

Health and safety

At P A Moody Recycling we are committed to maintaining a safe working environment for all our employees and customers. We drive a culture aimed at continuous improvement and maintaining consistently high standards. Health, Safety and Well­ being Is always on the agenda at P A Moody Recycling and to ensure we have a structured way of communicating health and safety through the entire business. The business has achieved ISO45001 accreditation during the period.

Outlook

At P A MOODY RECYCLING, our unwavering commitment to sustainability and excellence is at the forefront of our corporate vision. We are continually challenging the status-quo to improve our recycling processes (efficiency, environmental standards and quality) for white goods and plastics recycling, whilst ensuring we are part of a broader unified P A MOODY RECYCLING Group service proposition.

Revenue Growth:

During the past fiscal year, we achieved a great deal, representing an impressive year-over-year growth rate of 17.46%. This remarkable achievement can be attributed to our unwavering commitment to innovation, expanding market presence, and the exceptional dedication of our employees.

Market Expansion:

We continued to expand our United Kingdom footprint, entering new markets and strengthening our position in existing ones. Our strategic investments in market research, systems development, and marketing have allowed us to capture additional market share and drive sustainable growth.

Innovation:

Our commitment to innovation remains unwavering and is something which keeps GAP ahead of competitors. There are several projects which have been brought to fruition during the year and several more which are about to come-online further solidifying our reputation as an industry leader. These innovations have allowed us to meet evolving customer demands and stay ahead of competitors.

We are currently involved with several industry disruptive technologies which will come to market over the next 12-18 months. These innovations are dealing with Rare Earth Metals (REMs) which is becoming a major world wide issue.

Sustainability:

Environmental and social responsibility remain integral to our corporate ethos. We continue to make strides in reducing our carbon footprint. Additionally, we continued to support various social initiatives that align with our CSR commitment.

Priorities for the Coming Year

In the upcoming year, our focus will be on the following key priorities:

Cost-effective, compliant and efficient Recycling Service: We are committed to delivering a cost-effective recycling service to all our businesses and customers, ensuring accessibility and affordability.

Environmental and Safety Standards: We will continue to uphold the highest environmental and safety standards, building on our ISO and WEEELABEX recycling standards, which cover various aspects of our operations.

Operational Development: We will invest in training, process improvements, develop future markets, and the adoption of best available techniques.

SDA/Plastics Recycling Growth: We will work diligently to increase our SDA and ultimately plastics volumes, offering a sustainable supply of high-quality plastics components to our strategic partners.

In conclusion, we are excited about the opportunities and challenges that lie ahead. Our commitment to sustainability, innovation, and excellence will continue to drive us as we work toward a future where recycling is not just a responsibility but a source of pride for all. Thank you for your trust in P A MOODY RECYCLING.

On behalf of the board

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

The principal activity of the company continued to be that of collecting and recycling all aspects of WEEE along with general haulage.

The results for the year are set out on page 11.

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

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

The company finances its activities with a combination of bank loans, finance leases and hire purchase contracts, cash and short term deposits. Other financial assets and liabilities, such as trade debtors and trade creditors, arise directly from the Company's operating activities.

Cash flow and liquidity risk is the risk that a company's available cash will not be sufficient to meet its financial obligations. The company actively manages its cash flow position including collection of debts and timely payment of creditors. This, coupled with the strong cash position of the Company is deemed sufficient to minimise the Company's exposure to cash flow and liquidity risk.

Foreign exchange risk refers to the potential for loss from exposure to foreign exchange rate fluctuations. Company policies are aimed at minimising this risk. The company does not consider that it is materially exposed to foreign exchange risk.

Credit risk is the risk that one party of a financial instrument will cause a financial loss for the other party by failing to discharge its obligation. Company policies are aimed at minimising such losses and require customers to satisfy credit worthiness procedures prior to acceptance of contracts. The company also utilises insurance policies to protect against non-payment of debt. The company does not consider that it is materially exposed to credit risk.

Price risk is the risk that changes in raw material prices have a potential to impact on the profitability of the company. The company does not consider that it is materially exposed to price risk.

The company intends to continue developing the areas of operation and to increase profitability.

See disclosures within the Strategic Report regarding future developments of the company.

In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Azets Audit Services as auditors of the company is to be proposed at the forthcoming Annual General Meeting.

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.

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

During the year, the group breached one of the covenants on its loans with its bankers at the end of quarter one. Whilst the bank has not formally waived the breach it has formally acknowledged it and has stated that it will take no further action in respect of it. The group is achieving the covenant at the end of quarter two and is forecasting to comfortably continue to do so going forward. The group are currently in advanced discussions with the bank to obtain additional credit facilities to fund growth and the directors believe that this illustrates the bank’s continuing support of the group. Accordingly the directors are satisfied that there is no risk to going concern in respect of this issue.

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

In our opinion the financial statements:

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

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

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

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

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

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

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

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

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

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

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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

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.

We identified the following applicable laws and regulations as those most likely to have a material impact on the financial statements: Health and Safety; employment law (including the Working Time Directive); anti-bribery and corruption; and compliance with the UK Companies Act.

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; 

• 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. 

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 member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

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

P A Moody Recycling Limited is a private company limited by shares incorporated in England and Wales. The registered office is GAP House, Nest Road, Gateshead, Tyne & Wear, England, NE10 0ES.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and 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 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; 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 exemption available under paragraph 33.1A of FRS 102 and does not disclose related party transactions with members of the same group that are wholly owned.

The financial statements of the company are consolidated in the financial statements of GAP Group North East Limited. These consolidated financial statements are available from its registered office, Gap House, Nest Road, Gateshead, Tyne and Wear, NE10 0ES.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the company in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

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

During the year, the group breached one of the covenants on its loans with its bankers at the end of quarter one. Whilst the bank has not formally waived the breach it has formally acknowledged it and has stated that it will take no further action in respect of it. The group is achieving the covenant at the end of quarter two and is forecasting to comfortably continue to do so going forward. The group are currently in advanced discussions with the bank to obtain additional credit facilities to fund growth and the directors believe that this illustrates the bank’s continuing support of the group. Accordingly the directors are satisfied that there is no risk to going concern in respect of this issue.

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, 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.

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, which is 10 years.

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

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

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

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Interests in subsidiaries, associates and jointly controlled entities 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.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

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..

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

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

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position 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.

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 income statement 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 income statement, 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.

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

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

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.

No judgements have been considered to have a significant effect on amounts recognised in the financial statements.

No estimates or underlying assumptions have been considered to have a significant effect on amounts recognised in the financial statements.

All turnover is derived in the UK.

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2023 - 4).

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

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

The fair value of the company's land and buildings was revalued on 02 December 2022 by an independent valuer on an open market basis.

The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:

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

NEL CBILS loan is denominated in sterling with a nominal interest rate of 9.00%, and the final instalment is due on 30 June 2025. The carrying amount at year end is £23,419 (2023 - £94,533).

The loan is unsecured. In line with Government support, the first 12 months were interest free.

HSBC Term loan is denominated in sterling with a nominal interest rate of 3.00%, and the final instalment is due March 2028. The carrying amount at year end is £1,355,554 (2023 - £1,375,669).

The loan is secured by way of a fixed and floating charge which covers all of the property.

HSBC Term loan is denominated in sterling with a nominal interest rate of base rate + 2.35%, and the final instalment is due June 2029. The carrying amount at year end is £954,182 (2023 - £nil).

The loan is secured by way of a fixed and floating charge which covers all of the property.

Included in other borrowings is a receivable finance agreement with HSBC which is secured by way of a fixed and floating charge over the assets of the company. The amount outstanding at the period end was £608,527 (2023 - £553,926).

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. Leases are secured against the assets to which they relate.

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

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.

Included in the statement of financial position are unpaid pension contributions of £22,134 (2023 - £12,968).

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:

During the year the company entered into the following transactions with related parties:

The company's immediate parent is GAP Group North East Limited, incorporated in England and Wales.

The most senior parent entity producing publicly available financial statements is GAP Group North East Limited. These financial statements are available upon request from Gap House, Nest Road, Gateshead, Tyne And Wear, NE10 0ES.

The ultimate controlling party is GAP Group North East Limited.