Financial Statements
For the year ended 31 December 2025
Registered number: 04801815
Company Information
Contents
Strategic report
For the year ended 31 December 2025
The directors present the Strategic Report together with the audited financial statements for the year ended 31 December 2025.
The objectives of this report are to provide shareholders and other users of these statements:
∙with the appropriate level of background context for these financial statements;
∙with an analysis of the entity's past performance; and
∙insight into the Company's main objectives and strategies, and the principal risks it faces and how they might affect future prospects.
The business provides solutions for its clients so as to improve their efficiency, visibility, customer service and financial performance.
This is achieved through the continual training and development of our people in technologies and careful consideration of client business needs, business processes and trends. This is continually reflected in positive client satisfaction surveys that are routinely carried out with our clients.
During the year ended 31 December 2025, the Company generated:
∙Turnover of £57.1m (2024 - £69.9m);
∙Profit for the year, after taxation, amounted to £10.2m (2024 - profit of £4.4m, as restated);
∙Net assets at year end £23.0m (2024 - net assets of £12.9m, as restated); and
∙Cash at year end £1.6m (2024 - £2.4m).
The business continues to offer highly skilled consultancy support to a variety of blue chip, gilt-edged and FTSE 250 clients. The Company has recruited new individuals, invested in client relationships throughout the year and is in a position to further expand in the UK market.
The Company continues to work alongside existing clients, supporting them in their business needs with high quality advice. North Highland believes in treating its people and its clients in the right way and this is the essence of the "North Highland Way" and the NextGen approach to consulting. New opportunities are developed as relationships deepen both with existing clients and new clients when it is right for the client. North Highland remains committed to recruiting skilled individuals and investing in its existing staff.
The directors are confident that the Company will continue to operate profitably and there are no plans to significantly change the successful formula the Company has continued to operate with. Organic sales continue to be strong with both new and existing clients.
Page 1
Strategic report (continued)
For the year ended 31 December 2025
The principal risk is that some clients will be cautious in spending with an uncertain economy. The directors have set out to manage this risk by continuing to concentrate on blue chip and gilt-edge clients.
Sales targets have been set and regular sales meetings are held to review the new sales being made and to plan revenue for the future months.
The main risks arising from the Company's financial statements are market, liquidity, credit, and cash flow risk. The directors review and agree policies for managing each of these risks and they are summarised below:
Market risk
The Company is exposed to transaction foreign exchange risk. The mix of currencies and terms of trade is such that the directors believe that the Company's exposure is minimal and consequently they do not specifically seek to hedge that exposure.
Liquidity risk
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Company is financed by operating cash flows. In the event of a customer default or cash flow deficit, the Company has access to funding from the The North Highland Holding Company, LLC, the parent company.
Credit risk
The Company maintains its cash in bank accounts. The Company does not believe it is exposed to any significant credit risk as the Company maintains its cash with what management believes to be quality financial institutions.
Cash flow risk
The Company seeks to manage cash flow risk by driving revenue growth and responsibly managing discretionary expenses.
The directors measure the performance of the Company using a number of key performance indicators (KPIs). The most significant ones are revenue and profit after tax as disclosed above.
Other key performance indicators reviewed by the Company include gross margin 33.9% (2024 - 38.2%) and workforce utilization. Gross margin is reviewed on a consolidated basis, as well as at the project level to determine the health of the Company's individual revenue streams.
Other key performance indicators reviewed by the Company include gross margin 33.9% (2024 - 38.2%) and workforce utilization. Gross margin is reviewed on a consolidated basis, as well as at the project level to determine the health of the Company's individual revenue streams.
Page 2
Strategic report (continued)
For the year ended 31 December 2025
The directors acknowledge their duty under Section 172 of the Companies Act 2006 and consider that they have, both individually and together, acted in the way that, in good faith, would be most likely to promote the success of the Company for the benefits of its members as a whole. In doing so, they have had regard (amongst other matters) to:
∙The likely consequences of any decision in the long-term
The Company's long-term strategic objectives, including progress made during the year and principal risks to these objectives, are stated above.
The Company's long-term strategic objectives, including progress made during the year and principal risks to these objectives, are stated above.
∙The interests of the Company's employees
The board considers the Company's employees to be primary stakeholders of the Company under s172. The board is eager to retain its employees and show its appreciation by offering internal learning and educational opportunities to advance their careers and also by offering participation in various incentive schemes. Employees are fundamental to the Company's success in the current environment as well as our long-term strategic objectives. The board also acknowledges that discrimination in any form is unacceptable and equality of opportunity has been a long-standing characteristic of the Company's employment practice and procedure. The code of conduct set outs how employees are able to anonymously raise any concerns.
The board considers the Company's employees to be primary stakeholders of the Company under s172. The board is eager to retain its employees and show its appreciation by offering internal learning and educational opportunities to advance their careers and also by offering participation in various incentive schemes. Employees are fundamental to the Company's success in the current environment as well as our long-term strategic objectives. The board also acknowledges that discrimination in any form is unacceptable and equality of opportunity has been a long-standing characteristic of the Company's employment practice and procedure. The code of conduct set outs how employees are able to anonymously raise any concerns.
∙The need to foster the Company's business relationships with suppliers, customers and others
The board partners with its customers and through a group affiliate entity in order to build long-term relationships with its customers. It also leverages relationships with select vendors in order to supplement necessary consulting services to provide high quality and cost effective service for its customers.
The board partners with its customers and through a group affiliate entity in order to build long-term relationships with its customers. It also leverages relationships with select vendors in order to supplement necessary consulting services to provide high quality and cost effective service for its customers.
∙The impact of the Company's operations on the community and the environment
The Company operates honestly and transparently. It seeks to minimize adverse impacts on the environment from its activities, while continuing to address health, safety and economic issues. The Company has complied with all applicable legislation and regulations.
The Company operates honestly and transparently. It seeks to minimize adverse impacts on the environment from its activities, while continuing to address health, safety and economic issues. The Company has complied with all applicable legislation and regulations.
∙The desirability of the Company maintaining a reputation for high standards of business conduct
The Company strives to behave in a responsible manner, operating to a high standard of business conduct and good corporate governance covered in the Company's Code of Conduct.
The Company strives to behave in a responsible manner, operating to a high standard of business conduct and good corporate governance covered in the Company's Code of Conduct.
∙The need to act fairly as between members of the Company
The Company's duty is to behave responsibly towards its shareholders and treat them fairly and equally, so that they will be able to benefit from the successful delivery of the Company's strategic objectives.
The Company's duty is to behave responsibly towards its shareholders and treat them fairly and equally, so that they will be able to benefit from the successful delivery of the Company's strategic objectives.
Directors must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the:
∙likely consequences of any decision in the long-term;
∙interests of employees;
∙need to foster business relationships with suppliers, clients and others;
∙impact of operations on the community and the environment;
∙desirability of maintaining a reputation for high standards of business conduct; and
∙need to act fairly between members.
Page 3
Strategic report (continued)
For the year ended 31 December 2025
Directors' statement of compliance with duty to promote the success of the Company (continued)
In considering the above matters, the board meets regularly to discuss and assess:
∙the critical success factors that support the generation and preservation of value in the Company;
∙how the interests of different stakeholders affect the Company;
∙the culture of the Company, its development and its impact on future decision making;
∙the principal decisions taken by the board and any changes and application of those decisions to employees, stakeholders, members, the community and environment; and
∙the Company engages with its employees through staff cultural and feedback surveys. It also engages with its customers through regular discussion and understanding of their needs.
The board has always considered the long-term impact of its decisions, and collectively aims to uphold the highest standards of governance.
This report was approved by the board and signed on its behalf.
Page 4
Directors' report
For the year ended 31 December 2025
The directors present their report and the financial statements for the year ended 31 December 2025 .
The profit for the year, after taxation, amounted to £10,155,763 (2024 - £4,366,312 , as restated).
The directors did not pay a dividend in the year (2024 - £NIL).
The directors who served during the year were:
The Company has net assets of £23,011,495 (2024 - £12,854,574, as restated) and has recorded a profit of £10,155,763 (2024 - £4,366,312, as restated).
As part of their going concern assessment, the directors have prepared forecasts to assess the working capital requirements to continue in operational existence for a minimum period of 12 months from the date of the approval of these financial statements. The directors have considered potential downside scenarios and their impact on the forecasts. They have determined that the Company has adequate working capital access to absorb the foreseeable impact of a potential softening of the economy and is working to mitigate the business risks as the situation continues to evolve. The directors manage the risk of a downturn in trading activity through a diversified client base, which continues to grow year-on-year, and with which strong relationships are built. The Company has considerable financial resources together with a broad client base across different markets and disciplines.
The current economic environment has also shown a downturn through increased inflation and interest rates. The Company has seen an impact due to these economic circumstances but has been in a good position to mitigate through a combination of customer price increases and enhanced diligence when monitoring and reducing spend when needed.
The directors have a reasonable expectation that the Company has adequate resources to continue operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
As part of their going concern assessment, the directors have prepared forecasts to assess the working capital requirements to continue in operational existence for a minimum period of 12 months from the date of the approval of these financial statements. The directors have considered potential downside scenarios and their impact on the forecasts. They have determined that the Company has adequate working capital access to absorb the foreseeable impact of a potential softening of the economy and is working to mitigate the business risks as the situation continues to evolve. The directors manage the risk of a downturn in trading activity through a diversified client base, which continues to grow year-on-year, and with which strong relationships are built. The Company has considerable financial resources together with a broad client base across different markets and disciplines.
The current economic environment has also shown a downturn through increased inflation and interest rates. The Company has seen an impact due to these economic circumstances but has been in a good position to mitigate through a combination of customer price increases and enhanced diligence when monitoring and reducing spend when needed.
The directors have a reasonable expectation that the Company has adequate resources to continue operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The Company maintained throughout the year, and at the date of approval of the financial statements, liability insurance for its directors and officers. This is a qualifying provision for the purposes of the Companies Act 2006.
Page 5
Directors' report (continued)
For the year ended 31 December 2025
The Company will seek to minimize adverse impacts on the environment from its activities, while continuing to address health, safety and economic issues. The Company has complied with all applicable legislation and regulations.
The Company aims to keep its employees informed of operational results and the trading, financial and economic factors affecting them as employees. This is achieved through continuous communications via the Company's management structures, the use of internal communications, and presentations by the senior management team to all employees in the Company.
Page 6
Directors' report (continued)
For the year ended 31 December 2025
The auditor, Grant Thornton, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 7
Directors' responsibilities statement
For the year ended 31 December 2025
Matthew Joel Miller
Director
Date: 20 August 2026
Page 8
Independent auditor's report to the members of North Highland UK Limited
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 the date 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.
Page 9
Independent auditor's report to the members of North Highland UK Limited (continued)
Other information comprises the information included in the Annual Report, other than the financial statements and our Auditor's report thereon, including the Directors' report and the Strategic Report. The directors are responsible for the other information. Our opinion on the financial statements does not cover the 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 in the financial statements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 Directors' report and the Strategic Report for the year for which the financial statements are prepared is consistent with the financial statements, and
∙the Directors' report and the Strategic Report have been prepared in accordance with applicable legal requirements.
Page 10
Independent auditor's report to the members of North Highland UK Limited (continued)
Page 11
Independent auditor's report to the members of North Highland UK Limited (continued)
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.
for and on behalf of
Chartered Accountants &
Statutory Auditors
13-18 City Quay
13-18 City Quay
Dublin 2
Date:21 August 2026
Date:
Page 12
Statement of comprehensive income
For the year ended 31 December 2025
Page 13
Balance sheet
As at 31 December 2025
Refer to Note 21 for details of the prior year restatement.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 35 form part of these financial statements.
Page 14
Statement of changes in equity
For the year ended 31 December 2025
Statement of changes in equity
For the year ended 31 December 2024
Page 15
Notes to the financial statements
For the year ended 31 December 2025
North Highland UK Limited is a private company limited by shares and incorporated in England and Wales under the Companies Act 2006. The address of the registered office is given on the Company information page and the nature of the Company’s operations and its principal activity are set out in the Directors’ report.
2.Accounting policies
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The presentational and functional currency of these financial statements is GBP. Values are rounded to the nearest pound.
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
As part of their going concern assessment, the directors have prepared forecasts to assess the working capital requirements to continue in operational existence for a minimum period of 12 months from the date of the approval of these financial statements. The directors have considered potential downside scenarios and their impact on the forecasts. They have determined that the Company has adequate working capital access to absorb the foreseeable impact of a potential softening of the economy and is working to mitigate the business risks as the situation continues to evolve.
Page 16
Notes to the financial statements
For the year ended 31 December 2025
2.Accounting policies (continued)
The current economic environment has also shown a downturn through increased inflation and interest rates. The Company has seen an impact due to these economic circumstances but has been in a good position to mitigate through a combination of customer price increases and enhanced diligence when monitoring and reducing spend when needed.
The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Page 17
Notes to the financial statements
For the year ended 31 December 2025
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Page 18
Notes to the financial statements
For the year ended 31 December 2025
2.Accounting policies (continued)
Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an 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.
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Page 19
Notes to the financial statements
For the year ended 31 December 2025
2.Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme).
In February 2023, the Second Amended and Restated Limited Liability Company Agreement of The North Highland Holding Company LLC ("TNHHC") and the 2006 Companies Act "UK Plan" was modified to permit the forfeiture of specific cash-settled Class B shares and immediately replace with cash-settled Phantom Equity shares. The phantom shares are cash-settled instruments with the value of the replacement awards dependent on a contingent settlement provision that is triggered by an unpredictable future change in control event. Movements in the liability (other than cash payments) are charged to profit or loss.
In October 2023, the North Highland UK Limited 2023 Phantom Incentive Unit Plan "UK MIP Plan" was formed to permit the issuance of management incentive units to employees. Management incentive units are treated as equity-settled awards and the fair value of the options at the date of grant is charged to profit or loss over the vesting period.
Page 20
Notes to the financial statements
For the year ended 31 December 2025
2.Accounting policies (continued)
Interest income is recognised in profit or loss using the effective interest method.
All borrowing costs are recognised within interest payable and similar expenses in profit or loss in the period in which they are incurred. These costs include any interest expense calculated using the effective interest method.
Page 21
Notes to the financial statements
For the year ended 31 December 2025
2.Accounting policies (continued)
Management reviews the estimates and assumptions on a continuous basis, by reference to past experiences and other factors that can reasonably be used to assess the book values of assets and liabilities. Adjustments to accounting estimates are recognized in the period in which the estimate is revised if the change affects only that period or in the period of the revision and subsequent periods, if both periods are affected.
Actual results may differ from those estimates.
Judgements and estimates that have the most significant impact on the amounts reported in these financial statements and have a risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Page 22
Notes to the financial statements
For the year ended 31 December 2025
Analysis of turnover by country of destination:
Page 23
Notes to the financial statements
For the year ended 31 December 2025
Page 24
Notes to the financial statements
For the year ended 31 December 2025
Page 25
Notes to the financial statements
For the year ended 31 December 2025
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
Page 26
Notes to the financial statements
For the year ended 31 December 2025
Page 27
Notes to the financial statements
For the year ended 31 December 2025
Page 28
Notes to the financial statements
For the year ended 31 December 2025
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
Page 29
Notes to the financial statements
For the year ended 31 December 2025
The Company's reserves are as follows:
Called up share capital
Called up share capital
Share premium account
Profit and loss account
The long-term incentive programmes in place for all employees are based on the principles that compensation should be based on performance and be an incentive for employees to create value in the Company both now and in future years. Five incentive plans were in place during the period:
Synthetic Shares (opened December 2012)
Stock Appreciation Rights (opened December 2012)
B shares (opened December 2016)
Phantom Equity Awards (opened February 2023)
Management Incentive Units (opened May 2023)
Synthetic Shares, Stock Appreciation Rights and Phantom Equity Awards are phantom share schemes which are cash settled with employees and no shares are issued. For the B Shares and Management Incentive Unit schemes, shares are issued to employees as described in Note 18.
Transition Synthetic Shares and Awards
Synthetic shares (issued December 2012 and December 2013)
Synthetic shares are valued at the same share price of The North Highland Holding Company, LLC, a parent of North Highland UK Limited. The share price of The North Highland Holding Company, LLC is valued by a third party and is independently audited. Share valuations are undertaken annually based on the most recent accounts. Vested awards can be exercised during the annual trade window and will be cash-settled.
Transition synthetic shares (Transition 2012)
58,263 synthetic shares were awarded in December 2012 when the old share scheme was closed. The transition awards vest evenly over five years with the first 20% vesting on 31 December 2013.
Awards (issued December of 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021)
Employees are rewarded each year with awards based on grade and performance over the previous twelve months. The number of awards available for issue is based on a fraction of the annual salary cost. Awards are valued at the year end share price of The North Highland Holding Company, LLC, and the value was £12.96 as at 31 December 2021. The plan was ended as of 31 December 2021 with the share price frozen as of that date. The last shares issued in 2022 related to the 2021 plan year. Awards automatically vest on issue depending on length of service. At the financial year end following the first 18 months of service, awards vest at 20% and vest an additional 20% on each year end anniversary until they are 100% vested. Vesting was accelerated to 100% for all employees still employed after 31 December 2021 (the termination of the plan). The Company is actively working to pay out the plan in full. No awards were issued in the year ended 31 December 2025 (2024 - NIL).
Synthetic Shares (opened December 2012)
Stock Appreciation Rights (opened December 2012)
B shares (opened December 2016)
Phantom Equity Awards (opened February 2023)
Management Incentive Units (opened May 2023)
Synthetic Shares, Stock Appreciation Rights and Phantom Equity Awards are phantom share schemes which are cash settled with employees and no shares are issued. For the B Shares and Management Incentive Unit schemes, shares are issued to employees as described in Note 18.
Transition Synthetic Shares and Awards
Synthetic shares (issued December 2012 and December 2013)
Synthetic shares are valued at the same share price of The North Highland Holding Company, LLC, a parent of North Highland UK Limited. The share price of The North Highland Holding Company, LLC is valued by a third party and is independently audited. Share valuations are undertaken annually based on the most recent accounts. Vested awards can be exercised during the annual trade window and will be cash-settled.
Transition synthetic shares (Transition 2012)
58,263 synthetic shares were awarded in December 2012 when the old share scheme was closed. The transition awards vest evenly over five years with the first 20% vesting on 31 December 2013.
Awards (issued December of 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021)
Employees are rewarded each year with awards based on grade and performance over the previous twelve months. The number of awards available for issue is based on a fraction of the annual salary cost. Awards are valued at the year end share price of The North Highland Holding Company, LLC, and the value was £12.96 as at 31 December 2021. The plan was ended as of 31 December 2021 with the share price frozen as of that date. The last shares issued in 2022 related to the 2021 plan year. Awards automatically vest on issue depending on length of service. At the financial year end following the first 18 months of service, awards vest at 20% and vest an additional 20% on each year end anniversary until they are 100% vested. Vesting was accelerated to 100% for all employees still employed after 31 December 2021 (the termination of the plan). The Company is actively working to pay out the plan in full. No awards were issued in the year ended 31 December 2025 (2024 - NIL).
Page 30
Notes to the financial statements
For the year ended 31 December 2025
20.Share-based payments (continued)
In line with FRS 102 section 26 'Share based payments', the full value of vested awards is included within the Statement of Comprehensive Income as well as the future value whereby a proportion of future vestings are included within the current calculation based on the number of years to vest. Included within the accounts is a provision of £71,069 (2024 - £71,069) including the impact of National Insurance representing fully vested and a proportion of unvested awards.
Stock Appreciation Rights (SARs)
Transition Stock Appreciation Rights (issued December 2012)
Following a prior change in ownership, split interest awards which were 100% vested were replaced with Stock Appreciation Rights (SARs). SARs are an incentive for employees to remain with the Company as the SAR is determined by the current US parent share price less the share price at issue. Transition SARs vest evenly over five years with the first 20% vesting in December 2013. Vested awards can be exercised during the annual trade window and will be cash-settled.
Executive Scheme SARs (issued December 2012, December 2013 and December 2014)
The executives are awarded SARs based on their performance. The awards vest evenly over five years with the first vesting on the year end following the anniversary of the award. Included within the accounts is a provision of £141 (2024 - £141) excluding impact of National Insurance related to the vesting of these awards.
B shares - Cash settled share based payments
B Shares (Time-based Awards). Time-based awards granted to employees in the UK are referred to as "B Shares". The awards generally vest over three years. B Shares granted to employees are settled in cash and cannot be transferred during the vesting period. Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting. Compensation expense relating to the issuance of cash-settled units is recorded over the vesting period. The initial value is based on the fair value of the award on the grant date and is subsequently remeasured at each reporting date during the vesting period based on the change in The North Highland Holding Company's share price.
The total remaining unrecognized compensation cost related to unvested B shares (Time-based Awards) amounted to £NIL (2024 - £12,433 ) as of year-end.
B Shares (Performance-based Awards). B Shares with performance-based vesting are granted to employees in the UK. The awards generally vest over a four-year performance period. The performance metric and possible payouts for the awards is communicated at the beginning of the performance period, depending upon the Company's gross profit growth over the determination period. Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting. UK performance-based awards cannot be transferred and are settled in cash. Compensation expense relating to the issuance of performance based restricted units settled in cash is recognized over the vesting period initially based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded during the performance period based on probable and actual performance against targets. In addition, compensation expense is remeasured at each reporting period during the vesting period based on the change in the Company's share price.
As of 31 December 2025, the total remaining unrecognised compensation cost related to unvested B shares (Performance-based Awards) amounted to £NIL (2024 - £NIL).
B shares issued in 2025 were 505 (2024 - 5,513). At the start of the year, 532,213 (2024 - 527,333) B shares were in issue. 29,198 (2024 - 633 ) options were forfeited, exercised or expired during the year resulting in 503,520 (2024 - 532,213) B shares outstanding. 503,520 (2024 - 530,279) of these shares were vested and exercisable at year-end.
Page 31
Notes to the financial statements
For the year ended 31 December 2025
20.Share-based payments (continued)
The liability recorded arising from the award of these options is £15,736,433 (2024 - £26,772,205, as restated), based on the share price of The North Highland Holding Company LLC, a parent company. The share value was £32.11 (2024 - £51.14, as restated) as of 31 December 2025. During the year 29,198 options were redeemed resulting in a cash outflow of £1,243,229. Share based compensation income for the year was £9,791,383 (2024 - expense of £3,679,263, as restated).
Phantom Equity Awards
Phantom equity awards were granted to specific employees in the UK to replace awards forfeited as described in Note 2.12. The original awards forfeited were treated as liability awards to be settled in cash. The phantom equity replacement awards granted are subject to time-based vesting over a period defined in each specific agreement unless a change in control event occurs, in which all unvested awards would vest immediately. These awards are also cash-settled. The value of the awards is dependent on a contingent settlement provision that is triggered by an unpredictable future change in control event. The compensation expense will be determined at the time a change in control transaction becomes probable.
As of 31 December 2025, the total unrecognised expense for the phantom equity units is £8,520,827 (2024 - £12,361,439) as the change in control event is not probable. No awards were issued in 2025 (2024 - 94,000). No phantom equity awards were forfeited, exercised or expired during the year, resulting in 265,368 (2024 - 265,368) outstanding awards of which 265,368 (2024 - 231,368) are time-vested but not exercisable at year-end.
Equity settled share-based payments
Management Incentive Units (Class P Units). In February 2023, the Company began offering management incentive units as a new award class under the North Highland UK Limited 2023 Phantom Incentive Unit Plan. Awards granted are divided into two tranches with different vesting requirements. Tranche one will be subject to time-based vesting. This tranche generally vests over a five-year service period; however, if the Company enters a change of control transaction, all unvested time-based units will immediately vest. Tranche two is subject to performance-based vesting.
The performance-based tranche shall vest 0%, 33%, 66%, or 100% immediately prior to a change of control depending on performance metrics measured at the time of sale. Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting. Management incentive units cannot be transferred and are settled in shares. Compensation expense will be determined at the time a change in control transaction becomes probable. In addition, compensation expense will be measured as the spread between the grant price and the Company's share value at the time a probable triggering event occurs. As of 31 December 2025, unrecognized expense for the management incentive units is £NIL (2024 - £NIL) as the grant price of the units exceeds the current year's share price. A total of 4,945 awards were issued in 2025 (2024 - 39,632). 29,426 units were forfeited, exercised or expired during the year. 38,474 (2024 - 20,780) units are time-vested but not exercisable at year-end.
Page 32
Notes to the financial statements
For the year ended 31 December 2025
In accordance with FRS 102 Section 10 – Accounting Policies, Estimates and Errors, the prior period error has been corrected by restating the comparative financial information. The cumulative after-tax effect of the correction has been recognised in opening retained earnings at 1 January 2025. The impact of the restatement on the affected statement of comprehensive income and statement of financial position line items as at 31 December 2024 is summarised in the tables below.
Statement of comprehensive income
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
Statement of financial position
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
||||
|
|
Page 33
Notes to the financial statements
For the year ended 31 December 2025
Page 34
Notes to the financial statements
For the year ended 31 December 2025
Page 35