Company Registration No. SC063233 (Scotland)
WALKER'S SHORTBREAD LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
WALKER'S SHORTBREAD LTD
COMPANY INFORMATION
Directors
Justin P D Stead (Chairman)
(Appointed 20 October 2025)
Joseph N Walker
Stephen L McCarney
Norman Ross CA
Bryony H Walker
(Appointed 22 May 2025)
Jacqueline B Walker
Richard J Walker
Secretary
Norman Ross CA
Company number
SC063233
Registered office
Aberlour House
Aberlour-on-Spey
AB38 9LD
Auditor
Johnston Carmichael LLP
227 West George Street
Glasgow
G2 2ND
Solicitors
Stronachs LLP
28 Albyn Place
Aberdeen
AB10 1YL
WALKER'S SHORTBREAD LTD
CONTENTS
Page
Strategic report
1 - 5
Directors' report
6 - 9
Directors' responsibilities statement
10
Independent auditor's report
11 - 14
Group profit and loss account
15
Group statement of comprehensive income
16
Group balance sheet
17
Company balance sheet
18 - 19
Group statement of changes in equity
20 - 21
Company statement of changes in equity
22 - 23
Group statement of cash flows
24
Notes to the financial statements
25 - 47
WALKER'S SHORTBREAD LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
- 1 -

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

Business review

The year under review was one of consolidation for the Group, set against a backdrop of continued external challenge. While the business remained resilient, trading conditions in 2025 were more demanding than in the prior year, reflecting a combination of customer buying patterns, commodity pricing challenges and wider macroeconomic uncertainty, including inflationary pressure, across most key markets.

Group turnover for the year was £197m. Performance was lower than the prior year’s record result, which benefitted in part from customer stock‑building activity, particularly around peak seasonal periods in late 2024. During 2025 customer ordering patterns were more cautious and aligned more closely to underlying demand. This was most evident and impactful in the US market where trading conditions remained complex, including the effects of tariff implementation.

The Group’s operating profit reduced to £6.9m due to significant cost pressures experienced during the year. Commodity and utility price escalation, alongside ongoing labour cost inflation and the increase in employers’ national insurance, as well as the impact of the aforementioned tariffs, adversely impacted margins. While this outcome reflects the challenging trading environment, the Board considers the result to be robust in the context of the conditions faced during the year.

The Board remains committed to continuous improvement across all operations and has continued to invest in improvement initiatives, production capability and long‑term capacity planning. Capital expenditure during the year was aligned with these objectives and with the Group’s longer‑term growth ambitions.

The Group’s balance sheet remains strong, with good liquidity and significant cash resources available at year end. This reflects planned investment and capital allocation decisions taken by the Board as they keep the Group’s financial position under close review.

Global demand for the Walker’s brand remains strong with around 50% of produce being exported. During the year, the business further invested in brand development and positioning as “Scotland at its Finest”. Notably, the Group appointed its first ever Brand Ambassador, Sir Andy Murray, to support the continued elevation of the Walker’s brand across key markets.

In late 2025, Bob Brannan stepped down as Chairman after a successful and eventful 7-year tenure. The Board and the Shareholders are on record for thanking Bob for his significant contribution.

The Group and the Board also took great pride in announcing Justin Stead as our new Chairman following a very robust recruitment and interview process. During the year, there was also further Board change with the very welcome, deserved and poignant appointment of Bryony Walker as Commercial Director.

The Board also wishes to acknowledge the continued commitment and dedication of the Group’s workforce, whose contribution has remained crucial in navigating a challenging trading year while maintaining the quality, reputation and values of the Group and the Walker’s brand.

WALKER'S SHORTBREAD LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 2 -

Turning to the particulars of the year:

- Sales reduced by £4m (2%) to £197m.

Comparative performance reflects, in part, customer stock‑building activity in the prior year, alongside more cautious ordering patterns during 2025. Trading was also impacted by challenging environments across our international markets, as evidenced through the movement seen in the geographical turnover note.

- Operating Profit reduced to £6.9m (2024: £16.1m).

Commodity and utility price escalation and continued labour cost pressures adversely impacted margins during the year. The Group continued to respond proactively to these challenges through ongoing focus on operational efficiency and cost control.

Operating margin reduced accordingly. As previously noted, this remains below the level the Board considers to be an acceptable return on the assets employed however acknowledge the difficult trading conditions of the year. Despite the external uncertainty, this assessment remains unchanged.

- Cash outflow of £4.4m

The Group continues to maintain a strong balance sheet and good liquidity. The cash outflow during the year primarily reflects planned capital investment in support of the Group’s long‑term capacity and operational efficiency objectives.

Future outlook

Looking ahead, the external trading environment remains uncertain, with cost inflation, labour availability and geopolitical factors continuing to present challenges. The Board remains focused on those areas within its control: operational efficiency, disciplined capital investment, cost management and continued investment in people and brand.

While short‑term trading conditions remain demanding, the Board remains confident in the long‑term prospects of the business, underpinned by the strength of the Walker’s brand, a robust balance sheet and a clear strategic focus.

We continue to operate in a sustainable and environmentally conscious manner, whilst creating employment in the heart of the Highlands of Scotland, delivering for our shareholders, investing in the future and maintaining financial discipline.

Principal risks and uncertainties

The day-to-day management of the business and execution of the Board’s strategy exposes the Group to a variety of risks and uncertainties, all of which are tempered by the maintenance of a robust balance sheet. The principal areas of exposure are broadly grouped as follows:

Political risk and economic uncertainty

Political risk and economic uncertainty are persistent features of the global economy, often going ‘hand-in-hand’, and they exist in many of the markets in which we operate. With a proven track record of exporting to over a hundred countries across the globe the Board believes the Group is well placed to overcome these existing and emerging challenges and continue to operate in a profitable manner.

Inflation volatility has increased uncertainty around input and labour costs. In response the Group has adapted its operating approach through enhanced cost visibility and tighter coordination across commercial, operational and finance teams. This approach continues to evolve to ensure the business remains responsive to changing inflationary conditions.

Revenue and customer relationships

We operate in highly competitive markets, with the potential for customers to switch to other brands. The management of customer relationships and expectations by our sales teams are critical in this regard, as is the fulfilment of orders within agreed timelines. These risks are mitigated by the operation of a broadly-based business with a diverse and loyal customer base with sales not only in the UK but in a significant number of markets across the world.

WALKER'S SHORTBREAD LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 3 -

Supply chain

Where possible, we limit our exposure to price volatility and raw material availability through competitive tendering and longer-term contracts. We remain committed to using only the very finest ingredients available, sourced locally where possible, and believe our focus on the maintenance of mutually beneficial relationships with customers and suppliers alike remains a key differentiator.

Labour costs and availability

Labour availability continues to present challenges, particularly in the context of ongoing sector-wide shortages and our geographical location. While the structural constraints arising from the post-Brexit immigration framework and the aftermath of the pandemic have stabilised, their long-term impact on the labour market persists.

In response, we have further enhanced our recruitment and retention processes, are progressing automated solutions where feasible and continue to review our remuneration and benefit packages to ensure competitiveness in the market.

Foreign exchange

The Company’s reported profits and net assets are affected by fluctuations in foreign exchange rates. The risks associated with transacting in foreign currencies are mitigated using forward foreign currency contracts in accordance with a Board approved hedging policy. Derivative financial instruments are not used for speculative purposes.

Cyber security, data protection and emerging technologies

The Group relies on a range of information technology systems to support its operations. As with all organisations, there is an ongoing risk of cyber‑related incidents, including unauthorised access, system disruption or data loss. These risks are mitigated through a combination of technical controls, policies, staff awareness training and regular review of security arrangements.

During the year the Group has also begun early consideration of the potential opportunities and risks associated with emerging technologies, including artificial intelligence. While such technologies may offer efficiencies and benefits over time, they also give rise to additional considerations around data security, governance, ethical use and regulatory compliance. These areas continue to be monitored as part of the Group’s broader approach to information security and risk management.

Liquidity, cash flow and interest rates

The strength of the Company’s balance sheet and level of cash resources contained therein gives us only a limited exposure to liquidity, cash flow and interest rate risks.

Credit

These are mitigated through the proactive management of the Company’s working capital resources and the maintenance of a diverse and widely spread customer base.

Pension provision

In line with the Government’s push to widen access to workplace pensions, all our UK-based employees are able to join the Company’s defined contribution pension scheme.

As an employer with a long-standing commitment to our people, we believe that it is still right to promote pension saving and, on this point, we are pleased to report that the opt-out rate of 1.4% remains at the lower end of the national average for a Company of our size.

Defined benefit pension scheme

The Walker's Shortbread Limited Retirement Benefits Scheme remained in surplus as at 31 December 2025.

The scheme was closed to future accrual in 2013 and since that date the Company has made significant backlog contributions.

During 2024 the Trustees of the Walker's Shortbread Limited Retirement Benefits Scheme, in conjunction with the Company, executed an approach to the insurance market to secure a buy-in contract for the scheme’s benefits by means of a bulk annuity. The implementation project continued in the year.

WALKER'S SHORTBREAD LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 4 -

Health and safety

We give the highest priority to the health and safety of our employees and the general public and accordingly it is our policy to manage activities in ways that avoid unnecessary or unacceptable risks.

Environment and corporate social responsibilities

We recognise our environmental and corporate social responsibilities, and products are continually reviewed to ensure a proper balance is struck between the conflicting requirements of product protection, unnecessary packaging and indeed packaging materials.

We are also committed to reducing our carbon footprint through schemes to reduce and recycle waste materials and improve the efficiency of energy and water consumption, particularly in relation to our production output, whilst never compromising on product quality and necessary hygiene protocols.

S172 (1) Statement

The Companies (Miscellaneous Reporting) Regulations 2018 introduced a requirement for large companies to publish a statement describing how the directors have had regard to the matters set out in section 172 (1) (a) to (f) of the Companies Act 2006.

Section 172 (1) (a) to (f) requires each director to act in the way he or she considers would be most likely to promote the success of the Company for the benefit of its members as a whole, with regard to the following matters:

(a) The likely consequences of any decision in the long-term

At the core of the Company’s Mission and Vision Statement is the aim of being a ‘consistently profitable business that continuously invests in its people, brands, assets, processes and systems to ensure the continuity and security of the Company and the Walker’s brand in family ownership, for generations to come’.

All decisions taken by the Board are done so with this overarching objective in mind.

(b) The interests of the Company’s employees

The Board considers our people to be our greatest asset and the interests of our employees are always taken into consideration in the decisions that are made.

The Company communicates regularly with its employees via a variety of media and forums, including cascading information through line management. Employee opinion surveys are also routinely conducted and continue to improve all aspects of our formal and informal workplace communication.

(c) The need to foster the Company’s business relationships with suppliers, customers and others

We have a procurement team who work closely with our suppliers and, where possible, we enter into long-term supply arrangements.

We are a business that is focused on serving our customers and accordingly, we have a sales team that is dedicated to their support on both an individual and channel specific basis, aligned with our production teams who operate with a “quality first” mantra.

As well as customers and suppliers, we seek to build relationships with other key stakeholders, including trade associations, local and national politicians from all parties, the local authority, schools, other community groups and local businesses.

Our directors take an active interest in these connections and participate where possible in building and maintaining such relationships.

WALKER'S SHORTBREAD LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 5 -

(d) The impact of the Company’s operations on the community and environment

As the largest private sector employer in Moray, we understand our impact on the communities around us.

We also recognise our environmental responsibilities, and products are continually reviewed to ensure a proper balance is struck between the conflicting requirements of product protection and unnecessary packaging.

Furthermore, we are committed to reducing our carbon footprint through all our actions and schemes to recycle waste materials and improve the efficiency of energy and water consumption, particularly in relation to our production output.

(e) The desirability of the Company maintaining a reputation for high standards of business conduct

We believe it is vital that we are trusted by our stakeholders and therefore we seek to maintain high standards in all that we do as a business.

Our Audit & Risk Committee meets every six months and considers a range of reporting, management, control and governance issues, providing assurance to the Board in relation to the manner in which the Company operates.

Our Employee Handbook, also referred to in the Directors’ Report, and other relevant policies apply across the business and are reviewed regularly. Amongst other things, they cover conflicts of interest, our anti-bribery policy, whistleblowing, our expectations of conduct in the workplace and matters in relation to confidentiality, along with our policies aimed at preventing the use of modern slavery, people trafficking and child labour in any aspect of our business.(e) The desirability of the company maintaining a reputation for high standards of business conduct (Continued)

The Board treasures the Company’s proud universal reputation, and it is therefore always at the forefront when decisions are taken either collectively or individually.

(f) The need to act fairly as between members of the Company

The Board of Directors is comprised of an independent non-executive chairman, one non-family executive director and representatives from the controlling shareholder groups. We believe this ensures all shareholders are treated fairly and that their views are fully represented when making key decisions.

This is further ensured by a Family Business Constitution, first signed in 2008, and which sets out the rights of each of the shareholders in relation to the Company and the matters which require specific shareholder consent.

On behalf of the board

Joseph N Walker
Managing Director
28 April 2026
WALKER'S SHORTBREAD LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
- 6 -

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

Principal activities

The principal activities of Walker’s Shortbread Ltd are the manufacture and sale of the finest quality shortbread, oatcakes, biscuits and other bakery specialities.

Results and dividends

The results for the year are set out on page 15.

Ordinary dividends were paid amounting to £12,285k. The directors do not recommend payment of a further dividend.

Directors

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

Robert Brannan FCMA (Chairman)
(Resigned 31 August 2025)
Justin P D Stead (Chairman)
(Appointed 20 October 2025)
Joseph N Walker
Stephen L McCarney
Norman Ross CA
Bryony H Walker
(Appointed 22 May 2025)
Jacqueline B Walker
Richard J Walker
Financial instruments

Details of the group’s approach to the use of financial instruments is set out with in the Strategic Report on page 1.

Employment policies

The group has a comprehensive framework of employment policies, details of which are provided to all employees in the form of a handbook or digitally where appropriate.

The rights and opportunities of people of all ages to seek, obtain and hold employment with dignity and without any form of discrimination is central to the group. It is the policy that employees at all levels shall not in their dealings harass or discriminate against other individuals on the grounds of gender, race, nationality, religion, sexual orientation, disability, age or for any other reason whatsoever.

The group gives full and fair consideration to the employment of disabled persons, having regard to their particular aptitudes and abilities. Should an employee become disabled, every effort is made to provide appropriate training to allow their employment to continue.

Training and development activities are available to all employees, having due regard to their ambitions, aptitudes and abilities.

Auditor

The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

WALKER'S SHORTBREAD LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 7 -
Energy and carbon report

The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 has introduced a requirement for the Company to report on its energy consumption and carbon emissions and provide a summary of energy efficiency initiatives undertaken during the period under review.

Summary of energy consumption and emissions

| 202 5 | 202 4
Total energy consumption used to calculate emissions | 2 6,807,101 kWh | 2 7,634,452 kWh
Emissions from the combustion of gas | 2,731 tCO2e | 2,753 tCO2e
Emissions from the purchase of electricity | 1,884 tCO2e | 2,327 tCO2e
Emissions from the combustion of fuel for the purposes of transport | 296 tCO2e | 318 tCO2e
Total gross emissions | 4,911 tCO2e | 5,398 tCO2e
Intensity ratio: emissions per £100,000 of sales revenue | 2.50 tCO2e per £100,000 of sales | 2.69 tCO2e per £100,000 of sales

Methodology

We report our emissions in accordance with the latest Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). The 2025 UK Government GHG Conversion Factors for Company Reporting published by the UK Department for Environment Food & Rural Affairs (DEFRA) are used to convert energy use in our operations to emissions of CO2e. Carbon emission factors for purchased electricity are calculated in according to the “location-based grid average” method. This reflects the average emission of the grid where the energy consumption occurs. Data sources include billing, invoices and the Company’s internal systems. For transport data, where actual usage data (e.g. litres) was unavailable, conversions were made using average fuel consumption factors to estimate the usage.

Intensity Ratio

We have chosen to report our gross emissions against sales revenue.

Energy Efficiency Action

We are committed to minimising the environmental footprint of our operations and contributing to the fight against climate change. For over two decades, we have been active participants in the Climate Change Agreements (CCA) scheme, demonstrating our dedication to sustainable practices. Through our long-established procedures in energy efficiency, we have made significant strides in reducing our greenhouse gas (GHG) emissions.

While proud of our achievements, we recognise the need for continuous improvement in sustainability practices. Embracing technological advancements and fostering strategic partnerships, we remain vigilant in our pursuit of heightened efficiency and reduced emissions opportunities.

Carbon Reduction Initiatives Update

Since appointing a senior Sustainability Lead in late 2023, Walker’s has made strategic progress on carbon reduction. Several initiatives from last year’s report are advancing, with the expectation that they will lead to a continued reduction in our carbon intensity.

WALKER'S SHORTBREAD LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 8 -

Key Initiatives Update

PV Installation: We have received proposals to install solar panel systems at both our Aberlour and Elgin sites. These plans remain under review.

Heat Capture Initiatives: New proposals have been received covering the reuse of waste heat from production lines.

Collaboration with Local Authorities: We have shared data with the local authority, which contributes to a feasibility study for a possible district heat network in Elgin.

Carbon Accounting: We have partnered with Normative, an industry-leading carbon accounting platform, to streamline carbon data gathering and analysis. This partnership has a specific focus on completing Scope 3 emissions reporting across the entire value chain, helping to improve visibility, accuracy, and understanding of our overall carbon footprint.

Short-Term Carbon Intensity Gains

We achieved a reduction in carbon intensity during the reporting period through continued operational efficiencies. Notable improvements include:

Optimising Production Scheduling: We maximised production during core working hours, significantly reducing the need for overtime, periods during which factories traditionally operate at their lowest energy efficiency.

Efficiency and Products: Increased output was achieved via strategic rationalisation of our product portfolio.

Staff Engagement and Training: We have expanded our environmental and energy efficiency training programmes. Further, enhanced training ensures environmental awareness is embedded in daily operations.

Modern Slavery

We are committed to preventing slavery and human trafficking in our corporate activities and to ensuring our supply chains are free from slavery and human trafficking.

In accordance with the requirements of the legislation, full details of our policies and the due diligence we undertake are set out on our website at https://www.walkersshortbread.com/our-company/compliance-statement/.

Gender Pay Gap

We recently updated the information we publish on gender pay differences in accordance with The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.

In terms of the measure attracting the most public scrutiny - being the median hourly gender pay gap - we currently pay women 1.0% less than men. On a mean hourly basis, women are paid 15.1% less per hour than men. These differences reflect an historical imbalance in the representation of men and women in senior roles within the Group. During 2025, the percentage of women in the top pay quarter reduced from 46.4% to 39.8%, reflecting changes in role mix during the year.

The Board acknowledge the importance of publishing this information and would like the mean gender pay gap to be lower than it is. Over the coming years we will continue to act to do the right things to address this, primarily through a gender-neutral approach to the recruitment, retention and remuneration of employees at all levels.

In accordance with the requirements of the legislation, further information on our gender pay gap is set out on our website https://www.walkersshortbread.com/our-company/compliance-statement/.

Post Balance Sheet Event

Subsequent to the year end, a decision of the United States Supreme Court in relation to the application of tariffs under the International Emergency Economic Powers Act (IEEPA) may give rise to a potential refund of certain historical tariff costs incurred by the Group. At the date of approval of these financial statements, the amount, timing and recoverability of any such refund remains uncertain and no adjustment has therefore been made to the financial statements.

WALKER'S SHORTBREAD LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 9 -
Statement of disclosure to auditor

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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
Joseph N Walker
Managing Director
28 April 2026
WALKER'S SHORTBREAD LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2025
- 10 -

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 Group and 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 UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and 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 Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and 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 Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

WALKER'S SHORTBREAD LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WALKER'S SHORTBREAD LTD
- 11 -
Opinion

We have audited the financial statements of Walker's Shortbread Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 202 5 which comprise the group profit and loss account, group statement of comprehensive income, group balance sheet, company balance sheet, group statement of changes in equity, company statement of changes in equity, group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

- give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2025 and of the group's 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 responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group or 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

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.

WALKER'S SHORTBREAD LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WALKER'S SHORTBREAD LTD
- 12 -

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

- The parent company 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.

Responsibilities of directors

As explained more fully in the Directors’ responsibilities statement set out on page 10, 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 group’s and parent 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 group or parent company or to cease operations, or have no realistic alternative but to do so.

Auditor responsibilities for the audit of the financial statements

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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Extent to which the audit was considered capable of detecting irregularities, including fraud

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.

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

WALKER'S SHORTBREAD LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WALKER'S SHORTBREAD LTD
- 13 -

We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

- Companies Act 2006;

- UK Generally Accepted Accounting Practices;

- UK Tax legislation;

- Food Safety Standards; and

- Health and Safety Standards

We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.

We assessed the susceptibility of the group’s and parent company's financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:

- Management override of controls

- Revenue recognition

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

- Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;

- Reviewing the level of and reasoning behind the group’s procurement of legal and professional services;

- Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and assessing judgements made by management in their calculation of accounting estimates for potential management bias;

- Performing audit procedures over occurrence of revenue including reconciling the sales ledger to sales invoices and orders and undertaking appropriate sales cut-off procedures;

- Completion of appropriate checklists and use of our experience to assess the group’s and parent company's compliance with the Companies Act 2006; and

- Agreement of the financial statement disclosures to supporting documentation.

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.

WALKER'S SHORTBREAD LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WALKER'S SHORTBREAD LTD
- 14 -

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.

Jeffrey Marjoribanks (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
28 April 2026
Statutory Auditor
227 West George Street
Glasgow
G2 2ND
WALKER'S SHORTBREAD LTD
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2025
- 15 -
2025
2024
Notes
£000
£000
Turnover
3
196,784
200,986
Cost of sales
(179,988)
(175,462)
Gross profit
16,796
25,524
Administrative expenses
(9,842)
(9,353)
Other operating expenses
(15)
(22)
Operating profit
4
6,939
16,149
Interest receivable and similar income
8
790
1,235
Other income
9
1,035
684
Profit before taxation
8,764
18,068
Tax on profit
10
(2,001)
(4,672)
Profit for the financial year
24
6,763
13,396
Profit for the financial year is all attributable to the owners of the parent company.

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

WALKER'S SHORTBREAD LTD
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
- 16 -
2025
2024
£000
£000
Profit for the financial year
6,763
13,396
Other comprehensive income/(expenditure)
Gain/(loss) on defined benefit pension schemes
222
(3,253)
Currency translation differences
(498)
149
Cash flow hedges gain arising in the year
1,668
850
Cash flow hedges gain maturing in a future year
1,419
133
Cash flow hedges loss reclassified to profit or loss
(2,290)
(2,143)
Tax relating to other comprehensive income/(expenditure)
(200)
353
Other comprehensive income/(expenditure) for the year
321
(3,911)
Total comprehensive income for the year
7,084
9,485
Total comprehensive income for the year is all attributable to the owners of the parent company.
WALKER'S SHORTBREAD LTD
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2025
31 December 2025
- 17 -
2025
2024
Notes
£000
£000
£000
£000
Fixed assets
Tangible assets
12
25,789
26,265
Current assets
Stocks
16
18,884
22,255
Debtors
17
35,738
32,268
Investments
18
15,454
14,419
Cash at bank and in hand
21,181
25,755
91,257
94,697
Creditors: amounts falling due within one year
19
(15,920)
(14,891)
Net current assets
75,337
79,806
Total assets less current liabilities
101,126
106,071
Provisions for liabilities
Deferred tax liability
20
2,765
2,328
(2,765)
(2,328)
Government grants
21
(102)
(113)
Net assets excluding pension surplus
98,259
103,630
Defined benefit pension surplus
22
4,481
4,311
Net assets
102,740
107,941
Capital and reserves
Called up share capital
23
92
92
Share premium account
24
166
166
Cash flow hedge reserve
24
1,023
426
Capital redemption reserve
24
49
49
Profit and loss reserves
24
101,410
107,208
Total equity
102,740
107,941
The financial statements were approved by the board of directors and authorised for issue on 28 April 2026 and are signed on its behalf by:
28 April 2026
Joseph N Walker
Managing Director
WALKER'S SHORTBREAD LTD
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2025
31 December 2025
- 18 -
2025
2024
Notes
£000
£000
£000
£000
Fixed assets
Tangible assets
12
24,370
24,692
Investments
13
2,222
2,222
26,592
26,914
Current assets
Stocks
16
14,442
16,934
Debtors
17
34,213
31,632
Investments
18
15,454
14,419
Cash at bank and in hand
16,950
19,186
81,059
82,171
Creditors: amounts falling due within one year
19
(12,766)
(11,235)
Net current assets
68,293
70,936
Total assets less current liabilities
94,885
97,850
Provisions for liabilities
Deferred tax liability
20
2,765
2,328
(2,765)
(2,328)
Government grants
21
(102)
(113)
Net assets excluding pension surplus
92,018
95,409
Defined benefit pension surplus
22
4,481
4,311
Net assets
96,499
99,720
Capital and reserves
Called up share capital
23
92
92
Share premium account
24
166
166
Cash flow hedge reserve
24
1,023
426
Capital redemption reserve
24
49
49
Profit and loss reserves
24
95,169
98,987
Total equity
96,499
99,720

As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the year was £8,245k (2024 - £11,639k).

WALKER'S SHORTBREAD LTD
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2025
31 December 2025
- 19 -
The financial statements were approved by the board of directors and authorised for issue on 28 April 2026 and are signed on its behalf by:
28 April 2026
Joseph N Walker
Managing Director
Company Registration No. SC063233
WALKER'S SHORTBREAD LTD
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
- 20 -
Share capital
Share premium account
Cash flow hedge reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
£000
£000
Balance at 1 January 2024
92
166
1,233
49
108,436
109,976
Year ended 31 December 2024:
Profit for the year
-
-
-
-
13,396
13,396
Other comprehensive expenditure:
Losses on defined benefit plans
-
-
-
-
(3,253)
(3,253)
Currency translation differences
-
-
-
-
149
149
Cash flow hedges gains arising in the year
-
-
983
-
-
983
Cash flow hedges losses reclassified to profit or loss
-
-
(2,143)
-
-
(2,143)
Tax relating to other comprehensive expenditure
-
-
353
-
-
0
353
Total comprehensive income for the year
-
-
(807)
-
10,292
9,485
Dividends
11
-
-
-
-
(11,520)
(11,520)
Balance at 31 December 2024
92
166
426
49
107,208
107,941
WALKER'S SHORTBREAD LTD
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Share capital
Share premium account
Cash flow hedge reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
£000
£000
- 21 -
Balance at 1 January 2025
Profit for the year
-
-
-
-
6,763
6,763
Other comprehensive income:
Gains on defined benefit plans
-
-
-
-
222
222
Currency translation differences
-
-
-
-
(498)
(498)
Cash flow hedges gains arising in the year
-
-
3,087
-
-
3,087
Cash flow hedges losses reclassified to profit or loss
-
-
(2,290)
-
-
(2,290)
Tax relating to other comprehensive income
-
-
(200)
-
-
0
(200)
Total comprehensive income for the year
-
-
597
-
6,487
7,084
Dividends
11
-
-
-
-
(12,285)
(12,285)
Balance at 31 December 2025
92
166
1,023
49
101,410
102,740
WALKER'S SHORTBREAD LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
- 22 -
Share capital
Share premium account
Cash flow hedge reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
£000
£000
Balance at 1 January 2024
92
166
1,233
49
102,121
103,661
Year ended 31 December 2024:
Profit for the year
-
-
-
-
11,639
11,639
Other comprehensive expenditure:
Losses on defined benefit plans
-
-
-
-
(3,253)
(3,253)
Cash flow hedges gains arising in the year
-
-
983
-
-
983
Cash flow hedges losses reclassified to profit or loss
-
-
(2,143)
-
-
(2,143)
Tax relating to other comprehensive expenditure
-
-
353
-
-
0
353
Total comprehensive income for the year
-
-
(807)
-
8,386
7,579
Dividends
11
-
-
-
-
(11,520)
(11,520)
Balance at 31 December 2024
92
166
426
49
98,987
99,720
WALKER'S SHORTBREAD LTD
COMPANY STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Share capital
Share premium account
Cash flow hedge reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
£000
£000
- 23 -
Balance at 1 January 2025
Profit for the year
-
-
-
-
8,245
8,245
Other comprehensive income:
Gains on defined benefit plans
-
-
-
-
222
222
Cash flow hedges gains arising in the year
-
-
3,087
-
-
3,087
Cash flow hedges losses reclassified to profit or loss
-
-
(2,290)
-
-
(2,290)
Tax relating to other comprehensive income
-
-
(200)
-
-
0
(200)
Total comprehensive income for the year
-
-
597
-
8,467
9,064
Dividends
11
-
-
-
-
(12,285)
(12,285)
Balance at 31 December 2025
92
166
1,023
49
95,169
96,499
WALKER'S SHORTBREAD LTD
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2025
- 24 -
2025
2024
Notes
£000
£000
£000
£000
Cash flows from operating activities
Cash generated from operations
29
12,114
15,686
Corporate taxes paid
(3,061)
(4,046)
Net cash inflow from operating activities
9,053
11,640
Investing activities
Purchase of tangible fixed assets
(1,728)
(2,470)
Proceeds on disposal of tangible fixed assets
58
142
Interest received
483
719
Net cash used in investing activities
(1,187)
(1,609)
Financing activities
Dividends paid
(12,285)
(11,520)
Net cash used in financing activities
(12,285)
(11,520)
Net decrease in cash and cash equivalents
(4,419)
(1,489)
Cash and cash equivalents at beginning of year
25,755
27,358
Net decrease in cash and cash equivalents
(4,419)
(1,489)
Effect of foreign exchange differences
(155)
(114)
Cash and cash equivalents at end of year
21,181
25,755
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
- 25 -
1
Accounting policies
Company information

Walker's Shortbread Ltd (“the Company”) is a limited company incorporated and domiciled in Scotland. The registered office is Aberlour House, Aberlour-on-Spey, AB38 9LD.

1.1
Accounting convention

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 group. Monetary a mounts in these financial statements are rounded to the nearest £000.

The financial statements have been prepared on the historical cost convention, modified to include 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 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;

- 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’: Carrying amounts, 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; and

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

1.2
Basis of consolidation

The group financial statements consolidate the financial statements of Walker’s Shortbread Ltd and all of its subsidiary undertakings drawn up to 31 December 202 5. Intra-group sales and profits are eliminated fully on consolidation.

1.3
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.

1.4
Turnover

Turnover represents the fair value of the consideration received or receivable for goods supplied in the ordinary course of business excluding commissions, rebates, VAT and other sales related taxes.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, 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.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
1
Accounting policies
(Continued)
- 26 -
1.5
Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset on a systematic basis over its expected useful life as follows:

Land and freehold buildings
- over 50 years straight line
Leasehold buildings
- over 50 years or the remaining lease term if shorter
Plant and machinery
- 15% to 30% reducing balance
IT equipment
- over 4 years

Land and assets under construction are not depreciated.

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 profit and loss account.

The carrying value of tangible fixed assets are reviewed for impairment at each reporting end date or when events or changes in circumstances indicate the carrying value may not be recoverable.

Included in freehold land and buildings is land costing £2,227k which has not been depreciated.

1.6
Fixed asset investments

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.

The carrying value of equity investments is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be justified. Any impairment losses or reversals of impairment losses are recognised immediately in the profit and loss account.

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

1.7
Impairment of fixed assets

Where a reasonable and consistent basis of allocation can be identified, assets are allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use.

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 the profit and loss account.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
1
Accounting policies
(Continued)
- 27 -
1.8
Stocks

Stocks are stated at the lower of cost and net realisable value. Cost includes the cost of direct materials with, in the case of finished goods, an appropriate allowance for labour and other costs.

Net realisable value is based on estimated selling price, less any further costs expected to be incurred to completion and disposal.

1.9
Financial instruments

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 balance sheet 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 only 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.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet represent cash at bank and in hand.

Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price including transaction costs. Any losses arising from impairment review at the reporting end date are recognised in the profit and loss account.

Other financial assets and liabilities

Other financial assets and liabilities, excluding those classed as derivative financial instruments, are initially recognised at transaction price and remeasured at fair value at the reporting end date, with any changes recognised in the profit and loss account.

Debtors that have fixed or determinable payments that are not quoted in an active market are measured at amortised cost using the effective interest method, less any impairment.

Creditors that constitute a financing arrangement, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest, are carried at amortised cost, using the effective interest rate method.

Creditors where payment is due more than one year hence are presented as non-current liabilities.

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts the estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

Impairment of financial assets

Financial assets, other than those held at fair value through the profit and loss account, 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 emanating from that asset have been affected. The impairment loss is recognised in the profit and loss account.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
1
Accounting policies
(Continued)
- 28 -
Derecognition of financial assets

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, 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.

Classification of financial liabilities

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.

Hedge accounting

To qualify for hedge accounting, the group documents the hedged item, the hedging instrument and the hedging relationship between them, and the causes of hedge ineffectiveness.

The group elects to adopt hedge accounting for forward foreign currency contracts to hedge forecast transactions. The effective portion of changes in the fair value of forward foreign currency contracts that are designated and qualify as cash flow hedges is recognised in the cash flow hedge reserve within equity.

Derivative financial instruments

The group uses forward foreign currency contracts to reduce its exposure to fluctuating foreign exchange rates.

Derivative financial instruments are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in the profit and loss account immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the profit and loss account depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

The fair value of a forward currency contract is ‘marked to market’ by reference to current forward exchange contracts with similar maturity profiles.

1.10
Equity instruments

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.

1.11
Taxation

The tax expense represents the sum of current tax and deferred tax.

Current tax

Current tax is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it is determined in accordance with the rules established by the applicable tax authorities. It therefore excludes items of income or expense that are taxable or deductible in other years as well as items that are never taxable or deductible.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
1
Accounting policies
(Continued)
- 29 -
Deferred tax

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised on all timing differences and deferred tax assets are recognised to the extent that it is probable 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 the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying value 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 only when there is a legally enforceable right to set off current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.12
Employee benefits

Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are rendered by employees of the group.

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

1.13
Retirement benefits

The group operates a defined benefit pension scheme which was closed to future accrual in 2013. The cost of providing benefits under the defined benefit scheme is determined separately using the projected unit credit method and is based on actuarial advice. The cost of benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.

The net interest element is determined by multiplying the net benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in the profit and loss account as other finance revenue or cost.

Remeasurement changes comprise actuarial gains and losses and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to the profit and loss account in subsequent periods.

The defined net benefit pension asset or liability in the balance sheet comprises the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.

Contributions to defined contribution pension schemes are recognised in the profit and loss account in the period in which they become payable.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
1
Accounting policies
(Continued)
- 30 -
1.14
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to the profit and loss account on a straight line basis over the lease term.

1.15
Government grants
Grants are credited to deferred income. Grants towards capital expenditure are released to the profit and loss account over the expected useful life of the assets. Grants towards revenue expenditure are released to the profit and loss account as the related expenditure is incurred.
1.16
Foreign exchange

Transactions and balances

Transactions in currencies other than sterling are recorded at an average monthly rate of exchange as an approximation of the prevailing rate of exchange at each transaction date.

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 are included in the profit and loss account for the period.

Translation of overseas subsidiaries

Assets and liabilities of overseas subsidiaries are retranslated at the rate of exchange ruling at the balance sheet date. Income and expenses have been translated at the average rate of exchange as an approximation of the rate of exchange at the date of each transaction. All resulting exchange differences are recognised in other comprehensive income.

2
Judgements and key sources of estimation uncertainty

Inherent in the application of many of the accounting policies used in preparing the financial statements is the need for directors to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual outcomes could differ from those estimates and assumptions used. The accounting judgements and estimates that could have a significant impact on the results of the group are set out below, and should be read in conjunction with the information provided in the notes to the financial statements.

Key sources of estimation uncertainty

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.

Application of hedge accounting

The decision as to whether to apply hedge accounting can have a significant impact on the group's financial statements. The directors believe that the use of hedge accounting is appropriate to the commercial objectives of the group and, furthermore, are satisfied that the group meets the hedge accounting criteria contained within FRS 102. Accordingly, cash flow hedge accounting is applied to highly probable foreign currency transactions as part of the management of foreign currency risk.

Recognition of defined benefit pension surplus

The decision over whether to recognise a defined benefit pension surplus can have a significant impact on the group's financial statements. In recognising the surplus, the directors have exercised judgement over the amount that is expected to be recovered through agreed refunds from the scheme, net of any authorised surplus payment due by the scheme administrator.

The carrying value of the group's defined benefit pension surplus recognised is outlined within note 22.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 31 -
3
Turnover and other revenue

The total turnover of the group for the year has been derived from its principal activity and is stated net of value added tax.

2025
2024
£000
£000
Turnover analysed by geographical market
UK sales
97,056
97,276
International sales
99,728
103,710
196,784
200,986
2025
2024
£000
£000
Other significant revenue
Interest income
790
1,235
4
Operating profit
2025
2024
£000
£000
Operating profit for the year is stated after charging/(crediting):
Foreign exchange differences
256
105
Government grants
(11)
(13)
Depreciation of owned tangible fixed assets
2,071
1,999
(Profit)/loss on disposal of tangible fixed assets
(31)
36
Operating lease charges
721
943
5
Auditor's remuneration
2025
2024
Fees payable to the company's auditor and associates:
£000
£000
For audit services
Audit of the financial statements of the group and company
97
96
Audit of the financial statements of the company's subsidiaries
21
16
118
112
For other services
Taxation compliance services
17
14
All other non-audit services
120
120
137
134
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 32 -
6
Employees

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

Group
Company
2025
2024
2025
2024
Number
Number
Number
Number
Production and distribution
1,120
1,115
1,101
1,091
Administration and directors
146
140
101
117
Total
1,266
1,255
1,202
1,208

Their aggregate remuneration comprised:

Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Wages and salaries
40,808
38,649
37,699
35,334
Social security costs
4,519
3,538
4,199
3,208
Pension costs
3,144
2,758
3,032
2,634
48,471
44,945
44,930
41,176
7
Directors' remuneration
2025
2024
£000
£000
Remuneration for qualifying services
2,168
2,384
Company pension contributions to defined contribution schemes
-
9
2,168
2,393

The number of directors for whom retirement benefits are accruing under money purchase schemes amounted to 0 (2024 - 1).

Remuneration disclosed above includes the following amounts paid to the highest paid director:
2025
2024
£000
£000
Remuneration for qualifying services
716
644
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 33 -
8
Interest receivable and similar income
2025
2024
£000
£000
Interest income
Interest on bank deposits
483
719
Interest on the net defined benefit asset
307
516
Total income
790
1,235
9
Other income
2025
2024
£000
£000
Fair value gains on financial instruments
Change in value of financial assets held at fair value through profit or loss
611
129
Other gains
Income from current asset investments
424
555
1,035
684

Other income outlined above is in respect of the group's current asset investments. Refer to note 18 for further details.

10
Taxation
2025
2024
£000
£000
Current tax
UK corporation tax on profits for the current period
1,276
3,035
Adjustments in respect of prior periods
(55)
(4)
Total UK current tax
1,221
3,031
Foreign current tax on profits for the current period
537
1,424
Adjustments in foreign tax in respect of prior periods
(104)
(7)
Total current tax
1,654
4,448
Deferred tax
Origination and reversal of timing differences
286
226
Adjustment in respect of prior periods
61
(2)
Total deferred tax
347
224
Total tax charge
2,001
4,672
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
10
Taxation
(Continued)
- 34 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit and the standard rate of tax as follows:

2025
2024
£000
£000
Profit before taxation
8,764
18,068
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2024: 25.00%)
2,191
4,517
Tax effect of expenses that are not deductible in determining taxable profit
19
10
Tax effect of income not taxable in determining taxable profit
(100)
-
0
Adjustments in respect of prior years
(55)
(4)
Adjustments in respect of financial assets
13
-
0
Effect of overseas tax rates
(81)
37
Deferred tax adjustments in respect of prior years
61
(9)
Deferred tax relating to other comprehensive income
(200)
353
Other tax adjustments
57
(298)
Fixed asset differences
96
(2)
Remeasurement of tax for changes in tax rates
-
68
Taxation charge
2,001
4,672

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2025
2024
£000
£000
Deferred tax arising on:
Revaluation of financial instruments treated as cash flow hedges
200
(353)

11
Dividends
2025
2024
£000
£000
'A' Ordinary interim dividends paid
12,285
11,520
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 35 -
12
Tangible fixed assets
Group
Freehold land and buildings
Leasehold buildings
Plant and machinery
Assets under construction
Total
£000
£000
£000
£000
£000
Cost
At 1 January 2025
17,500
14,101
49,051
1,039
81,691
Additions
48
-
0
1,241
439
1,728
Disposals
-
0
-
0
(257)
-
(257)
Transfers
-
0
-
0
961
(961)
-
0
Exchange adjustments
(187)
-
0
(49)
-
0
(236)
At 31 December 2025
17,361
14,101
50,947
517
82,926
Depreciation and impairment
At 1 January 2025
7,198
7,883
40,345
-
0
55,426
Depreciation charged in the year
298
228
1,545
-
0
2,071
Eliminated in respect of disposals
-
0
-
0
(230)
-
0
(230)
Exchange adjustments
(82)
-
0
(48)
-
0
(130)
At 31 December 2025
7,414
8,111
41,612
-
0
57,137
Carrying amount
At 31 December 2025
9,947
5,990
9,335
517
25,789
At 31 December 2024
10,302
6,218
8,706
1,039
26,265
Included in freehold land and buildings is land costing £2,227k (2024 - £2,227k) which has not been depreciated.
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
12
Tangible fixed assets
(Continued)
- 36 -
Company
Freehold land and buildings
Leasehold buildings
Plant and machinery
Assets under construction
Total
£000
£000
£000
£000
£000
Cost
At 1 January 2025
14,945
14,101
48,132
1,039
78,217
Additions
13
-
0
1,232
439
1,684
Disposals
-
0
-
0
(257)
-
(257)
Transfers
-
0
-
0
961
(961)
-
0
At 31 December 2025
14,958
14,101
50,068
517
79,644
Depreciation and impairment
At 1 January 2025
6,077
7,883
39,565
-
0
53,525
Depreciation charged in the year
247
228
1,504
-
0
1,979
Eliminated in respect of disposals
-
0
-
0
(230)
-
0
(230)
At 31 December 2025
6,324
8,111
40,839
-
0
55,274
Carrying amount
At 31 December 2025
8,634
5,990
9,229
517
24,370
At 31 December 2024
8,868
6,218
8,567
1,039
24,692

Included in freehold land and buildings is land costing £1,707k (2024 - £1,707k) which has not been depreciated.

13
Fixed asset investments
Group
Company
2025
2024
2025
2024
Notes
£000
£000
£000
£000
Investments in subsidiaries
14
-
0
-
0
2,222
2,222
Movements in fixed asset investments
Company
Shares in subsidiaries
£000
Cost
At 1 January 2025 and 31 December 2025
2,222
Carrying amount
At 31 December 2025
2,222
At 31 December 2024
2,222
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 37 -
14
Subsidiaries

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

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Walker's Shortbread Incorporated
170 Commerce Drive, Hauppauge, New York, 11788
Wholesaling of bakery products
Ordinary
100.00
Top Food GmBH
Badstraße 16, 74072 Heilbronn
Wholesaling of bakery products
Ordinary
100.00
Highland Pride Foods Limited
Aberlour House, Aberlour-On-Spey, Banffshire, AB38 9LD
Dormant
Ordinary
100.00

The investments in subsidiaries are all stated at cost.

15
Financial instruments
Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
14,707
13,552
14,707
13,552
Instruments measured at fair value through other comprehensive income
1,945
1,568
1,945
1,568
16,652
15,120
16,652
15,120
Carrying amount of financial liabilities
Instruments measured at fair value through other comprehensive income
233
658
233
659
233
658
233
659

The group purchases forward foreign currency contracts to hedge currency exposure on highly probable forecast transactions. The fair values of the assets and liabilities held at fair value through other comprehensive income at the balance sheet date are determined using quoted prices supplied by the company’s bank. The highly probable forecast transactions largely occur in the following financial period.

Financial assets measured at fair value through profit or loss are included within current asset investments at note 18.

Financial assets measured at fair value through other comprehensive income are included within other debtors at note 17.

Financial liabilities measured at fair value through other comprehensive income are included within other creditors at note 19.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 38 -
16
Stocks
Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Raw materials and consumables
10,907
13,242
10,907
13,242
Finished goods and goods for resale
7,977
9,013
3,535
3,692
18,884
22,255
14,442
16,934
17
Debtors
Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Trade debtors
29,339
27,294
23,738
21,112
Amounts owed by subsidiary undertakings
-
0
-
0
4,787
6,030
Corporation tax recoverable
607
28
303
-
0
Other debtors
3,063
2,969
2,956
2,939
Prepayments and accrued income
2,686
1,815
2,429
1,551
35,695
32,106
34,213
31,632
Amounts falling due after one year:
Deferred tax asset (note 20)
43
162
-
0
-
0
Total debtors
35,738
32,268
34,213
31,632

Included within other debtors are derivative financial instruments with a fair value of £1,945k (2024 - £1,568k).

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 39 -
18
Current asset investments
Group and company
At fair value
At cost
Total
£000
£000
£000
At 1 January 2025
13,552
867
14,419
Transfers
120
(120)
-
Income
424
-
424
Fair value adjustment
611
-
611
At 31 December 2025
14,707
747
15,454

Current asset investments held "at cost" relate to cash held in the investment portfolio. Whilst these funds are available on demand, the directors consider this to be a defensive investment and, at the time of signing, have no short-term intention to access this cash.

These investments expose the group to a variety of financial risks i.e. market risk (including interest rate risk and foreign exchange risk), credit risk and liquidity risk as set out below:

Market risk - The group has direct exposure to foreign exchange risk as it holds investments in funds that are denominated in foreign currencies and has further indirect exposure as the funds hold assets that are themselves denominated in foreign currencies. As some of the group's investments are in funds that invest in gilts and bonds, the group is exposed to interest rate risk as movements in the underlying market rate of interest could impact the valuation of these investments. The group also has an exposure to other price risk as the fair value of investments will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign exchange risk).

Credit risk - The group has no direct exposure to credit risk, other than counterparty risk, but has indirect exposure as it invests in funds that themselves invest in gilts and bonds.

Liquidity risk - The group has limited exposure to liquidity risk as all investments are either traded on recognised exchanges or are unlisted funds that are regularly priced and traded and are therefore readily convertible into cash.

Th e board has delegated authority for the management of these risks to a professional investment advisor, operating within a defined set of investment guidelines which take account of the scale of the investments made. These guidelines and the underlying investment strategy are subject to regular review by the board after taking advice from the group's investment advisor.

Whilst the investments are held by a third party, the group has full access to the underlying funds, which are valued at the year end using market prices in an active market.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 40 -
19
Creditors: amounts falling due within one year
Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Trade creditors
4,972
5,530
3,449
4,351
Amounts owed to group undertakings
-
0
-
0
149
145
Corporation tax payable
9
738
-
0
393
Other taxation and social security
1,222
1,110
1,213
1,065
Other creditors
233
658
233
659
Accruals and deferred income
9,484
6,855
7,722
4,622
15,920
14,891
12,766
11,235

Included within other creditors are derivative financial instruments with a fair value of £233k (2024 - £658k).

20
Deferred taxation

The deferred tax liabilities and assets recognised by the group and company are analysed as follows:

Liabilities
Liabilities
Assets
Assets
2025
2024
2025
2024
Group
£000
£000
£000
£000
Accelerated capital allowances
2,459
2,007
43
162
Other timing differences
306
321
-
-
2,765
2,328
43
162
Liabilities
Liabilities
Assets
Assets
2025
2024
2025
2024
Company
£000
£000
£000
£000
Accelerated capital allowances
2,459
2,007
-
-
Other timing differences
306
321
-
-
2,765
2,328
-
-
Group
Company
2025
2025
Movements in the year:
£000
£000
Liability at 1 January 2025
2,166
2,328
Charge to profit or loss
347
237
Charge to other comprehensive income
200
200
Foreign exchange adjustment
9
-
Liability at 31 December 2025
2,722
2,765
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 41 -
21
Government grants
Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Arising from government grants
102
113
102
113

During the year, £11k (2024 - £13k) of deferred government grants were credited to the statement of comprehensive income.

Local Enterprise government grants are subject to terms and conditions, any breach of which, may result in the grants having to be repaid in part or in full.

22
Retirement benefit schemes
2025
2024
Defined contribution schemes
£000
£000
Charge to profit or loss in respect of defined contribution schemes
3,144
2,758

The group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the group in independently administered funds. The pension cost charge represents contributions payable by the group to the funds.

Defined benefit schemes

The group and company also operates a defined benefit pension scheme which is closed to future accrual. The following disclosures support the full requirements of FRS 102.

Under FRS 102, the scheme's liabilities are determined by projecting the expected benefit payments using the chosen assumptions and then discounting the resulting cash flows back to the review date. For this purpose the scheme's liabilities have been calculated by updating the valuation calculations carried out for the formal valuation as at 1 May 2025.

Assumptions

2025
2024
Key assumptions
%
%
Discount rate
5.5
5.5
Expected rate of increase of pensions in payment
1.85 - 3.1
1.9 - 3.2
Inflation assumption (RPI)
3.2
3.4
Inflation assumption (CPI)
2.55
2.7
Deferred pension revaluation
2.55
2.7
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
22
Retirement benefit schemes
(Continued)
- 42 -
Mortality assumptions
2025
2024
Works Section
Males
100% S3PMA
100% S3PMA
Females
110% S3PFA
110% S3PFA
Staff Section
Males
90% S3PMA
90% S3PMA
Females
95% S3PFA
95% S3PFA
2025
2024
Other assumptions
Assumed retirement age
60
60
GMP equalisation allowance (% of liabilities)
0.10%
0.10%
Commutation
50% of members are assumed to take 25% of their pension as tax free cash
50% of members are assumed to take 25% of their pension as tax free cash

Sensitivity analysis

Reasonably possible changes as at 31 December to one of the actuarial assumptions would have increased/(decreased) the scheme's liabilities as follows:

|  | 2025 | 2024
|  | £000 | £000
Discount rate | Plus 0.5% | (1,594) | (1,609)
| Minus 0.5% | 1,766 | 1,785
Inflation | Plus 0.25% | 280 | 238
| Minus 0.25% | (268) | (269)
Life expectancy | Plus one year | 860 | 867
| Minus one year | (863) | (872)

Group
2025
2024

Amounts recognised in the profit and loss account

£000
£000
Net interest on net defined benefit asset
(307)
(516)
Administration costs
359
465
Total cost/(income)
52
(51)
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
22
Retirement benefit schemes
(Continued)
- 43 -
Group
2025
2024

Amounts taken to other comprehensive income

£000
£000
Actual return on scheme assets
(2,315)
7,937
Adjusted for: calculated interest element
1,738
1,864
Return on scheme assets excluding interest income
(577)
9,801
Actuarial changes related to obligations
300
(3,941)
Effect of changes in the amount of surplus that is not recoverable
55
(2,607)
Total (income)/cost
(222)
3,253

The amounts included in the balance sheet arising from obligations in respect of defined benefit plans are as follows:

2025
2024
£000
£000
Present value of defined benefit obligations
27,145
26,611
Fair value of plan assets
(33,118)
(32,359)
Surplus in scheme
(5,973)
(5,748)
Restriction on scheme assets
1,492
1,437
Total asset recognised
(4,481)
(4,311)

Under the conditions of FRS 102, a surplus can only be recognised when there is an unconditional right of refund or where the company expects to benefit from reduced contributions. Where the right to refund depends on uncertain future events not wholly inside the company's control, the right is not deemed to be unconditional. The directors are satisfied that the conditions as set out under FRS 102 have been met and therefore a surplus has been recognised as at 31 December 2025, net of the expected authorised surplus payment due by the scheme administrator.

Group and company
2025

Movements in the present value of defined benefit obligations

£000
Liabilities at 1 January 2025
26,611
Benefits paid
(1,197)
Actuarial gains and losses
300
Interest cost
1,431
At 31 December 2025
27,145
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
22
Retirement benefit schemes
(Continued)
- 44 -
Group and company
2025

The defined benefit obligations arise from plans funded as follows:

£000
Wholly unfunded obligations
-
Wholly or partly funded obligations
27,145
27,145
Group and company
2025

Movements in the fair value of plan assets

£000
Fair value of assets at 1 January 2025
32,359
Interest income
1,738
Return on plan assets (excluding amounts included in net interest)
577
Benefits paid
(1,197)
Administration costs
(359)
At 31 December 2025
33,118

The actual return on plan assets was (£2,315k) (2024 - £7,937k). The long term expected rate of return on the scheme's assets is 5.5% p.a. (2024 - 5.5% p.a.).

Fair value of plan assets at the reporting period end

Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Annuity policy
27,106
26,572
27,106
26,572
Cash
4,826
5,787
4,826
5,787
Index fund
1,186
-
1,186
-
33,118
32,359
33,118
32,359
WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
22
Retirement benefit schemes
(Continued)
- 45 -

Virgin Media vs NTL Trustees

The judgement in the above High Court case has implications for Defined Benefit schemes which previously contracted out of certain parts of the state pension system between 1997 and 2016. The judge in this case ruled that, where benefit changes were made without a valid “Section 37” certificate from the Scheme Actuary, those changes could be considered void. The Court of Appeal dismissed an appeal to this judgement on 25 July 2024. The judgement could have material consequences for some Defined Benefit schemes which contracted out of the state scheme, but uncertainty around the ruling persists. This is due in particular to expectations of further court cases and potential intervention from the UK Government. The c ompany Directors are in dialogue with the Schemes’ trustees over this issue and will continue to monitor developments as they arise. Due to the uncertainty in terms of potential impact on the pension surplus for the Scheme, no adjustment has been made in these financial statements.

23
Share capital
Group and company
2025
2024
2025
2024
Ordinary share capital
Number
Number
£000
£000
Issued and fully paid
Ordinary shares of £1 each
7,754
7,754
8
8
'A' Ordinary Shares of £1 each
84,154
84,154
84
84
91,908
91,908
92
92

Ordinary £1 shareholders have no right to receive any dividends, but are entitled on a winding up to repayment of the amount paid up. They can attend any general meeting, receiving 20 votes per share.

'A' Ordinary £1 shareholders have no fixed entitlement to dividends but, in so far as profits are resolved to be distributed by dividend, the 'A' Ordinary shareholders will receive a dividend on the amount paid up. In the event of a winding up, shareholders are only entitled to payment if any surplus remains after paying Ordinary £1 shareholders, and any payment will be in proportion to the amount paid up. 'A' Ordinary shares carry one vote per share.

24
Reserves
Share premium

This reserve records the amount above the nominal value received for shares sold, less transaction costs.

Cash flow hedge reserve

The hedging reserve represents the value at the year end of derivative financial instruments that will be used to hedge the effect of foreign currency cash flows in future years and the associated deferred tax impact.

Capital redemption reserve

This reserve records the nominal value of shares repurchased by the company.

Profit and loss reserves

Retained earnings represent accumulated profits and losses less distributions.

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 46 -
25
Capital commitments

At 31 December, the group and company had capital commitments as follows:

Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Acquisition of tangible fixed assets
303
615
303
615
26
Operating lease commitments
Lessee

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

Group
Company
2025
2024
2025
2024
£000
£000
£000
£000
Within one year
580
281
489
202
Between two and five years
198
55
198
55
778
336
687
257
27
Events after the reporting date

Subsequent to the year end, a decision of the United States Supreme Court in relation to the application of tariffs under the International Emergency Economic Powers Act (IEEPA) may give rise to a potential refund of certain historical tariff costs incurred by the Group. At the date of approval of these financial statements, the amount, timing and recoverability of any such refund remains uncertain and no adjustment has therefore been made to the financial statements.

28
Related party transactions
Transactions with related parties

During the year the group leased various properties from a related party. The total rent payable amounted to £334k (2024 - £334k).

Terms and conditions of transactions with related parties

All rents payable were fixed at an open market value. The group has not provided or benefited from any guarantees in relation to any related party payables.

Key management personnel

The total remuneration of these individuals was £3,477k (2024 - £3,779k).

WALKER'S SHORTBREAD LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
- 47 -
29
Cash generated from group operations
2025
2024
£000
£000
Profit for the year after tax
6,763
13,396
Adjustments for:
Taxation charged
2,001
4,672
Interest receivable
(790)
(1,235)
Other income
(1,035)
(684)
(Profit)/loss on disposal of tangible fixed assets
(31)
36
Release of government grants
(11)
(13)
Depreciation of tangible assets
2,071
1,999
Net effect of foreign exchange adjustments
(225)
160
Non-cash effect of derivative hedging instruments
(6)
21
Defined benefit pension scheme administrative expenses
359
465
Movements in working capital:
Decrease/(increase) in stocks
3,371
(3,489)
Increase in debtors
(2,476)
(506)
Increase in creditors
2,123
864
Cash generated from operations
12,114
15,686
30
Analysis of changes in net funds - group
1 January 2025
Cash flows
Exchange rate movements
31 December 2025
£000
£000
£000
£000
Cash at bank and in hand
25,755
(4,419)
(155)
21,181
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