The directors present their annual report and financial statements for the year ended 31 March 2025.

The principal activity of the company continued to be that of operation of premium bars.

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

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

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

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

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

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

Equity injection and refinancing

Subsequent to the balance sheet date, the Company completed a successful equity raise totalling £2 million fully paid in cash by existing shareholders on 24 October 2025. This was executed through the issuance of 4,181 A4 ordinary shares at £478.36 per share. The proceeds are intended to support the continued growth and expansion of the Company’s operations.

In addition, the Company refinanced its existing debt facilities and secured an additional £2 million in funding from HSBC. The new facility enhances the Company’s liquidity and provides additional financial flexibility to pursue its strategic growth objectives.

These events occurred after the reporting period and do not impact the financial position as at 31 March 2025, but will be reflected in the subsequent financial statements.

Saffery LLP have expressed their willingness to continue in office.

The following table shows an estimate of the amount of CO2 emissions resulting from the purchase of energy for the Company's use for the financial year. The Company is considering ways to reduce its carbon footprint. Usage at each site is being reviewed and initiatives introduced to reduce emissions. The increase in energy costs in the financial year has impacted on margins and provides a further reason for the business to focus on this expense.

The calculations above are based on metered readings or estimates if readings are not available.

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

The Company has completed the transition to LED lighting and smart meters across all sites and continues to assess energy-saving technologies on a site-by-site basis. New developments incorporate defined travel management plans, LED task lighting throughout and recycling of up to 95% of construction waste.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors present the strategic report for the year ended 31 March 2025.

Since the investment in Arc Inspirations (“Arc”) by BGF in April 2022, the company has focused on delivering industry-leading growth whilst maintaining strong site-level and overall EBITDA performance. In line with this strategy, Arc continued to expand its estate, opening three new sites during the financial reporting period to 31 March 2025 (“FY25”), following three openings in the previous financial reporting period to 31 March 2024 (“FY24”).

Key developments included the launch of Manahatta Edinburgh in October 2024 — the first site in Scotland — followed by Manahatta Nottingham and BOX Sheffield in November 2024. The Nottingham and Sheffield openings, mark the second sites in both these cities and align with the multi-brand cluster strategy. All six openings across the two financial years are trading positively and contributing meaningfully to EBITDA. As part of the Business’s strategy to concentrate on prime city centre locations, four underperforming suburban sites were exited that no longer aligned with the long-term growth plans of the business.

As at 31 March 2024, the Company held two revolving credit facilities with HSBC (£5m and £4m respectively) to support capital expenditure on new sites. In January 2025, these were consolidated and converted into a more flexible £9m facility. This new facility allows more variable drawdowns and repayments in line the working capital and CAPEX requirements. HSBC and the shareholders remain committed to the business and supporting its growth over the next 5 years. At the year end, £1m remained undrawn, earmarked to support upcoming openings in FY26.

The Company continued to operate profitably in the year and maintained EBITDA at levels broadly consistent with the prior year, despite a slight decline in top-line revenue. This performance reflects management’s strategic focus on operational efficiency and profitability Despite market pressures such as inflation and the cost-of-living crisis, margin compression has been successfully managed through supplier negotiations, wage cost planning, and a relentless focus on delivering value. Customer satisfaction metrics remain strong, further demonstrating the impact of these efforts.

Arc has three successful brands which excite customers, and 1,000 great people committed to providing customers with a fantastic experience each time they visit one of the sites. This combined with a healthy pipeline of new sites, the development of which is supported by Arc’s strategic partnerships with BGF and HSBC, allows the Company to capitalise on market opportunities and growth over the next five years.

The management team’s key performance indicators vs the prior year are as follows:

FY25 was a transformational year for the Company, marked by strategic site evaluations, geographic expansion, and the continued strengthening of the three premium brands. The opening of Manahatta in Edinburgh was a significant milestone, marking Arc’s first presence in Scotland. In Nottingham and Sheffield, the geographical footprint was expanded with second sites, validating the cluster model and the ability of the differentiated brands to thrive in close proximity without cannibalising each other’s trade.

Arc’s vision is to operate 50 highly successful bars by 2030. To achieve this, the Company is focussed on targeting prime city centre locations with plans to open in London and Liverpool in FY26 and further sites in Cardiff and Edinburgh planned for future years. Key metrics to achieve profitable growth are site EBITDA and site EBITDA conversion (EBITDA/sales). The Company is proud to achieve growth in both these metrics year on year. Site EBITDA has grown from £9.3m to £9.7m and site EBITDA conversion from 19.6% to 20.5%.

The FY25 Christmas trading period was the most successful in the business’s history, boosted by the success of the new openings as well as pleasing sales growth in its existing sites. In the week to 15th December 2024, Arc reported record sales in excess of £2m for the week. . Total sales across the key Christmas weeks (2nd December – 5th January) were up 10.8% year on year. Delivery of these record sales is testament to the passion, commitment and flair shown by the operational teams and underpins business confidence in our brands, our teams and the market to accelerate our growth through future new openings.

Sales in the year were also boosted by a hugely successful Men’s Euro 2024 football tournament in June and July 2024. As a result of the Euros tournament, company-wide sales rose by £640k (16.4%) during the five-week tournament, particularly, but not exclusively, in BOX sites.. The Company also saw a 79% increase in like-for-like sales across its estate on the seven days that England played during the championships.

The Board is pleased with the Company’s performance in what has been a challenging market environment. The cost-of-living impact on the consumer continued to adversely impact the sector and consumer discretionary spending. The three distinct brands of BOX, Banyan and Manahatta are differentiated and appeal to different demographics and day parts and this allows the Company to leverage the respective brand strengths across the year and maximise sales opportunities, despite challenging market conditions. The Company has focussed on managing its cost base to hold Adjusted EBITDA stable year on year. Inflationary headwinds within gross margins, wages and overheads continued to be successfully navigated through competitive sourcing as well as better planning and forecasting of wage costs and overheads. The Company has also invested in its systems and processes to help support the future growth of the Company. During FY25, a new cloud-based finance system was implemented, Sage Intacct, which supports the robust financial reporting process.

Shortly after the year-end, the Business was extremely proud that the BOX site, which opened in Nottingham in November 2023, was awarded Best New Site at the prestigious Publican Awards. The Awards win also cemented a hugely successful first year of opening for the site, with sales in the first 5 months of opening to March 2024, exceeding Management’s forecast by £0.4m.

Looking into FY26, the Company is gearing up to open its first site in London in October 2025, which will be another milestone for the Company. This will be a BOX site on Shaftesbury Avenue in Piccadilly, and Arc is also planning a Manahatta in Liverpool in H1 2026. Further sites are planned in prime locations in Cardiff and Edinburgh in future financial years.

While FY26 is expected to remain challenging due to ongoing cost-of-living impacts, there are early signs of recovery forecast for late in the financial year, The Company will be impacted by increased labour costs stemming from the changes to National Minimum Wage and National Insurance thresholds , representing an estimated £0.9m increase in the annual labour cost for the Company. These anticipated cost challenges will be managed through enhanced sales forecasting, strategic labour deployment, cost control and smart ranging and pricing decisions.

The Company has successfully navigated market and economic headwinds over the last few years and with a continued focus on guest experience, brand strength and operational excellence, with profit and cash firmly at the forefront of business decisions, we have carefully balanced our growth ambitions. The Company is primed for the year ahead and will be well-positioned as consumer confidence returns and the sector returns to growth.

The key risk is considered to be a reduced level of sales. To mitigate the risk associated with a reduction in sales, the Company maintains strong control over its cost of sales and wage costs and expects to be able to take suitable mitigating actions to manage overhead costs, capital expenditure and cash flow in the event that sales fall below forecast levels to ensure compliance with its banking covenants.

The Directors' key decisions are made with due regard for the Company's key stakeholders and other matters as specified in s172 of the Companies Act 2006. When making decisions, each Director ensures that he/she acts in the way he/she considers, in good faith, would most likely promote the Company's success for the benefit of the members as a whole. It is important to the Board that the Company maintains its positive reputation for high standards of business conduct. The Directors consider that they act fairly as between members of the Company.

The Company's Directors act, at all times, to support employees to benefit from working for the Company. Employees are provided with regular communications outlining strategy and operational performance including the performance of their venue. Staff are encouraged to provide feedback to management. Staff participate in incentive programmes and our highest-performing employees are included in our employee awards night and other events.

Key management decisions include opening new outlets and refurbishing existing outlets in order to maintain and improve profitability, and to enhance customer experience. Management continually reviews the performance of our brands (Manahatta, BOX and Banyan) and regularly refresh the offering of each brand, taking feedback on a regular basis from customers. Investments have now been made across a wider geographical area as opportunities to open new sites arise.

Key suppliers' interests are managed through the year by way of a strong management reporting structure and clear lines of communication. Management has developed strong relationships with major suppliers over a number of years. The Company pays particular regard to the quality of products and services sourced from suppliers and balances this with the cost of these products and services particularly in times of significant inflation.

Our sites are mainly based in areas of higher population in the North and Midlands. The Company considers it plays an important role in providing community spaces for its customers to relax and enjoy themselves. Staff are encouraged to contribute to their local communities and to support charities that they consider have meaning to them and those in their lives. Due to local Leeds connections, the Company has provided support in the recent years to the Motor Neurone Disease Charity. The Company is conscious of its environmental impact and has looked to reduce its carbon footprint particularly at a time when energy prices and inflation have impacted profitability.

Management maintains a strong dialogue with the Company's investors. The investors either have Board representation or regular access to Board members and continue their focus of growing the business and its brands, and its future profitability.

On behalf of the board

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;

• 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 ARC Inspirations Limited (the 'company') for the year ended 31 March 2025 which comprise the income statement, 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 31 March 2025 and of its loss for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

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

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

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

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

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

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

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

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

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.

Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation.

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

ARC Inspirations Limited is a private company limited by shares incorporated in England and Wales. The registered office is 5th Floor, White Rose House, 8 Otley Road, Headingley, Leeds, West Yorkshire, United Kingdom, LS6 2AD.

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.

At the time of approving the financial statements, the directors are confident that the company has adequate resources to continue in operational existence for the foreseeable future, notwithstanding the net current liabilities of £4,273k at the balance sheet date. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements. The net current liabilities have arisen due to a planned use of cash reserves to fund capital expenditure and expansion at new sites.true

Forecasts

The directors' financial forecasts for the Company indicate that, taking account of reasonably possible downsides, the Company will have sufficient funds to meet its liabilities as they fall due and that the Company has sufficient headroom to comply with its banking covenants for the foreseeable future.

The key risk to the financial forecasts is considered to be a reduced level of sales. To mitigate the risk associated with a reduction in sales, the Company maintains strong control over its cost of sales and wage costs and expects to be able to take suitable mitigating actions to manage overhead costs, capital expenditure relating to new sites and overall cash flow in the event that sales fall below forecast levels to ensure compliance with its banking covenants.

The directors remain confident that the Company has adequate resources to continue to meet its liabilities as and when they fall due within the period of 12 months from the date of approval of these financial statements. The directors are also confident that the business will continue to see a strong sales performance relative to the sector in which it operates, and has retained the support of its funding providers, including additional funding received post year end. Based on the above indications, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.

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

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 fixed assets residual values, useful lives, and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indications of significant changes since the last reporting date.

At each reporting period end date, the company reviews the carrying amounts of its tangible 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).

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

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

Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to net realisable value.

Cash and cash equivalents are basic financial assets and include cash in hand 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, 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 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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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

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

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

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

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

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

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

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

The key accounting estimate and area of judgement within the accounts is the depreciation and impairment of the leasehold buildings.

The Company has tax losses carried forward due to significant capital allowances available in this financial year. The tax losses are treated as recoverable.

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 4 (2024 - 4).

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

The company had trading tax losses carried forward at the year end of £6,932,841 (2024 - £3,969,579).

Preference dividends in arrears total £798,604 (2024 - £444,410). These relate to the redeemable preference shares included within creditors due after one year.

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

More information on impairment movements in the year is given in note 12.

The bank loans are secured by fixed charges over the assets of the company and are made up of a Term Loan payable in quarterly instalments of £375,000 with an outstanding balance of £4,875,000 (less arrangement fees for statutory purposes), accruing an interest rate of 3.5% per annum above the Bank of England base rate, and an additional facility for capital expenditure totalling £8,000,000 with interest of 3% above the Compounded Reference Rate.

In addition, on 11 April 2022 BGF Investments LP and BGF UKEF LP provided an unsecured loan of £2,000,000 to the Company, at an interest rate of 9%. The loan is repayable in six equal half yearly instalments from 11 April 2027.

Other borrowings represents redeemable preference shares in the name of BGF Investments LP, classified as a liability. The preference shares accrue a dividend of 9% per annum and are repayable in six bi-annual instalments from April 2027 onwards.

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

The deferred tax liability above relating to fixed assets and the resultant deferred tax asset relating to tax losses are expected to reverse over the useful economic lives of the related assets. Other short term timing differences are expected to reverse within 12 months.

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.

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:

ATC Properties Limited is related to the company through the common directorship and ultimate ownership of the companies and trusts in which CD Ure has a beneficial interest.

During the year rent and other charges were charged for leased properties of £403,817 (2024: £840,123) to ATC Properties Limited.

At 31 March 2025 the company owed £87,144 (2024: £47,514) to ATC Properties Limited which is included in trade creditors.

During the year loan note compound interest payable to BGF amounted to £185,207 (2024: £220,706). The Company paid £56,454 (2024: £27,253) loan note interest to BGF. £798,604 (2024: £444,410) was accrued at 31 March 2025 in relation to the preference share dividends, with £383,048 being the cash interest element due as at March 2025, and the remaining £415,556 being the compound interest on the preference shares.

BGF charged annual fees of £95,481 (2024: £92,700) for Investment Management for the period to 31 March 2025. £6,121 (2024: £6,892) is included in prepayments at the year end.

Within the year there were transactions totalling £9,407 with BGF UKEF (2024: £1,934), none of which remained outstanding at the year end.

A special dividend of £548,660 on the ordinary shares owned and preference shares previously owned by C Ure prior to 11 April 2022 is payable at such time as the Company has distributable reserves. The special dividend has specific elements with interest payable at between 4 and 9%.