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

The company is a wholly owned subsidiary of Pensave Limited and operates from four production units in the United Kingdom, selling its products Bedmax, Littlemax, Stockmax, Strawmax and Hotmax to customers throughout the British Isles, and globally.

The company's principal activities are the manufacture and supply of wood shavings to the equine industry. There have not been any significant changes in the company's principal activities during the year under review, although the company continues to develop new bedding products to give customers a wider choice, and it has recently launched Catmax a cat litter product. The directors are not aware, at the date of this report, of any likely major changes in the company's activities in the next year.

During the year the company continued to make investments in both plant and machinery and research and development. Operational Excellence has matured through all areas of the company and the benefits can be seen clearly. The result is an improved product measured in terms of sustainability, quality, output and efficiency.

The company holds a Royal Warrant from His Majesty The King and it is the UK's only equine bedding manufacturer to hold The British Equine Association's NOPS accreditation, which applies to all bedding products.

During the year, EBITDA was £1,276,271 (2024: £1,264,743).

2025 marks the 25th anniversary of the company, in which time the company has invested significantly in improving its products for the benefit of its customers, and expects to continue to do so in the future.

The company monitors all aspects of the costs associated to the business and these are reported regularly to the Board and Key Managers.

The company regards gross profit margin percentage and net profit on sales as key financial indicators. These are assessed against budgets and the previous year.

All production plants monitor their own performance by relevant measures such as unit costs of production, downtime and sales.

Key performance indicators are:

These reflect the continued investment in research and development and plant and machinery already highlighted.

The cost of energy remains volatile, albeit less so than two years ago, and may adversely affect gross margin. As such, we monitor these costs closely. Furthermore the long term availability of some energy sources may be adversely impacted, albeit this is partly mitigated by long term relationships with key suppliers. In addition, the weather in the UK is a significant factor in determining the level of horse bedding sales. The company sells less bedding during periods of dry and mild weather. The state of the economy also may impact the level of sales and thus the level of gross margin, albeit this is mitigated by a broad customer base including those overseas, and diverse product offering.

Bedmax is committed to the responsible manufacturing and sale of equine and animal bedding and sustainable heat logs. The company is focused on reducing its carbon footprint and works together with suppliers, customers and local communities to achieve this and to help deliver a more sustainable future. Its strategy aims to achieve a positive impact on the environment and society, whilst adhering to sound governance measures.

The company acknowledges the importance of sustainability and the impact of its operations on the environment. Working with Planet Mark, it continually reviews its practices and has introduced ways to improve its production processes and operating procedures to minimise its carbon footprint.

As a Planet Mark certified business, an annual carbon audit is completed, and since Bedmax became a Planet Mark certified business, it has reduced its carbon outputs year on year.

The company aims to reduce emissions to levels at which adverse impacts on the environment are minimised and to comply with and, where possible, to exceed statutory obligations. Initiatives include the purchase of timber from sustainable sources, the efficient use of energy during manufacturing process, the monitoring of emissions and noise and the processing of waste materials.

Whatever cannot be recycled is either recovered, reused, or disposed of responsibly. Bedmax operates in a socially responsible manner, leading by example in sustainable best practice within the equine industry. It applies strict quality controls in all it does and seeks to design, operate and maintain plants to the highest practicable standards in order to meet its environmental objectives.

For the production of Hotmax heat logs, made from the waste dust, Bedmax has been awarded the Sustainability Award at the Farm innovation show and the company has been used as a case study ‘Best Practice’ example as part of the Royal Warrant Holders’ environmental programme. The production of Strawmax straw pellet bedding uses straw, being a waste product of grain harvesting. In the main, the straw being used is fully traceable and produced within 20 miles of the production plant.

RESPONSIBLE TIMBER PROCUREMENT

Bedmax Limited assesses all timber suppliers so it can identify where its timber has been sourced. Credible evidence of good forest management is sought from our suppliers of timber to ensure that the timber originates from well-managed forests.

EMPLOYEES

As a company across all departments, staff are required to work to “Operational Excellence” Standards. The company's policy is to engage with employees, through regular consultation and discussion on matters likely to affect employees' interests. Information on matters of concern is shared with everyone, and in doing so the aim is to achieve a common awareness on the part of all employees, of the financial and economic factors affecting the company's current and future performance.

INVESTMENT IN PEOPLE

For Bedmax, the ongoing professional and practical development of its staff is paramount. The company recognises that every business depends on good people and ensures that all employees have an annual personal development review from which a ‘Training Needs Programme’ is developed. All staff are trained to the highest standard using internal and external training resources to achieve this. Many employees have benefitted from external mentoring and are now able to pass on these skills to others.

The company ensures that its customers and end users are kept up to date and properly informed on all the key issues affecting its products. This information is provided by a team of sales managers covering the whole of the UK and export markets who are regularly briefed on industry information. In association with equine representative bodies and our own customers, Bedmax delivers training programmes. One of which is accredited as the UK’s only AMTRA course specifically related to equine bedding. In addition it collaborates with industry representatives such as the British Horse Racing Authority, the British Equine Trade Association and the British Grooms Association to deliver this training digitally. Its sales team regularly delivers external face to face training to equine students via educational establishments about the benefits and importance of bedding in stables and not just Bedmax’s specific benefits.

The company recognises and acknowledges that social and environmental responsibilities are important to both productivity and financial results. The company appreciates that it makes an impact on both the local and wider environment and communities and strives to reduce this impact year on year. The challenge is to continuously meet customer demands, improve performance and maintain a highly motivated and trained workforce.

We are continuing to explore new options and alternatives to keep enhancing Bedmax’s impact on the environment and support within the industry. As the UK market leader for the manufacture of equine bedding Bedmax is recognised as the voice of the equine bedding industry.

COMMUNITY SUPPORT

As a company with business interest across the whole of the United Kingdom, Bedmax is committed to building close links within the vibrant local and equine communities, providing goodwill, time and expertise where we can. In addition, as part of their roles, staff are each given the opportunity to volunteer two days per year. The company believes in contributing to the well-being of the communities and sectors in which it operates and we support these at several levels and through various initiatives. During the last twelve months these have included The North Northumberland Voluntary Awards, The Ebony Inner City Riding Club in Brixton, Bellview Resource Centre, The Glendale Agricultural Society, the War in Ukraine equine support initiative, local forest schools and Racing Welfare. We have also supported several organisations at a local level within the areas in which we operate.

As part of the 25th anniversary of the company in 2025, a special fundraising campaign has been established in support of The Freeman Hospital Heart and Lung Transplant Association. As part of the fundraising campaign, part of the companies key management team took part in a 400 mile cycle starting at the company's production plant near Andover, calling in at their production plant in Caunton, Nottinghamshire, and finishing at the original manufacturing site Greymare in Northumberland.

By order of the board

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 the manufacture and supply of wood shavings and straw pellets, principally to the equine industry, and production of a biomass product.

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

An ordinary dividend was paid amounting to £Nil (2024: £150,000).

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

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

The company is exposed to cash flow interest rate risk on its bank credit facilities.

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

The company is heavily committed to research and development activities in order to continually improve product quality, efficiency and sustainability.

The directors are committed to expanding the company's production capacity over the forthcoming year.

Greaves West & Ayre were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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 Bedmax Limited (the 'company') for the year ended 31 March 2025 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 March 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.

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

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

• the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non- compliance with applicable laws and regulations;

• we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the manufacturing sector;

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including legislation such as the Companies Act 2006, taxation legislation, employment legislation and Health & Safety regulations;

• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, contacting the entity’s solicitor for any details of non-compliance and inspecting current year legal expenditure; and

• identified laws and regulations of particular relevance were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, including any fraud associated with revenue recognition, we:

• performed analytical procedures to identify any unusual or unexpected relationships;

• tested journal entries to identify unusual transactions;

• assessed whether judgements and assumptions made in determining the accounting estimates set out in accounting policy note 2 were indicative of potential bias;

• traced a sample of sales orders obtained from Business Central report to customer signed delivery notes and sales invoices to nominal ledgers;

• traced a sample of sales orders dispatched around the year-end from customer signed delivery notes to invoice to ensure cut-off is operating correctly;

• traced a sample of sales credit notes throughout the year and around the year-end in order to confirm their commercial justification; and

• evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

• agreeing financial statement disclosures to underlying supporting documentation;

• reading the minutes of meetings of those charged with governance;

• enquiring of management as to actual and potential litigation and claims against the company;

• reviewed health and safety audit reports from health & safety compliance manager for all three production plants; and

• reviewed accident & near miss reports from compliance manager.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit.

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 profit and loss account 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.

Bedmax Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Old Smithy, Detchant, Belford, Northumberland, NE70 7PF.

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.

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: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;

• Section 26 ‘Share based Payment’: Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

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

The financial statements of the company are consolidated in the financial statements of Pensave Limited. These consolidated financial statements are available from its registered office, Detchant, Belford, Northumberland NE70 7PF.

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.

Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.

When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

In respect of revenue and costs associated with Pallets, when pallets are received from the supplier, they are initially recognised as stock at cost. When the pallet is shipped to a customer site along with the goods, the pallet is derecognised from the inventory. A pallet ledger is maintained and therefore, a pallet debtor and a sale in respect of the costs of pallets returnable, less any provision for impairment (recognised in profit & loss account immediately) is recognised at this point. At the reporting year-end date, average rate of return of pallets over a number of years is calculated to recognise the expected number of pallets to be returned which are located at customer site at the year-end. Based on the expected return of pallets, a further provision is recognised for pallets not expected to be returned at the year-end against pallet debtor. Cost of sales is debited for the provision in the profit and loss account.

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

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

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

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

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

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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

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

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks.

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

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

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

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

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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

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

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

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 balance sheet 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.

Research and development expenditure

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

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

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

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

Timber stock is measured at each monthly stock take to give an estimate of the volume of timber. Timber stack width, length and height are measured however this measurement includes air spaces between the logs and therefore, an industry wide conversion factor of 0.6 is used with expert knowledge from site managers and approval from the directors. This reduces the volume of timber stock by 40% at each monthly stock count.

An overhead absorption rate is used to add fixed production costs to the costs of finished goods. The overhead absorption rate is based on a one year average cost of plant and machinery upkeep and depreciation costs and 20% of remaining overheads (except finance costs) per bags produced per annum.

The total cost of research and development that has been recognised as an expense through the profit and loss account is £390,190 (2024: £216,983).

Included within other services is the supply of £11,540 (2024: £33,582) of IT equipment.

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

Their aggregate remuneration comprised:

Contributions payable during the year have been recognised in the Profit and Loss Account. At the Balance Sheet date £13,117 (2024: £3,159) had not been paid over and is included in creditors.

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2024: 1).

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:

On transition to FRS102 one of the company's properties was recognised at fair value, with the excess taken to a non distributable reserve. This is used as deemed cost going forward under transitional relief.

The non-distributable reserve is disclosed in note 22.

If the property was measured using the original cost, the carrying amounts would be as follows:

The Royal Bank of Scotland plc holds both a floating charge over the company's assets and a first charge over the company's freehold property at Caunton in Nottinghamshire.

The finance leases are secured over the assets to which they relate.

The factoring account represents amounts advanced against trade debtors under an invoice discounting agreement. This is settled as the debts are received.

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. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

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

The deferred tax liability set out above is expected to reverse within 5 years and relates to accelerated capital allowances that are expected to mature within the same period.

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 year end £13,117 (2024: £3,159) had not been paid over and is included in creditors.

The ordinary shares have full voting, dividend and capital distribution (including on winding up) rights attached to them; they do not confer any rights of redemption.

The non distributable reserve has arisen on the revaluation of the company's freehold land and buildings as detailed within note 13. The movement during the year relates to the excess depreciation over that which would have been charged under the historical cost approach.

The company is party to a cross guarantee arrangement securing overdraft and loan facilities for other members of the Pensave Limited group.

Operating lease payments represent rentals payable by the company for freehold land and buildings. Lease terms range from 5 to 24 years. All renewals must be agreed with the Lessor.

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:

Amounts contracted for but not provided in the financial statements:

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

The company is party to a cross guarantee detailed in note 24. The guarantee secures the bank overdraft and loan facilities of other members of the Pensave Limited group.

The company is controlled by its parent company, Pensave Limited, which owns 100% of its ordinary shares. The parent company is registered in the United Kingdom with registered office The Old Smithy, Detchant, Belford, Northumberland, NE70 7PF.