REGISTERED NUMBER: 00939400 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2025

FOR

MEL AVIATION LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

Mr N F Smith

Mr G W Harvey

Mr J D Watson

REGISTERED OFFICE:

Laurence Walter House

Addison Road

Chilton Industrial Estate

Sudbury

Suffolk

CO10 2YW

REGISTERED NUMBER:

00939400 (England and Wales)

SENIOR STATUTORY AUDITOR:

Mr Adam Moody FCCA

AUDITORS:

Xeinadin Audit Limited

Statutory Auditor

Maple House, Level 5A

149 Tottenham Court Road

London

W1T 7NF

The directors present their strategic report of the company and the group for the year ended 31 October 2025.

REVIEW OF BUSINESS

Group turnover decreased during the year to £25.52m (2024: £29.15m), mainly due to a one off defence contract in the prior year. Gross margin increased to 44.3% (2024:34.5%). Group operating profit before exceptional write downs and provisions amounted to £4.7m (2024: £3.5m) and exceptional expenses amounted to nil (2024: £1.04m).

The state of affairs at the balance sheet date is considered to be satisfactory with group net assets of £29.2m (2024: £26.0m).

A review of the group's activities is given below:-

MEL Aviation Limited, the parent company, based in Sudbury, Suffolk, supplies aviation support services to the military and civil aircraft industry. The company traded profitably and operating profit before exceptional items amounted to £3.2m (2024: £2.4m).The resulting profit before tax after exceptional write offs for the year was £3.3m (2024: £1.4m). The state of affairs at the balance sheet date is considered to be satisfactory with net assets of £27.3m (2024: £24.8m).

Arrowsmith Engineering and Consultants Ltd, a business based in Hampshire supplies engineering and consultancy services to the aviation industry, mainly in relation to the helicopter industry. The business traded profitably during the year with profit before tax of £828k (2024: £709k). The state of affairs at the balance sheet date is considered to be satisfactory with net assets of £1.9m (2024: £1.3m).

Headset Services Ltd, now relocated in Sudbury, supplies headset equipment to the aircraft industry and other sectors. The business traded profitably during the year with a profit before tax of £228k (2024: £250k). The state of affairs at the balance sheet date is considered to be satisfactory with net assets of £2.2m (2024: £1.9m).

MEL Aviation GmbH, a subsidiary company based in Hamburg, Germany, generated a profit of £259k (2024: £268k).The state of affairs at the balance sheet date has improved compared to the prior year.

SMA Plastics Limited, a plastics manufacturing business that operates in Sudbury, traded profitably during the year with profit before tax of £28k (2024: £56k). The state of affairs at the balance sheet date has improved compared to the prior year.

The key financial performance indicators for the group are as follows:-

2025

2024

Measure

Gross Profit Margin

44.3%

34.5%

Gross Profit/Turnover

Debtors days

106 days

97 days

Trade Debtors/Turnover

Creditors days

63 days

67 days

Trade Creditors/Cost of Sales

PRINCIPAL RISKS AND UNCERTAINTIES

The group faces the usual business risks of competition within its sector and pressure on prices. These risks are mitigated by the directors continuously driving the business forward into new product areas and niche markets where prices can be maintained at profitable levels.

The principal risks and uncertainties affecting the group include:

- Retention of customers - the company maintains strong relationships with each of its key customers and has established procedures for monitoring performance and service levels.

- Competitive risk - the group's expertise and efficiency in its marketplace and its diversity of operations helps to mitigate the possible effect of action by any one single competitor.

- Manufacturing labour costs - the group has a factory facility in Serbia. This has allowed it to maintain tight control over its manufacturing cost base whilst still maintaining excellent quality in its products.

- Quality control risks - the group maintains strict quality control over its products. It holds appropriate approval with the Civil Aviation Authority (CAA) and the Federal Aviation Authority (FAA) along with other organisations to enable it to carry on its activities in various jurisdictions around the world.

The directors believe that the group has adequate resources in place to meet its forecast trading requirements and all risks and uncertainties are managed appropriately.

FUTURE DEVELOPMENTS

The group continues to seek to develop and expand its product range and service offering to its major customers, taking advantage of opportunities both in the UK and worldwide. The directors are confident of sustainable future growth in its precision engineering sector.

EMPLOYEES

The group operates an equal opportunities policy. The aim of this policy is to ensure that there should be equal opportunity for all and this applies to external recruitment, internal appointments, terms of employment, conditions of service and opportunity for training and promotion regardless of gender, ethnic origin or disability.

Disabled persons are given full and fair consideration for all types of vacancy in as much as the opportunities available are constrained by the practical limitations of the disability. Should, for whatever reason, an employee of the group becomes disabled whilst in the employment, every step, where appropriate will be taken to assist with rehabilitation and suitable re-training.

The group maintains its own health, safety and environmental policies covering all aspect of its operations. Regular meetings and inspections take place to ensure all legal requirements are adhered to and that the group is responsive to the needs of the employees and the environment.

FINANCIAL INSTRUMENTS

The group has no funding facilities with its bank as it relies on its own cash reserves for its working capital requirements. The group has not entered into any hedging arrangements as the directors perceive the exchange rate risk to the business to be low.

ON BEHALF OF THE BOARD:

Mr G W Harvey - Director

23 July 2026

The directors present their report with the financial statements of the company and the group for the year ended 31 October 2025.

DIVIDENDS

The total distribution of dividends for the year ended 31 October 2025 was £nil (2024: £585,000).

DIRECTORS

The directors shown below have held office during the whole of the period from 1 November 2024 to the date of this report.

Mr N F Smith

Mr G W Harvey

Other changes in directors holding office are as follows:

Mr J D Watson was appointed as a director after 31 October 2025 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group 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;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

Mr G W Harvey - Director

23 July 2026

Opinion

We have audited the financial statements of MEL Aviation Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2025 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of 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 of the parent company affairs as at 31 October 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 Auditors' 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's and the 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 directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors 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 its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where 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 Statement of Directors' Responsibilities set out on page four, 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 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 the 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 the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

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

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

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

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group, including the Companies Act 2006, taxation legislation and data protection, employment, and health and safety legislation;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence where necessary.

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

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

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

To address the risk of fraud through management bias and override of controls, we:

- performed analytical procedures to identify any unusual or unexpected transactions;

- agreed income to underlying contracts;

- tested the appropriateness of journal entries;

- investigated the rationale behind significant or unusual transactions.

To address the risk that revenue could be misstated due to fraud, we:

- obtained an understanding of the company's revenue recognition policies and compared these to the accounting standard;

- performed a walkthrough to confirm our understanding of the processes and controls through which the business initiates, records, processes and reports revenue transactions;

- tested a sample of revenue transactions to supporting evidence; and

- tested, on a sample basis, revenue related balances in the balance sheet.

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

- agreeing financial statement disclosures to underlying supporting documentation;

- enquiring of management as to actual and potential litigation and claims; and

- reviewing legal expenses for any potential issues.

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

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

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

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

Mr Adam Moody FCCA (Senior Statutory Auditor)

for and on behalf of Xeinadin Audit Limited

Statutory Auditor

Maple House, Level 5A

149 Tottenham Court Road

London

W1T 7NF

23 July 2026

TURNOVER

4

25,520,074

29,150,821

Cost of sales

(14,218,718

)

(19,098,862

)

GROSS PROFIT

11,301,356

10,051,959

Administrative expenses

(7,055,452

)

(6,617,139

)

4,245,904

3,434,820

Other operating income

413,687

95,887

OPERATING PROFIT

7

4,659,591

3,530,707

Exceptional items

8

-

(1,045,021

)

4,659,591

2,485,686

Interest receivable and similar income

9

101,055

315,210

4,760,646

2,800,896

Interest payable and similar expenses

10

(61,633

)

(16,498

)

PROFIT BEFORE TAXATION

4,699,013

2,784,398

Tax on profit

11

(1,057,126

)

(367,077

)

PROFIT FOR THE FINANCIAL YEAR

3,641,887

2,417,321

Profit attributable to:

Owners of the parent

3,641,887

2,417,321

PROFIT FOR THE YEAR

3,641,887

2,417,321

OTHER COMPREHENSIVE INCOME

Exchange rate losses or gains

(475,455

)

-

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

(475,455

)

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

3,166,432

2,417,321

Total comprehensive income attributable to:

Owners of the parent

3,166,432

2,417,321

FIXED ASSETS

Intangible assets

14

227,924

215,932

Tangible assets

15

784,842

908,990

Investments

16

982,410

982,410

Investment property

17

-

392,294

1,995,176

2,499,626

CURRENT ASSETS

Stocks

18

6,871,420

8,841,839

Debtors

19

16,128,399

18,293,603

Cash at bank and in hand

15,567,050

7,445,653

38,566,869

34,581,095

CREDITORS

Amounts falling due within one year

20

10,028,009

10,837,081

NET CURRENT ASSETS

28,538,860

23,744,014

TOTAL ASSETS LESS CURRENT LIABILITIES

30,534,036

26,243,640

CREDITORS

Amounts falling due after more than one year

21

(1,302,107

)

(189,096

)

PROVISIONS FOR LIABILITIES

25

(63,604

)

(52,651

)

NET ASSETS

29,168,325

26,001,893

CAPITAL AND RESERVES

Called up share capital

26

3,100

3,100

Revaluation reserve

27

-

220,235

Retained earnings

27

29,165,225

25,778,558

SHAREHOLDERS' FUNDS

29,168,325

26,001,893

The financial statements were approved by the Board of Directors and authorised for issue on 23 July 2026 and were signed on its behalf by:

Mr G W Harvey - Director

FIXED ASSETS

Intangible assets

14

227,924

215,932

Tangible assets

15

606,756

671,633

Investments

16

2,423,117

2,423,117

Investment property

17

-

392,294

3,257,797

3,702,976

CURRENT ASSETS

Stocks

18

5,578,226

6,834,473

Debtors

19

15,873,372

18,072,093

Cash at bank and in hand

12,561,582

5,898,729

34,013,180

30,805,295

CREDITORS

Amounts falling due within one year

20

8,718,223

9,643,223

NET CURRENT ASSETS

25,294,957

21,162,072

TOTAL ASSETS LESS CURRENT LIABILITIES

28,552,754

24,865,048

CREDITORS

Amounts falling due after more than one year

21

(1,225,660

)

(64,450

)

PROVISIONS FOR LIABILITIES

25

(37,518

)

(37,518

)

NET ASSETS

27,289,576

24,763,080

CAPITAL AND RESERVES

Called up share capital

26

3,100

3,100

Revaluation reserve

27

-

220,235

Retained earnings

27

27,286,476

24,539,745

SHAREHOLDERS' FUNDS

27,289,576

24,763,080

Company's profit for the financial year

2,526,496

1,295,577

The financial statements were approved by the Board of Directors and authorised for issue on 17 July 2026 and were signed on its behalf by:

Mr G W Harvey - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 November 2023

3,100

23,946,237

220,235

24,169,572

Changes in equity

Dividends

-

(585,000

)

-

(585,000

)

Total comprehensive income

-

2,417,321

-

2,417,321

Balance at 31 October 2024

3,100

25,778,558

220,235

26,001,893

Changes in equity

Total comprehensive income

-

3,386,667

(220,235

)

3,166,432

Balance at 31 October 2025

3,100

29,165,225

-

29,168,325

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 November 2023

3,100

23,829,168

220,235

24,052,503

Changes in equity

Dividends

-

(585,000

)

-

(585,000

)

Total comprehensive income

-

1,295,577

-

1,295,577

Balance at 31 October 2024

3,100

24,539,745

220,235

24,763,080

Changes in equity

Total comprehensive income

-

2,746,731

(220,235

)

2,526,496

Balance at 31 October 2025

3,100

27,286,476

-

27,289,576

Cash flows from operating activities

Cash generated from operations

1

8,245,515

(1,406,813

)

Interest paid

(45,664

)

-

Interest element of hire purchase payments paid

(15,969

)

(16,498

)

Tax paid

(367,077

)

(866,983

)

Net cash from operating activities

7,816,805

(2,290,294

)

Cash flows from investing activities

Purchase of intangible fixed assets

(39,185

)

-

Purchase of tangible fixed assets

(56,725

)

(264,224

)

Purchase of investment property

(39,086

)

-

Sale of tangible fixed assets

(12,319

)

6,572

Sale of investment property

392,294

-

Interest received

101,055

315,210

Net cash from investing activities

346,034

57,558

Cash flows from financing activities

New loans in year

1,500,000

-

New HP in year

-

40,005

Hire purchase finance

(86,405

)

(20,351

)

Amount introduced by directors

844,208

1,817

Amount withdrawn by directors

(2,299,245

)

(844,208

)

Equity dividends paid

-

(585,000

)

Net cash from financing activities

(41,442

)

(1,407,737

)

Increase/(decrease) in cash and cash equivalents

8,121,397

(3,640,473

)

Cash and cash equivalents at beginning of year

2

7,445,653

11,086,126

Cash and cash equivalents at end of year

2

15,567,050

7,445,653

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2025

2024

£

£

Profit before taxation

4,699,013

2,784,398

Depreciation charges

224,385

199,240

Loss on disposal of fixed assets

35,086

-

Exchange rate gains

(475,458

)

-

Finance costs

61,633

16,498

Finance income

(101,055

)

(315,210

)

4,443,604

2,684,926

Decrease in stocks

1,970,419

235,361

Decrease in trade and other debtors

3,620,244

1,365,142

Decrease in trade and other creditors

(1,788,752

)

(5,692,242

)

Cash generated from operations

8,245,515

(1,406,813

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 October 2025

31.10.25

1.11.24

£

£

Cash and cash equivalents

15,567,050

7,445,653

Year ended 31 October 2024

31.10.24

1.11.23

£

£

Cash and cash equivalents

7,445,653

11,086,126

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.11.24

Cash flow

At 31.10.25

£

£

£

Net cash

Cash at bank and in hand

7,445,653

8,121,397

15,567,050

7,445,653

8,121,397

15,567,050

Debt

Finance leases

(265,939

)

86,405

(179,534

)

Debts falling due within 1 year

-

(300,000

)

(300,000

)

Debts falling due after 1 year

-

(1,200,000

)

(1,200,000

)

(265,939

)

(1,413,595

)

(1,679,534

)

Total

7,179,714

6,707,802

13,887,516