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

The principal activity of the company continued to be that of distribution of fitness training equipment.

The company is a wholly owned subsidiary of WaterRower Holdings Limited, within which the results of the wider group are consolidated. Although the company is the parent undertaking of WaterRower Inc., it has taken advantage of the exemption under section 400 of the Companies Act 2006 and, accordingly, these financial statements and the strategic report have been prepared on a company-only basis.

During the year ended 31 March 2025, the company operated in a challenging economic environment. Trading conditions during the year were affected by persistent inflationary pressures, increased input and operating costs, the introduction of tariffs, and broader global trade adjustments, together with ongoing geopolitical uncertainty arising from the war in Ukraine. These factors constrained consumer and commercial spending and placed pressure on margins.

Despite this backdrop, the Board remains encouraged by the continued progress against its long-term vision and its commitment to operating as a sustainable supplier within its principal markets.

The Board of Directors continued to focus on maintaining high operational and governance standards. The company consistently delivered high-quality products to its customers, supported by robust internal control systems and a strong organisational culture aligned with its mission to provide outstanding products and services.

Although the company reported a loss for the year ended 31 March 2025, sales increased year on year and trading performance remained in line with the approved budget.

Inflationary pressures and reduced discretionary consumer spending contributed to margin compression and an operating loss of £139,277 (2024: £299,623). In response, the Board implemented targeted cost control measures and regularly reviewed pricing strategies. Gross profit increased to £1.74 million; however, the gross profit margin declined to 40.30% (2024: 41.82%), reflecting the partial absorption of increased input costs to support demand.

Ongoing disruption within global supply chains remained a risk to product availability and cost of sales. To mitigate this, the company diversified its supplier base and maintained higher buffer stock levels, supporting continuity of supply while increasing inventory holding costs.

The company carefully considers its principal risks and manages these risks by continual monitoring and assessment, policy-setting, and compliance with all legal, statutory, and fiduciary obligations. The company's operations expose it to various risks. Policies and safeguards are set to limit such risks to negligible levels. The main principal risks can be identified as follows:

Challenges of Economic Downturns and Inflationary Pressure:

Facing economic downturns may result in diminished consumer spending, affecting sales, while inflationary pressures can escalate operational costs. To counter these risks, management employs strategies such as diversifying product offerings to appeal to various market segments. Additionally, cost-control measures are implemented, and pricing strategies are regularly reassessed.

Supply Chain Disruptions and Transportation Delays:

The company's reliance on global supply chains exposes it to potential disruptions and delays. In response, management takes proactive steps by establishing alternative suppliers and cultivating strategic partnerships. Maintaining buffer stock levels and vigilantly monitoring supply chain resilience further mitigates these risks. The implementation of advanced forecasting and logistics technologies contributes to enhancing the overall robustness of the supply chain.

Regulatory Compliance, Including Health and Safety:

Compliance with health and safety regulations is paramount, as failure to adhere may result in legal and reputational repercussions. To address this, the management consistently updates compliance protocols, conducts thorough training for staff, and maintains ongoing communication with regulatory bodies. Stringent quality control measures are implemented throughout the manufacturing process to uphold regulatory standards and safeguard the company's reputation.

Ongoing Research and Development:

The company is dedicated to delivering cutting-edge technology equipment to ensure the best training experience. However, rapid technological changes and shifting consumer preferences may render current products obsolete. In response, the company invests significantly in continuous research and development to stay ahead of market trends. Regular assessments and upgrades to product lines are conducted, and customer feedback is actively sought to drive ongoing innovation.

Currency Risks:

Operating in multiple countries exposes the business to fluctuations in currency exchange rates. To mitigate this risk, the management takes proactive measures, maintaining currency balances in various currencies. This approach is designed to minimise realised losses over time, providing a strategic means of navigating currency-related challenges.

Further assessment and mitigation of financial instruments risks are presented in the directors' report.

The company has continued to make solid progress in recent years, delivering improved results through the ongoing execution of its growth strategy and achieving a reasonable return from trading activities.

For the year ended 31 March 2025, turnover increased by £0.99 million to £4.31 million (2024: £3.32 million). Gross profit increased to £1.74 million (2024: £1.39 million); however, the gross profit margin decreased to 40.30% (2024: 41.82%), reflecting the impact of cost inflation that could not be fully passed on to customers. Royalty income decreased from £626,563 in 2024 to £425,683 in 2025, primarily as a result of reduced volumes in an inflation-constrained market.

Continued investment in research and development remains central to the company’s long-term strategy to support innovation and future revenue growth. Expenditure on research and development increased to £240,099 during the year (2024: £168,320), contributing to an operating loss of £139,277 (2024: £299,623). The directors consider this level of investment appropriate to mitigate ongoing cost pressures and to strengthen the company’s position for future growth.

As at 31 March 2025, the net asset position was strong. The company's directors are of the opinion that the company and its group will continue to possess the ability to meet their financial obligations as they fall due and therefore consider it appropriate to prepare the financial statements on the going concern basis.

Overall, the balance sheet remains strong and well positioned for future growth from both a liquidity and capital perspective.

The board receives monthly updates from all divisions across the company to track and assess KPI’s against targets set each year. Non-financial KPI’s include satisfaction levels from customers. Monthly financial KPI’s include turnover, gross profit (value and percentage) and net profit.

For the year under review, the results were as follows:

- Turnover £4,312,083 (2024: £3,317,613)

- Gross profit £1,737,825 (2024: £1,387,423)

- Gross profit margin: 40.30% (2024: 41.82%)

- Operating loss £139,277 (2024: £299,623)

Waterrower (UK) Ltd and its subsidiary is a manufacturer and provider of high quality rowing exercise machines, hand built using ethically sourced materials, with clientele based worldwide. The group has considerable financial resources, with substantial working capital cash balances available to invest in developing new innovative products and maintaining the supply of exceptional products and services, and innovative solutions for its clients. The group is dedicated to developing products and services that will consistently enhance customer satisfaction during the training process.

The directors recognise that employees are fundamental to the company’s success and are committed to the involvement and development of employees at all levels. We will continue to invest in and develop our employees. Our aim is to be an employer of choice, to provide our employees with challenges and to support career progression, to reward and recognise their contribution, whilst ensuring diversity across the workforce. We are committed to supporting our employees by fostering mental well-being and promoting a healthy work-home balance.

We constantly try to develop long term relationships with our suppliers without whom the group would not be where it is today. By establishing a robust network of support, we ensure that clients have access to the assistance they require.

Our commitment to delivering outstanding service and unique products to our clients has resulted in the company’s exceptional reputation for quality and service. The reliability, quality, efficacy of solution, pricing strategy, the depth of products and services offered, the customer experience, the technical expertise and security of our products makes our company an important competitor in this sector.

We understand the impact we have on our environment. We are trying hard to be a responsible business and to control our environmental footprint, investing in ethically sourced materials, consistently making efforts to recycle and reuse.

We are subject to various local laws and regulations, administrative practices regulating matters such as data privacy, consumer protection, procurement, equal employment, the national minimum wage and the environment, amongst others.

Economic conditions are expected to remain challenging, shaped by persistent inflation, elevated interest rates, and global uncertainties. Inflationary pressures, though projected to moderate, could still weigh on consumer spending and business costs. Central banks, including the Bank of England, are expected to keep interest rates higher for longer, potentially impacting borrowing costs and investment across industries. Further, geopolitical uncertainties and supply chain disruptions may continue to affect markets, contributing to price volatility and operational risks. These factors suggest a cautious economic outlook, with the company likely needing to balance cost management and strategic investments to navigate these economic challenges.

On behalf 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 that of distribution of fitness training equipment.

The results for the year are set out on page 9.

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

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

The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.

The company’s principal financial instruments can include derivative financial instruments, the purpose of which is to manage currency risks and interest rate risks arising from the company’s activities, and bank overdrafts, loans and corporate bonds, the main purpose of which are to raise finance for the company’s operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations. In accordance with the company’s treasury policy, derivative instruments are not entered into for speculative purposes.

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 fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The company can use interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.

The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity can involve the use of foreign exchange forward contracts.

Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the board. 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 has invested £240,099 (2024: £168,320) in research and development activities undertaken in the course of seeking and delivering innovative solutions for our clients.

The Strategic Report contains details of our business relationships with our customers, employees and suppliers.

In accordance with the company's articles, a resolution proposing that PK Audit LLP be reappointed as auditor of the company will be put at a General Meeting.

The company is exempt from the carbon and energy reporting requirements, as it does not meet the applicable threshold.

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

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.

We have audited the financial statements of Waterrower (UK) Ltd (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 loss for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

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

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

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

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

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

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

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

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 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 responsible individual 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 the directors and from our commercial knowledge and experience of the sector; we focused on those laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;

• we assessed the extent of compliance with the laws and regulations identified above through enquiries of management;

• we enquired the company's solicitor as to whether there has been any litigation and claims;

• identified laws and regulations were communicated within the audit team who 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 and their knowledge of actual, suspected and alleged fraud; and

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

Based on our understanding of the company and industry, and through discussion with the directors and other management, we identified that the principal risks were in relation to:

• management bias in relation to the risk of management override of controls and transactions;

• management assumptions in the accounting estimates associated with the recoverability of intercompany balances, trade debtors and loans;

• the risk of not identifying related party transactions and performance of transactions outside the normal course of business;

• revenue recognition and cut off;

• existence and condition of stock; and

• risk associated with the completeness and accuracy of provisions and costs.

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

• performing analytical procedures to identify any unusual or unexpected relationships and transactions;

• auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;

• assessing whether judgments and assumptions made in determining the accounting estimates were indicative of potential bias;

• agreeing disclosures within the financial statements to underlying supporting documentation;

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

• enquiring of management, those charged with governance and the entity’s solicitors around actual and potential litigation and claims;

• for an appropriate sample of transactions, identifying the revenue recognition point for the sales of goods, and testing for completeness by ensuring the transaction was properly recorded in the sales nominal ledger account;

• enquiring of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations;

• observing physical stock at the year end and assessing the stock conditions;

• reviewing correspondence with HM Revenue and Customs, bankers and the company’s relevant costs; and

• discussing the existence of related parties with management and obtaining confirmation of inter-company balances.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Waterrower (UK) Ltd is a private company limited by shares incorporated in England and Wales. The registered office and principal place of business is Unit 4 The Valley Centre, Gordon Road, High Wycombe, Bucks, HP13 6EQ.

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

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

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

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

Waterrower (UK) Ltd is a wholly owned subsidiary of Waterrower Holdings Limited and the results of Waterrower (UK) Ltd are included in the consolidated financial statements of Waterrower Holdings Limited which are available from the company's registered address.

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.

Turnover is recognised at the fair value of the consideration received or receivable for goods 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.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

The company recognises revenue from the following major sources:

• Sale of fitness training equipment

• Royalty income

• Dividends

• Interest

The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:

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

Revenue from royalty income is recognised on an accrual basis in accordance with the terms of the underlying agreements and is based on worldwide sales. The company recognises royalty income when it is earned, typically when the right to receive the royalty is established. This occurs based on actual sales, once the significant risks and rewards of ownership of the goods have transferred to the buyer, usually upon dispatch of the goods.

Dividend income from investments is recognised when the shareholder's right to receive payment has been established.

Interest income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

The stock is measured on a average price basis.

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

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

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

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

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

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.

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.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

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.

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.

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.

Warranty provisions

The company offers its customers the right to return defective products under the standard base warranty. During a financial period, the company may receive product returns from customers for various reasons. All costs to repair under the standard warranty are absorbed by the company. The company provides a provision for expected costs of returns under warranty, the calculation of which requires judgements to be made. The provision is calculated using the average historical rate of combined warranty components, service and freight costs as a percentage of sales. The company does not offer extended warranties.

Legal provisions

The company may be involved in legal where the outcome is difficult to estimate. Specifically, the company’s subsidiary, Waterrower Inc, is currently facing a legal claim alleging copyright infringement, which also extends to the company. The company is vigorously contesting the claim and believes it has a strong basis for defending its position.

As at 31 March 2025, and up to the date of approval of these accounts, the case remains ongoing, and no reliable estimate of the outcome or any potential financial impact can be made. Accordingly, no provision has been recorded in the financial statements in relation to this claim. The company will continue to closely monitor developments and will recognise a provision if it becomes probable that an outflow of economic resources will be required to settle the claim and a reliable estimate can be determined.

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

Turnover by geographical markets has not been disclosed, as in the opinion of the directors the disclosure of any of this information would be prejudicial to the commercial interests of the company.

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

Their aggregate remuneration comprised:

The actual credit 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:

Details of the company's subsidiaries at 31 March 2025 are as follows:

Waterrower (UK) Limited holds money on deposit on behalf of Waterrower International LLC. Such amounts are included as part of cash at bank and in hand and, as at 31 March 2025, amounted to £2,842,290 (2024: £4,586,856). The corresponding liability to Waterrower International LLC is included as part of other creditors stated above and is repayable on demand.

The company provides base warranties on sold products that allows customers to return defective products and parts. Pursuant to these warranties, the company repairs or replaces products and parts that are considered defective at its own expense. The estimated costs for warranty components, related service expenses, and freight are accrued based on historical data regarding the costs of products returned under warranty in relation to sales revenue.

Other provisions

During the year, the commercial provision of £12,500 (2024: £12,500) was settled, and no further liability remains in respect of this matter. The legal provision amouting to £60,000 (2024: £60,000) has been adjusted accordingly to £47,383 and reclassified as a liability, based on the additional evidence provided by the post–year-end.

Additional information regarding other contingent liabilities is presented within the financial commitments, guarantees and contingent liabilities note.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The company's subsidiary Waterrower Inc is subject to a legal claim alleging copyright infringement, which also extends to the company. The Waterrower group is vigorously contesting the copyright claim and believes that it should be successful in defending its position. As at 31 March 2025, and to the date of approval of the accounts, the case is ongoing, and the outcome cannot be reasonably estimated.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

The parent company and ultimate controlling company is Waterrower Holdings Limited, a company incorporated in England and Wales and the ultimate controlling party is Peter King.