The directors present the strategic report for the year ended 30 April 2025.

In the financial year ending April 2025, Morgenrot recorded total turnover of £13.24 million, an increase of 16.8% from £11.34 million in 2023/24. Gross profit rose to £3 million, representing a margin of 23.0% (2024: 22.5%). Operating profit stood at £272,871 (2024: £391,296), with net profit after tax of £180,379 (2024: £243,972).

Growth was driven by solid performance across both the wine and beer portfolios. Premium imported lager continued to gain traction across targeted on-trade channels, supported by sustained consumer demand for quality and authenticity. However, operating profit was impacted by rising wage costs, distribution overheads and increased depreciation following investment in bar and pub equipment.

Operationally, Morgenrot continues to manage its distribution network through its Manchester hub. The Bristol operation remains a challenge, with cost levels disproportionate to the business and margin generated. We are working closely with our partner Mevalco to develop a robust and sustainable plan for this region.

In the Southeast, the company has taken the decision to close the Brighton operation, effective January 2026, and transition the entire Southeast operation to Tapin 3PL logistics. This will reduce overheads and streamline distribution while maintaining service levels.

The company’s strategic focus on premium wines, authentic imported world lagers, and the no/low alcohol segment remains well aligned with market trends, underpinning both turnover growth and brand positioning in the UK.

Market Trends and Strategy

UK On-Trade Market (Wine & Beer) Overview – 2024/25

The UK on-trade navigated another complex trading environment between May 2024 and April 2025. Inflation moderated compared to the previous year, but input costs remained high, and wage growth accelerated following the change of government.

Consumers continued to visit less frequently but spent more per occasion, favouring quality-led experiences over volume.

Economic and regulatory environment

A Labour majority government was elected in July 2024, signalling a shift towards greater employment regulation.

The main employee National Insurance rate was cut to 8% from April 2024, but employer NIC rates have risen and thresholds have fallen since April 2025, increasing payroll costs.

The National Living Wage increased to £12.21 in April 2025, adding significant labour cost pressure across the trade.

Energy costs stabilised but remained above pre-pandemic levels.

The Extended Producer Responsibility (EPR) scheme for packaging advanced, with base fees confirmed in June 2025 and the first invoices due in October 2025.

UK-wide Deposit Return Scheme implementation was postponed to October 2027.

Alcohol duty

Duty remained frozen until February 2025. The end of the temporary wine easement and the full implementation of ABV banding added complexity to still wine pricing and administration. Draught Relief continued to support on-trade beer volumes.

The lower duty band for sub-3.5% ABV products continued to shape product development strategies across the industry.

Consumer Behaviour

Consumer patterns remained consistent with recent years: fewer visits, but higher spend per occasion, with strong demand for quality, provenance, and premium experiences. No/low alcohol continued its steady growth, supported by health-conscious consumers and favourable duty treatment. Smaller formats supported both moderated consumption and trial.

Beer Trade

Imported world lager remained one of the most dynamic on-trade categories in 2024/25. Headline growth in the category continued to be driven by brands such as Madrí, Birra Moretti and Cruzcampo, which have achieved wide distribution across UK pubs and bars. However, these brands are brewed under licence in the UK by multinational brewers. Their success has reshaped pricing expectations in parts of the market, but the offer is increasingly commoditised.

Morgenrot occupies a clear and differentiated position in this landscape. Our beer portfolio focuses exclusively on authentic imported lagers and speciality beers with genuine provenance and international reputation. These brands appeal to venues and consumers seeking quality and originality rather than mass-produced imitations. We continue to build their presence in outlets that value authenticity and differentiation.

The category’s broader trends remain supportive. World lager continues to outperform standard lager in both volume and value, and the moderation trend is creating opportunities for lower-ABV products. In 2026, we will launch a 3.4% lager from Ambar Brewery (Zaragoza, Spain), which combines authentic Spanish brewing credentials with a duty-efficient ABV, positioning us well within this evolving segment.

Wine Trade

Wine remains a competitive and evolving category in the UK on-trade. The end of the temporary duty easement and full implementation of ABV-based duty bands from February 2025 increased administrative complexity and raised costs for higher-strength still wines, particularly in core European segments. Despite this, premiumisation persisted, with consumers continuing to trade up on fewer occasions and favouring quality, character, and story.

Morgenrot’s portfolio is built around authentic, characterful imported wines, with a clear focus on innovation and differentiation rather than following mainstream volume trends. In 2024/25 we revamped our Australian range, introducing a set of eclectic varietals deliberately chosen to challenge the traditional UK perception of “Aussie Shiraz and Chardonnay.” The new range includes Saperavi, Nero d’Avola, Gamay, Arneis, Vermentino and Piquepoul, offering customers something distinctive, food-friendly and premium at accessible price points. This strategy has been well received by the trade and will continue to shape our approach to portfolio development.

Innovation will remain a central theme. In 2025/26 we will launch a range of premium keg wines, starting with French Gascogne Blanc and Gamay, to address demand for sustainable formats, reduce packaging waste and offer outlets quality wines at scale. We are also reviewing a new 0% sparkling white and rosé from Italy, reflecting the continuing growth of the no/low alcohol segment in wine, particularly in celebratory and by-the-glass occasions.

This deliberate focus on distinctive imported wines, innovative formats, and emerging styles positions Morgenrot well in a category that continues to evolve under pressure from cost, regulation, and shifting consumer expectations.

The principal risks to the business remain broadly consistent, with several key developments shaping the outlook:

• Government Policy: Regulatory change following the Labour victory is expected to affect employment law, wages, and possibly tax.

• EPR and Environmental Regulation: The introduction of packaging fees from October 2025 represents both a financial and administrative burden.

• Minimum wage and NIC changes from April 2025 have materially increased payroll costs.

• Supply Chain: Continued Red Sea disruption has extended lead times and increased shipping costs for non-EU imports.

• Cost of Living: Moderating inflation has not fully restored disposable income; frequency of visits remains below pre-pandemic levels.

• Interest Rates: Elevated rates continue to affect borrowing costs.

Financial Risk Management

Our financial risk management strategy remains focused on maintaining turnover growth while controlling costs. In 2025/26 we will continue to:

• Hedge currency exposure to limit import cost volatility.

• Manage pricing and mix carefully to protect margins.

• Maintain strong cash flow management, with improved operational cash flow achieved in 2025 (£395k inflow vs £66k in 2024).

• Monitor gearing and maintain constructive relationships with lenders.

Key Performance Indicators

The company continues to measure performance using the following KPIs:

• Turnover Growth: 16.8% achieved in 2024/25, supporting progress toward the £21m turnover target by 2028/29.

• Net Profit Margin: 1.7% (2024: 3.0%), impacted by rising costs; the medium-term target remains 5%.

• Working Capital: Stock and debtor levels increased in line with sales; operational cash flow strengthened materially.

• Channel Performance: On-trade remains the core focus, supported by retail and e-commerce growth.

Sustainability and Corporate Responsibility

We remain committed to reducing our carbon footprint through improved logistics and working with environmentally conscious suppliers. The continued development of no/low alcohol products supports responsible drinking objectives. We work closely with our trade partners to promote moderation and offer healthier choices to consumers.

Summary

Morgenrot delivered strong turnover growth in 2024/25, underpinned by a focused portfolio of authentic imported beers and innovative wines. The business faces rising wage costs, regulatory change and ongoing global supply pressures, but remains well positioned strategically.

By order of the board

The directors present their annual report and financial statements for the year ended 30 April 2025.

The principal activity of the company continued to be that of an importer, bonded warehouse keeper, national and regional wholesaler of wines, spirits, beers and related promotional products.

Ordinary dividends were paid amounting to £21,500. 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, DJH Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent; and

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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.

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

We have audited the financial statements of Morgenrot Group PLC (the 'company') for the year ended 30 April 2025 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 30 April 2025 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

As part of our planning process:

• We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.

• We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, The Warehousekeepers and Owners of Warehoused Goods Regulation Act 1999, Producer Responsibility Obligations, Alcohol Wholesaler Registration Scheme, General Data Protection Regulation (GDPR) and Anti-Money Laundering Supervision.

• We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.

• Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

• Identifying and testing journal entries, in particular those that were significant and unusual.

• Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

• Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to depreciation rates and estimated useful lives of assets, categorisation of leases, stock provisions and provision for bad debts.

• Assessing the extent of compliance, or lack of, with the relevant laws and regulations in particular those that are central to the entities ability to continue in operation.

• Testing key turnover lines, in particular cut-off, for evidence of management bias.

• Performing a physical verification of key assets, including stock.

• Obtaining third-party confirmation of material bank and loan balances.

• Documenting and verifying all significant related party balances and transactions.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors of the entity.

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

Use of our report

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

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

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

Morgenrot Group PLC is a private company limited by shares incorporated in England and Wales. The registered office is Unit 2, Canary Way, Agecroft Commerce Park, Swinton, Manchester, M27 8AW.

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

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

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.

The company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report.

The company meets the day-to-day working capital requirements using an agreed overdraft facility as required. The directors' expectations, which include increases in turnover and taking account of reasonable possible changes in trading performance, indicate that the company should be able to operate within the level of its current facility.

The company is in regular contact with its finance providers. During these discussions about the company's future borrowing needs, no matters have been drawn to the directors' attention that suggest that the existing facilities will not continue on acceptable terms beyond the current arrangement.

Turnover represents sales of goods, excluding value added tax. Sale of goods are recognised when the company has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is fairly assured.

Goodwill has been amortised evenly over its estimated useful life of 10 years.

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.

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each statement of financial position date. The effects of any revision are recognised in the income statement when the change arises.

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 valued at the lower of cost and net realisable value on a first-in, first-out basis, after making due allowance for obsolete and slow moving items. Cost is based on the invoice value of goods plus a variable charge for duty, levy and delivery and stocking costs. Net realisable value is estimated selling price less costs to complete and sell.

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.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

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

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.

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

Dividend

Equity dividends are recognised when they become legally payable and are no longer at the discretion of the company.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below:

• Estimating the useful economic life of an asset and the anticipated residual value are considered key estimates in calculating an appropriate depreciation charge.

• In categorising leases as finance or operating leases, the directors make judgements as to whether significant risks and rewards of ownership have transferred to the company as lessee.

• Making judgement based on historical experience on the level of provision required for impairment of stock. Further information received after the statement of financial position date may impact on the level of provision required.

• Determining the recoverability of trade debtors is considered the key judgement in calculating the bad debt provision at the year end.

The turnover and profit before taxation are attributable to the principal activities of the company.

All turnover is generated in the United Kingdom.

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

Their aggregate remuneration comprised:

During the year, a total of key management personnel compensation of £404,237 (2024: £330,336).

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:

Tangible fixed assets includes assets held under finance leases or hire purchase contracts, as follows:

Freehold land and buildings and plant and machinery are pledged as security for the company's bank loan and bank overdraft under a fixed charge in favour of National Westminster Bank plc.

The bank overdraft and bank loan are secured by a fixed charge over the company's freehold land and buildings and plant and machinery.

Hire purchase liabilities included within obligations under finance leases are secured on 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.

The company has given a guarantee in favour of HM Revenue and Customs for £20,000 (2024: £20,000).

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:

The ultimate controlling party are members of the Plath family holding shares.