The directors present the strategic report for the year ended 31 October 2025.
The Group’s principal activity remains the installation and maintenance of mechanical and electrical systems to the Building Services Industry.
The year ended 31 October 2025 represents a significant step forward for the Group, both operationally and strategically. The business has delivered strong growth across its core activities, alongside the successful completion of a group restructuring and acquisition at year end, positioning the Group for its next phase of sustainable development.
Turnover increased to £23.54m (2024: £21.84m), representing growth of approximately 7.7%, reflecting continued demand across both Installation and Maintenance services and the strengthening of long-standing client relationships.
Profit before tax increased to £0.96m (2024: £0.59m), demonstrating improved operational performance and cost control across the business. Gross profit margins also improved to 27.5% (2024: 26.8%), continuing the Group’s track record of maintaining and enhancing margins while scaling activity.
This performance has been achieved while remaining cash generative, although the Group continued to generate cash, the working‑capital outflow was driven principally by the £3.5m loan provided to the ultimate parent undertaking to fund the sale consideration.
Operational Performance
The Installation division continued its strong trajectory, benefiting from increased activity with NHS Trusts, Local Authorities, and University partners. The Group has successfully secured and delivered a number of new projects, including specialist laboratory works, and continues to build a pipeline of opportunities with both new and existing clients.
The Maintenance division remained a stable and important contributor to the business, with a continued focus on long-term relationships and recurring revenue streams. Whilst some contract churn and procurement changes continue to occur across the sector, the Group has maintained a strong base of clients and continues to secure new maintenance opportunities.
The Group’s collaborative delivery model and reputation for quality have resulted in repeat business and further contract awards, underpinning future revenue visibility.
Management Buyout (MBO)
A key milestone during the year was the successful completion of a Management Buyout on 31 October 2025. Andrew McCracken and Paul Bass completed the acquisition of previous ultimate parent - BTU Holdings Limited and its subsidiaries from the former owner, Paul Merritt, who resigned as a director at that date.
This transition represents a natural evolution of the business, placing ownership firmly with the existing leadership team who have been instrumental in driving the Group’s growth in recent years.
The restructuring has simplified the ownership structure, removed legacy share option arrangements, and aligned management fully with the long-term success of the Group. It provides a strong platform for continued strategic growth and reinforces stability for employees, clients, and stakeholders.
The principal risks facing the Group remain consistent with prior years and include:
Economic pressures impacting public sector spending
Contract retention and re-tendering risk
Working capital requirements associated with growth
Recruitment and retention of skilled labour
These risks are actively managed through strong client relationships, diversified revenue streams, prudent financial management, and ongoing investment in people.
Following the successful MBO, the Company enters 2026 with a clear strategic focus on sustainable growth.
The Board’s priorities are:
Delivering high-quality service to existing clients.
Successfully retaining key contracts through upcoming re-tender processes.
Expanding the client portfolio through targeted new business opportunities.
Continuing to grow expertise in decarbonisation and hard facilities management with a particular emphasis on fabric maintenance opportunities alongside our M & E and HVAC contracts.
The Company sees significant opportunities in the continued transition towards low-carbon buildings and increased demand for integrated building services solutions.
With a strong order book, an experienced management team, and a proven delivery model, the Company is confident in its ability to continue growing without any discernible reduction in margins, while remaining cash generative.
The Board believes the business is well positioned to maintain its trajectory of sustainable growth into 2026 and beyond.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 October 2025.
The results for the year are set out on page 9.
Ordinary dividends were paid by BTU Holdings Limited amounting to £151,275 (2024 - £151,275). The director does not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Ward Williams, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
United Kingdom company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare the group and parent company 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 group and parent company, and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent 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 group and parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of BTU Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2025 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the company statement of financial position, the consolidated statement of changes in equity, the company statement of changes in equity, the consolidated statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Emphasis of matter
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 group's and parent 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
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.
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.
The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks. Owing to the inherent limitations of the audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK).
In identifying and assessing risks of material misstatement in respect or irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
We obtained an understanding of the legal and regulatory frameworks applicable to the group and the sector in which they operate. We determined that the following were the most significant: The Companies Act 2006 and UK corporate taxations laws.
We obtained an understanding of how the group are complying with those legal and regulatory frameworks by making inquiries to the management of the group. We corroborated our inquires through our review of correspondence during our audit work.
We assessed susceptibility of the group's financial statements to material misstatement, including how fraud might occurred. Audit procedures performed included:
identifying and assessing the design and implementation of controls management has in place to prevent and detect fraud;
understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
challenging assumptions and judgement made by management in its significant accounting estimates;
identifying and testing journal entries, in particular journal entries posted with unusual account combinations; and
assessing the extent of compliance with the relevant laws and regulations.
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 parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company's loss for the period was £175,680.
BTU Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 38 Weyside Road, Guildford, Surrey, GU1 1JB38 Weyside Road, Guildford, Surrey, GU1 1JB.
The group consists of BTU Group Limited and all of its subsidiaries since 31 October 2025. Up to 31 October, the group consisted of BTU Holdings Limited and its subsidiaries.
BTU Group Limited, which became the parent of the BTU Holdings Limited group following an internal group restructure on 31 October 2025, was incorporated on 18 August 2025. There is no comparative reporting period of the individual parent company.
The comparative reporting period of the group includes results for the full year-ended 31 October 2024, with BTU Holdings Limited being a parent prior to 31 October 2025 and BTU Group Limited being a parent on and post 31 October 2025.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
The consolidated group financial statements consist of the financial statements of the parent company BTU Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 October 2025.
All intra-group transactions and balances between the group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The consolidated group financial statements consist of the financial statements of the parent company BTU Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 October 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
As part of the group restructuring completed on 31 October 2025, BTU Group Limited became the new parent entity of the group. Accordingly, the consolidated financial statements reflect the results and position of the group under the new ownership structure from that date. The consolidated equity includes an adjustment to eliminate the pre‑acquisition retained earnings of the previously existing group, as these relate to the former ownership structure. This is presented within retained earnings in Statement of Changes in Equity as “pre‑acquisition retained earnings and other consolidation adjustments”.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
During the last financial reporting period, the group structure was further simplified, with BTU Group Limited becoming the Group’s ultimate parent company and BTU Holdings Limited immediate parent company. This group restructuring has had no impact on the Group’s ability to continue as a going concern as it was a mere strategical arrangement, and the going concern basis of accounting remains appropriate.
At the time of approving the financial statements, the directors have assessed the group’s ability to continue as a going concern. This assessment included a review of the latest management accounts, detailed cash‑flow forecasts and budgets prepared through to October 2026, expected trading performance, and the timing of key contractual receipts and payments.
As part of this assessment, the directors also considered the groups’s available funding facilities which were formally entered into after year-end, including the invoice‑discounting facility with Lloyds Bank, which provides a review limit of £1,750,000. The facility operates on a rolling four‑month funding period, with no fixed expiry date. The directors have reviewed the facility’s terms, renewal profile and notice arrangements and are satisfied that the facility remains available for the foreseeable future and continues to provide adequate working‑capital support. No issues have been identified that would indicate an inability to renew or continue accessing the facility beyond its current review cycle.
Although the formal budget period does not extend beyond October 2026, the directors consider that extending forecasts further is not required to support the going‑concern conclusion. The board has supplemented the formal forecasts beyond that date with an informal assessment of liquidity, including:
• analysis of historic cash‑generation trends
• expected working capital cycle including that of customer collections and supplier payments pattern
• stability of key customer relationships and contracted revenue
• availability of external funding as outlined above
Based on this combined review, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Additionally, the group companies support each other in terms of working capital funding and there is a formal support letter in place with sufficient liquid coverage behind. Accordingly, the financial statements have been prepared on a going‑concern basis.
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (upon delivery), 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 contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired in BTU Holdings Limited and its subsidiaries on 31 October 2025. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
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 recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset.
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 is estimated to be less than its carrying amount, the carrying amount of the asset 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 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 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.
The group 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 group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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 trade and other receivables and cash and bank balances, are initially measured at transaction price, less any impairment.
Other financial assets, including investments in equity instruments which are not subsidiaries, 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.
Listed shares investments
Investments in listed shares are measured at fair value, with changes in fair value recognised in profit or loss. Fair value is determined by reference to the quoted market price at the reporting date. Transaction costs are expensed as incurred.
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. 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 group transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
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 group after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, and loans from fellow group companies, are recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.
Trade payables 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’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 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 non-current 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.
The group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the group in an independent administered fund. Contributions payable are charged to the profit and loss account in the year they are payable.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the EBITDA model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
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 leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In determining appropriate depreciation rates to apply against property, plant and equipment, the director has used his knowledge and experience of both the group and the industry to asses the useful lives of each individual assets' category.
The useful economic life of an asset is the period over which the asset is expected to be available for use by the group. This estimate is based on the following factors:
Expected usage of the asset: Assessed by reference to the asset’s expected usage capacity when compared to other companies in the industry.
Expected physical wear and tear: Dependent on operational factors such as the number of repairs and maintenance program.
Technical or commercial obsolescence: Arising from changes or improvements in technological advancement of similar assets available on the market.
Historical usage of the asset not being aligned with expectations: Arising with over- or under- consuming the asset when compared with its assumed useful economic life.
The total turnover for the group for the period has been derived from its principal activities wholly undertaken in the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
Details of the company's subsidiaries at 31 October 2025 are as follows:
As permitted by the reduced disclosure framework within FRS 102, the company has taken advantage of the exemption from disclosing the carrying amount of certain classes of financial instruments.
Deferred consideration
As part of the acquisition of the Group during the year, the Company agreed to pay total consideration comprising both an initial cash payment and a deferred element. The deferred consideration represents an amount of £550,000 payable to the former shareholders under the terms of the purchase agreement.
The deferred consideration is unconditional, does not depend on future performance of the acquired business, and is therefore recognised as a financial liability at its present value in accordance with FRS 102 Section 11 – Basic Financial Instruments.
The liability is included within Other Payables in the consolidated balance sheet as at the acquisition date and at the reporting date. The amount will be settled in cash in accordance with the agreed payment schedule.
Deferred goodwill
As part of the same business combination, deferred negative goodwill has been recognised within accrued expenses and deferred income, amounting to £856,711. Further information has been presented in Note 28.
Non‑current deferred consideration
As part of the acquisition of the Group during the year, the Company agreed to settle a portion of the purchase price through deferred consideration payable to the former shareholders. An amount of £1,821,680 is due for settlement more than twelve months after the reporting date and is therefore classified as a non‑current financial liability.
The deferred consideration is recognised at its present value in accordance with FRS 102 Section 11 – Basic Financial Instruments. The liability is not contingent on future performance of the acquired business and represents a fixed obligation arising directly from the acquisition agreement.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse in future periods and relates to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Prior to 31 October 2025, the outstanding share options had an exercise price of £30.31 per share and a remaining contractual life of 8 years and 11 months.
During the year, the Group formally cancelled these options, rendering them invalid. As no further service or performance conditions were required and no additional share‑based payment expense arose, the previously recognised share‑based payment reserve of £176,072 has been transferred to retained earnings reserves.
No share based expenses were incurred (2024: £169,000).
On 31 October 2025 the group acquired 100% percent of the issued capital of BTU Holdings Limited.
Negative goodwill recognised on acquisition has been accounted for in accordance with FRS 102 Section 19. The excess of the fair value of net assets acquired over the consideration transferred has been assessed and confirmed.
Negative goodwill – acquisition accounting
Following the acquisition of BTU Holdings Limited on 31 October 2025, the Group recognised an excess of the fair value of the identifiable net assets acquired over the consideration transferred at fair value of £5,696,000 in accordance with FRS 102 Section 19.
The directors have reviewed the identification and measurement of the assets, liabilities and contingent liabilities acquired in accordance with the requirements of FRS 102 paragraph 19.24(a). This review confirmed that the recognised negative goodwill arises from the application of the standard’s measurement principles, rather than from any reassessment of the commercial terms of the transaction.
The contractual purchase price agreed in the SPA amounted to £6,250,000, comprising:
Initial consideration: £3,500,000, paid at completion
Deferred consideration: £2,750,000, payable in equal instalments to 2030
"Notional' Negative Goodwill explained
In accordance with the Group’s accounting policy for financial instruments, the deferred consideration has been recognised at its present value at the acquisition date. The liability was discounted at a rate of 8% using the effective interest method to reflect the time value of money.
As a result of this discounting, the consideration transferred (Discounted Cash Net Present Value as per FRS 102 requirement) at the acquisition date was reduced to £5,696,000. The difference between the contractual purchase price (£6,250,000) and the fair‑value consideration transferred (£5,696,000) has significantly contributed to the recognition of negative goodwill.
Accordingly, the negative goodwill arises mainly from the requirement under FRS 102 to measure deferred consideration at amortised cost, rather than from any reduction in the fair value or underlying economic value of the assets acquired.
The directors therefore consider that the significant part of the negative goodwill does not reflect the net book value or fair value of the underlying assets acquired, nor does it indicate that the business was purchased below its intrinsic value. Instead, it represents an accounting adjustment arising from discounting the deferred consideration in accordance with applicable standards.
In accordance with FRS 102 paragraph 19.24(c), negative goodwill has been recognised on the statement of financial position at the acquisition date and will be released to profit or loss over the periods during which the underlying non‑monetary assets are expected to be recovered. The Group has determined that a weighted average useful economic life of five years appropriately reflects the pattern of recovery of these assets. As the acquisition took place on 31 October 2025, being the reporting date, no amount has been recognised in profit or loss in the current year.
The unwinding of the discount on the deferred consideration is recognised as a finance cost over the term of the liability using the effective interest method, at the interest charge recognised during the year amounted to £175,680.
At the reporting end date the group 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:
The remuneration of key management personnel, which consists of the director of the holding company and fellow directors of its subsidiaries is as follows.
Rent of £106,500 (2024: £106,500) was paid to AFM Holdings (Limited) Pension Scheme regarding the investment property which is used by the group. This rent was charged on an arm's length basis and at a normal commercial rate.
In addition, during the year rent totalling £82,500 (2024: £82,500) was paid to AFM Limited Pension Fund Trust relating to a different property used by the group. This rent was charged on an arm's length basis and at a normal commercial rate.
Dividends totalling £165,165 (2024: £151,275) were paid in the year by the group in respect of shares held by the company's director and shareholder in their office prior to group acquisition.
BTU Group Limited has agreed to purchase the shares of the company from former director, Paul Merritt, who resigned on 31 October 2025. There is a charge to include the obligation to pay deferred consideration under the SPA.