The directors present the strategic report for Hamworthy International Ltd (formerly Wartsila Water Systems Ltd) for the year ended 31 December 2025.

The Company continued its core activities throughout the year, focusing on the design, project management, supply, and sale of equipment for marine and offshore applications. Their strategic objective centres around becoming the preferred supplier of their chosen products in specific markets. To achieve this, they emphasize:

•     Continuous product development

•     A strong commitment to engineering excellence

•     Building and nurturing exceptional customer relationships

•     Cultivating a culture of whole product cycle support

In terms of financial performance, the Company reported an after-tax profit of £3,215k for the year ending 31 December 2025.

Regarding their financial position, the Company's net assets stood at £618k in 2025.

The Company closely monitors its progress through Key Performance Indicators (KPIs), ensuring successful outcomes for specific projects.

The Company continues to focus on quality and technical excellence as key differentiators in the markets it serves. Despite the risk posed by low-priced competitor products, the Company maintains its strategy of maintaining technical leadership to provide mitigation against competitive risk.

Operating internationally, the Company provides equipment manufactured using highly specialized materials. To manage the risk of material supply shortages, the Company has established flexible arrangements with suppliers and conducts regular reviews of its order book.

Additionally, the Company closely monitors geopolitical tensions, particularly in areas affected by ongoing wars. It adheres to government sanction guidelines regarding trade and relations in war zone countries. Recognizing the potential risks posed by conflicts, the Company is proactively putting in place mitigation plans where appropriate.

As our business evolves, adapts, and grows in complexity, effective risk management becomes vital. Identifying, evaluating, managing, and mitigating risks are essential components of our approach. This ongoing evolution in risk management aligns with our long-term strategic goals.

We have outlined the principal risks and uncertainties and detailed our approach to managing them. These efforts ensure that our business remains resilient and well-prepared for the challenges ahead.

Culture and Values play a crucial role in shaping how a company creates and sustains value over the long term. They are the bedrock of maintaining a reputation for high standards of business conduct. The Board set clear requirements and behaviors for directors, employees, and all associated with the organization. Our culture fosters engagement, collaboration, and employee development, benefiting both the business and those working within it.

The Company is deeply committed to responsible business practices, ensuring that our behaviour aligns with the expectations of our employees, customers, and investors. To drive success, we focus on several key aspects:

• Employee Performance Management:

  • We actively manage our employees' performance, setting individual goals and providing regular feedback.

  • Annual development reviews allow us to nurture talent and support professional growth.

• Operational Efficiency:

  • Operating efficiently is crucial for our success. We strive to optimize processes, reduce waste, and enhance productivity.

  • By streamlining operations, we create value for all stakeholders.

• Employee Engagement:

  • Regular engagement surveys provide insights into employee satisfaction, well-being, and overall experience.

  • The results of these surveys inform our future strategies, ensuring a positive work environment and organizational effectiveness.

In summary, our commitment to responsible behaviour, talent development, and operational excellence drives our long-term success.

In its global trading activities, the Company delegates customer relations ownership to the sales team. These teams coordinate their efforts regionally, with support from the wider group. This approach enables efficient collaboration with customers while upholding high service levels. Understanding and meeting our customers' needs are central to our business success, emphasizing the importance of maintaining robust relationships with our customer base.

Furthermore, the Board has taken the initiative to internalize supplier relations management. By identifying and nurturing key supplier relationships, the Company benefits both its own operations and its suppliers. The focus on quality, reliability, and value for money within our supply chain is enhanced through our preferred supplier approach.

Hamworthy’s Environmental Commitment: Hamworthy recognizes that climate change and environmental impacts are both global and local concerns. As a responsible company, Hamworthy is dedicated to minimizing its impact on the environment. Our commitment extends to working in an environmentally responsible and efficient manner, with a focus on reducing our environmental footprint.

Two Dimensions of Environmental Responsibility:

• Products: Most of our efforts to improve environmental performance, including our operations, are integrated into product development and enhancement processes. By embedding sustainability considerations into our products, we contribute to a greener future.

• Operations: Operational measures are crucial. We adhere to high environmental standards and continually seek improvement. Our goal is to minimize any adverse effects on the environment.

Additionally, we prioritize continuous improvement in our environmental and social performance. We strive to avoid causing harm to communities near our operations.

On behalf of the board

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

During the year, the principal activities of the company were the design, manufacture, and sale of equipment for marine and offshore applications.

The results for the year are set out on page 11.

The profit after tax for the financial year, amounted to £3,215k (2024: £3,186k loss).

No dividends were paid during the year (2024: £nil).

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

Hamworthy International Ltd maintains insurance policies on behalf of all directors against liability arising from negligence, breach of duty and breach of trust in relation to the entity. This is a qualifying third-party indemnity provision made for the benefit of its directors during the year. These provisions remain in force at the reporting date.

The Company made no political or charitable donations during the year (2024: £niI).

The Company's operations expose it to a variety of financial risks that include the effects of credit risk, liquidity risk, interest rate and foreign currency risk.

As part of its financial policy, the Company aims to minimize interest rate risk associated with borrowings.

Operating globally, the Company enters into contracts denominated in various currencies. Over 65% of its earnings are generated outside the UK. Unhedged exposure to changes in global currency rates can impact expected earnings and cash flows, potentially affecting the Company's competitive position.

To mitigate currency risk, the Company employs forward currency contracts. These contracts help reduce the impact of exchange rate fluctuations on project sales and purchases from a Wartsila factory in China. However, it's important to note that hedge accounting is not applied in this context.

The Company has a comprehensive credit risk management policy covering both the introduction of new customers and the management of existing customers' debts.

The Company actively maintains short-term debt finance which is designed to ensure the Company has sufficient available funds for operations and planned expansions.

The Company is exposed to price risk, and so to mitigate against price increases the Company negotiates framework agreements with suppliers to fix prices as far as possible. Purchases of materials are made to satisfy only known orders

The Company spent £373k during the year (2024: £384k) on research and development on advanced wastewater, compressors and ballast water products and systems which was expensed to the profit and loss account

Under Section 487 of the Companies Act 2006, it is stipulated that the auditors shall be considered reappointed unless a resolution has been passed to appoint someone else. Azets Audit Services Limited will retain their position and continue to serve as the company's auditors.

The Company is committed to environmental protection and carbon reduction. As per the 2018 amendments to the Companies Act 2006, The Directors are required to report on energy and carbon matters.

Data collation and emissions reporting have been conducted in accordance with HM Government's Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance (March 2019). For the calculation and reporting of greenhouse gas emissions, the UK Government's 2024 Greenhouse Gas Conversion Factors for Company Reporting have been applied, ensuring consistency and accuracy in line with the latest methodology.

The selected reporting metrics are gross Scope 2 and Scope 3 emissions, measured in tonnes per £m of turnover, as this most accurately reflects the scale of business activities. Emissions intensity will be reported annually, with year-on-year comparisons to track performance improvements.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The demand for wastewater treatment systems in the maritime industry is increasing significantly due to regulatory pressure, heightened environmental awareness, technological advancements, and the rise in global maritime trade and cruise tourism. There is ample evidence to support the Board's confidence in the Company's satisfactory performance in the coming years.

The Company remains vigilant in assessing risks and closely monitors the impact of political uncertainty on the global economy. The management team is dedicated to mitigating financial risks while ensuring a safe working environment for all personnel.

The directors consider the Company's outlook to be positive and are satisfied that the Company will be able to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of these financial statements.

The Company's business operations span across various locations, and responsibility is decentralized to local management. In this context, involving employees becomes crucial. Joint management/employee committees serve as a means to achieve a shared commitment from all employees toward the success of the business. Regular team briefings, participation in management forums, utilizing the Wartsila intranet, and distributing in-house newsletters ensure that employees are well informed and engaged.

Occupational health and safety remain a priority at all organizational levels. The Company is committed to providing equal employment opportunities for disabled individuals, whenever feasible. Efforts are made to offer suitable employment and support career development and promotion consistent with each employee's capabilities.

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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

• make an assessment of the company's ability to continue as a going concern.

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

We have audited the financial statements of Hamworthy International Ltd (the 'company') for the year ended 31 December 2025 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2025 and of its profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

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

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

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

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

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

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

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

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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 and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and 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 reviewing accounting estimates for indicators of potential bias. 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

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

There are no recognised gains and losses other than those passing through the income statement.

The notes on pages 14 to 35 form part of these financial statements.

The notes on pages 14 to 35 form part of these financial statements.

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The notes on pages 14 to 35 form part of these financial statements.

Hamworthy International Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Merchants House, Vanguard Road, Poole, Dorset, England, BH15 1PH. The company's principal activities and nature of its operations are disclosed in the directors' report.

These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”) and historic cost convention.

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

The financial statements are prepared in Sterling which is the functional currency of the company and are rounded to the nearest thousand pounds (£'000) except when otherwise stated.

Judgements made by directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 2.

In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following disclosures:

• A cashflow statement and related notes;

• Comparative year reconciliations for share capital, tangible fixed assets and intangible assets;

• Disclosures in respect of transactions with the company's parent undertaking and other wholly owned entities within the Group;

• Disclosures in respect of capital management;

• The effects of new but not yet effective IFRS's;

• Disclosures in respect of the compensation of Key Management Personnel.

As the consolidated financial statements of Wärtsilä Corporation include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:

• Certain disclosures required by IFRS 13 Fair Value Measurement, and the disclosures required by IFRS 7 Financial Instrument Disclosures.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all years presented in these financial statements.

New standards, amendments and IFRIC interpretations

The Company has adopted all new and amended IFRS Accounting Standards and IFRIC Interpretations that became effective for annual reporting periods beginning on or after 1 January 2025. The principal amendment applicable to the current financial year is the Amendments to IAS 21 – Lack of Exchangeability. The adoption of this amendment has not had a material impact on the Company's financial statements.

Standards issued but not yet effective

The Company has not early adopted any new or amended IFRS Accounting Standards or IFRIC Interpretations that have been issued but are not yet effective for the financial year ended 31 December 2025.

In accordance with paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the Company has considered the IFRS Accounting Standards and amendments that have been issued but are not yet effective. Based on the Company's assessment, these standards and amendments are not expected to have a material impact on the Company's financial position, financial performance or cash flows upon initial application. The Company will adopt these standards and amendments when they become mandatorily effective.

The demand for wastewater treatment systems in the maritime industry is increasing significantly due to regulatory pressure, heightened environmental awareness, technological advancements, and the rise in global maritime trade and cruise tourism. There is ample evidence to support the Board's confidence in the Company's satisfactory performance in the coming years. true

The Company remains vigilant in assessing risks and closely monitors the impact of political uncertainty on the global economy. The management team is dedicated to mitigating financial risks while ensuring a safe working environment for all personnel.

The directors consider the Company's outlook to be positive and are satisfied that the Company will be able to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of these financial statements.

IFRS 15 Revenues from Contracts with Customers is effective for periods beginning 1 January 2018 and has been applied using the modified retrospective approach. Under this standard, revenue recognition is based on the transfer of control, i.e., notion of control is used to determine when a good or service is transferred to the customer. In accordance with this, the Company has adopted a single comprehensive model for the accounting for revenues from contracts with customers, using a five-step approach for revenue recognition:

(1) identifying the contract;

(2) identifying the performance obligations in the contract;

(3) determining the transaction price;

(4) allocating the transaction price to the performance obligations in the contract; and

(5) recognising revenue when or as the Company satisfies a performance obligation.

Revenue represents amounts receivable for goods or services provided in the normal course of business excluding amounts collected on behalf of third parties such as sales taxes, goods and services taxes, and value added taxes. Revenue is measured at the fair value of the consideration received or receivable.

The company revenue is generated from the following:

Revenue recognised over time

Service maintenance contracts

Service maintenance contracts are performed over a period of more than one year and the customer receives the benefit of the work as it is performed, therefore revenue is recorded over time based on costs incurred as a proportion of total costs to be incurred for total services provided.

Revenue recognised at a point in time

Project sales

Contracts involving the development and construction of systems for customers, which require substantial project management, are classified as projects. These projects may span periods exceeding one year. Revenue is recognized when performance obligations are fulfilled, all components have been shipped, and control has been transferred to the customer.

Spare parts and other product sales

Spare parts and other product revenue is recognised when the order is fulfilled in line with the shipping terms in the sales contract.

Service

Service revenue is recognised on completion of the work.

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

Intangible assets acquired by the Group, other than goodwill, are stated at cost less accumulated amortisation and impairment losses. Intangible assets are amortised over the asset's estimated useful life on a straight-line basis as follows:

• Software     3 to 5 years

Amortisation methods, useful lives and residual values are reviewed at each balance sheet date.

Research and development

Expenditure on research activities is recognised in the profit and loss account as an expense as incurred.

Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Company intends and has the technical ability and sufficient resources to complete development, future economic benefits are probable and if the Company can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve a plan or design to produce new or improved products or processes. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads and capitalised borrowing costs. Other development expenditure is recognised in the profit and loss account as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses. Amortisation is recognised straight line over the expected useful life of the asset as follows:

• Licences     10 years

Amortisation methods, useful lives and residual values are reviewed at each balance sheet date.

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

Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets.

Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. The estimated useful lives are as follows:

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.

Right-of-use assets

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

• Leases of low value assets; and

• Leases with a duration of twelve months or less

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Company's incremental borrowing rate on commencement of the lease is used. Other variable lease payments are expensed in the period to which they relate.

Right-of-use assets are initially measured at the amount of the lease liability.

After initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

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

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

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

Stocks are stated at the lower of cost and net realisable value. Cost includes materials, direct labour, delivery costs and an attributable proportion of manufacturing and assembly overheads based on normal levels of activity. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow-moving, or defective items where appropriate.

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

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

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

Derivative financial instruments

Derivative financial instruments are recognised at fair value. Gains and losses arising from changes in fair values are recognised in the profit and loss account in the period in which they have arisen.

Non-derivative financial instruments

Non-derivative financial instruments comprise intercompany, trade and other debtors, cash and cash equivalents, trade and other creditors, and borrowings.

Intercompany, trade and other debtors

Intercompany, trade and other debtors are recognised initially at transaction cost unless a financing arrangement is in place. After initial recognition they are measured at amortised cost using the effective interest method,

less any impairment losses. These are derecognised at the time of either the customer settling the debt or being written off as not recoverable.

Intercompany, trade and other creditors

Intercompany, trade and other creditors are recognised initially at transaction cost unless a financing arrangement is in place. Subsequent to initial recognition they are measured at amortised cost using the effective interest method. These are derecognised at the point that the debt is settled with the creditor.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances. They are recognised at fair value initially and at the end of the accounting year, where necessary, translated to functional currency at the prevailing rates at that time.

All cash is part of an intergroup cash pooling arrangement which is administered by the central treasury department in Wartsila Corporation.

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at transaction cost. After initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses, and derecognised at the time that the debt is settled.

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

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.

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

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

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

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

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

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within tangible fixed assets, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently adjusted for remeasurements of the lease liability and applies the relevant cost model, fair value model or revaluation model as set out within the accounting policies for the applicable asset class. Where the cost model is applied, the asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term, and is periodically reduced by impairment losses, if any.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is reassessed at each financial period end to reflect lease modifications and any changes to the factors considered at initial measurement, as set out above. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

Transactions in foreign currencies are translated to the Company's functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. Foreign exchange differences arising on translation are recognised in the profit and loss account.

Impairment excluding stocks and deferred tax assets

Financial assets (including trade and other debtors)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it will suffer an expected credit loss (ECL). A financial asset is impaired if objective evidence indicates that a loss event will occur after the initial recognition of the asset, and that the loss event will have a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets

The carrying amounts of the Company's non-financial assets, other than stocks and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.

In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Expenses

Interest receivable and interest payable

Interest payable and similar expenses include interest payable, finance charges on finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and gross foreign exchange losses that are recognised in the profit and loss account (see foreign currency accounting policy). Other interest receivable and similar income include interest receivable on funds on deposit and net foreign exchange gains.

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Foreign currency gains and losses are reported on a gross basis.

Intangible assets Impairment reviews

Intangible assets are considered significant in comparison to the Company's total carrying amount. As such, these assets have been allocated to cash generating units (CGUs) or groups of cash generating units (CGUs).

When an indication of impairment is identified, the estimation requires measurement of recoverable value of cash generating units (CGUs). This requires estimation of the future cash flows from the cash generating units (CGUs) and also selection of appropriate discount rates in order to calculate the net present value of those cash flows. When these do not support the carrying amount, an impairment is booked.

Long term contract accounting and Work-in-progress (WIP)

In order to determine the profit or loss that the company is able to recognize on its long-term projects in a specified period, the Company has to allocate total costs of the projects to determine the work in progress (WIP) and estimate the future costs required to complete the projects. The assessment of the total costs to be incurred and assessing the work in progress (WIP) requires a degree of estimation. Management has established internal controls to review and ensure the appropriateness of estimates made on an individual contract basis, including any necessary contract provisions. Contract assets and onerous contract provisions are disclosed in Note 12 and Note 15, respectively.

Warranty provision

Company routinely gives warranties to customers in respect of certain products ranging from 18 to 24 months from delivery. Management estimates the provision based on historic claims received over last few years which requires a degree of estimation. Management has established controls in process to monitor the frequency of claims, the expected lifetime of the products and the history of customers in estimating the claims.

Onerous contract provision

The Company conducts quarterly reviews of ongoing projects to assess profitability before revenue recognition, in line with IFRS 15. Loss-making projects are provisioned based on expected losses. This involves management judgment, particularly in estimating costs to complete, interpreting contract terms, and reviewing current performance. Internal controls are in place to monitor budgets, cost trends, and scope changes that may impact profitability.

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

Their aggregate remuneration comprised:

The charge for the year can be reconciled to the profit/(loss) per the profit and loss account as follows:

Pillar Two disclosures

During the year, the company was part of a multinational group headed by Wärtsilä Corporation, a company incorporated in Finland, with consolidated annual revenue exceeding €750 million. As such, the group is within the scope of the OECD's Pillar Two Global Anti-Base Erosion (GloBE) Model Rules, which introduce a global minimum effective tax rate of 15%. The company is claiming exemption from Pillar Two specific disclosures in accordance with FRS 101 67CA to 67CB, as these disclosures will be included in the consolidated financial statements of the ultimate parent, Wartsila Corporation.

The balances are presented net of stock provisions, writing stock down to net realisable value, and which amounted to £492,001 (2024: £343,953). Impairments to stock are recognised in cost of sales.

Included in amounts owed by group undertakings is cash placed on short term deposit as part of a Group cash pooling arrangement which is interest bearing at an average rate of 2% (2024: 2%) and is unsecured and repayable on demand. At 31 December 2025 this amounted to £7,571,114 (2024: £11,634,596).

Subsequent to the year end, the Group cash pooling arrangement was terminated and the balance was repaid/settled accordingly.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

Provisions for warranties

The Company routinely provides warranties to customers in respect of certain products. Any costs incurred in meeting claims, for which the warranty provision has been established, are expected to be incurred within the agreed warranty period. This would typically be within 24 months of the balance sheet date.

Onerous contracts provisions

During the reporting period, the company continued to recognise a provision in respect of certain remedial works, which totaled £8.9m (2024: £9,8m) at the balance sheet date. This amount was allocated from the existing loss provision during the previous reporting period and represents management's best estimate of the costs associated with the required actions.

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

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

At 31 December 2025 contingent liabilities exist in respect of bank guarantees in relation to performance and advance payment guarantees totalling £1,923,000 (31 December 2024: £2,368,000).

The company routinely enters into a range of contractual arrangements in the ordinary course of business that can give rise to claims or potential litigation against the company. It is the company’s policy to make specific provision at the balance sheet date for all liabilities including warranty costs and guarantees which, in the opinion of the directors, are expected to result in a significant loss. The directors have reviewed the open claims and pending litigation against the company at the year end and concluded that no material loss is likely to accrue from any such un-provided claims.

At the balance sheet date, the Company's immediate parent company was Wartsila UK Holding Limited. The Company's ultimate parent undertaking, which was also the ultimate controlling party, was Wärtsilä Corporation, which is incorporated in Finland.

Wartsila Corporation is the only group in which the results of the Company are consolidated. The consolidated financial statements of this groups are available to the public and may be obtained from:

Wärtsilä Corporation

John Stenbergin ranta 2

00530

Helsinki

P.O. Box 196

00531 Finland

Or at the company website www.wartsila.com.

With effect from 1 June 2026 the company's new immediate parent undertaking is Hamworthy International Holding Ltd, and its ultimate controlling party is Solix Investment AB.

As part of a divestment led by the Company's ultimate parent undertaking, Wärtsilä Corporation, the Company was acquired by Solix Investment AB, a company incorporated in Sweden.

Following completion of the sale and purchase agreement after the reporting date, certain assets and liabilities recognised by the Company as at 31 December 2025 were derecognised.

The group restructuring has no impact on the Company's financial statements for the year ended 31 December 2025.