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

We aim to present a balanced and comprehensive review of our business’s development and performance during the year and its position at year-end. Our review is consistent with its size and nature.

The company’s principal activity is the supply, manufacture and processing of timber and building materials to trade and retail customers from its 17 depots across Sussex, Hampshire, Kent, and Surrey.

The only exceptional items in 2025 (as analysed in the Adjusted Income Statement below) related to writing down the investment of a small dormant subsidiary, net of a final dividend. We also reviewed the carrying value of goodwill arising on other investments, such as Wingham Timber, acquired in 2022, and reduced its value in light of continued subdued trading conditions. To get a like-for-like comparison with 2024, which also had exceptional items, an Adjusted Income Statement is shown below.

Like much of the construction sector, the company continued to face a challenging trading environment in 2025, largely for the same reasons as in 2024, with high inflation, elevated interest rates, and broader economic uncertainty suppressing consumer confidence and disposable income. Demand for home improvements continued to stall; volumes declined, and timber prices remained low by recent history. As a result, the company's 2025 revenue reduced slightly. Margins were slightly ahead of the prior year but remain under pressure as competition intensified and costs rose, most notably from increases in Employer's National Insurance and the National Living Wage. Discretionary spending was cut to partially mitigate these increases, and recruitment was delayed.

Our key financial performance indicators—turnover, gross margin, and operating margin—reflect the company’s financial performance and resilience.

Adjusted Income Statement (Excluding Exceptional Items)

• The Company’s turnover decreased by 1.0%.

• Gross margin increased slightly to 33.3%.

• Adjusted operating margin was 1.0%, up 1.5% against the prior year.

• The business recorded an Adjusted operating profit of £0.9m (2024: £0.4m loss).

• Adjusted profit before tax moved from a £1.3m loss in 2024 to a profit of £0.1m in 2025.

Despite these pressures, the balance sheet remains strong, with net current assets of £16.1m and total net assets of £44.1m. No dividends were paid in 2025 (2024: £0.7m), reflecting a prudent approach to maintaining financial resilience. This enables us to continue investing in the business's future and to meet supplier terms.

We have continued to be guided by our values (available on the website www.coversmerchants.co.uk) and always aim to protect and enhance our long-term reputation with all stakeholders.

The directors have identified the following as the principal risks and uncertainties facing the Company, together with the mitigating actions taken:

• Economic and market conditions – demand for building materials is closely linked to consumer confidence, interest rates and construction activity. We mitigate this through a diversified trade and retail customer base and tight management of working capital.

• Cost inflation – rising statutory employment costs and other input cost inflation, as referenced above, continue to pressure operating margins. We manage this through pricing discipline, procurement efficiencies and selective cost control.

• Commodity prices and supply chain – timber and other building material prices can be volatile and supply can be disrupted. We mitigate this through forward ordering, supplier diversification and selective stockholding (see also Our customers and suppliers below).

• Competition – the Southeast builders’ merchant market remains highly competitive (see our Section 172 statement below for more on our competitive positioning). We respond by investing in service levels, digitalisation and our independent, customer-focused positioning.

• Credit, liquidity and interest rate risk – the Company is exposed to price, credit, liquidity and cashflow risk in the normal course of trading. This is mitigated by credit control procedures, financial support from the wider Group, and access to unused credit facilities.

We have taken steps to reduce costs and improve efficiency while maintaining the high levels of service our customers expect. We continue to invest selectively in the business, particularly in vehicles, forklifts, and plant—prioritising electric equipment wherever feasible to support our net-zero ambitions. Our energy intensity decreased on a like-for-like basis and will continue to do so as we fully transition to purchasing green electricity.

Outlook

At the time of writing, the UK economic outlook remains uncertain, not helped by the continued war in Ukraine and the conflict in Iran. Government tax policy continues to cause uncertainty, and interest rates remain relatively high. Consumer confidence is fragile, and construction activity is expected to remain subdued in the short term. Against this backdrop, we remain cautious about major investment decisions.

However, we are confident in the resilience of Covers. Our strong financial position, long-standing supplier relationships, and loyal customer base provide a solid platform to weather current conditions. By investing in technology and digitalisation, people, and sustainability, we are positioning the business to capitalise on opportunities as the market improves.

People and Culture

The contribution of our staff continues to underpin Covers’ long-term success. In 2025, we invested £58,000 in training and development, following £127,000 in 2024. This included leadership development for the Executive Board, Managers and future Managers as well as product and sales training. We are committed to providing our people with opportunities to advance their careers and to maintaining a safe, inclusive, and rewarding work environment.

The directors recognise the important contribution made by all our staff to the business’s long-term success.

Research and development

Covers continues to invest in systems and product development to strengthen our customer offering. A new website was launched in summer 2025, enhancing online ordering and customer communication. Our point-of-sale system was also upgraded, improving efficiency and service at depot level.

On the product side, we have continued to grow and develop our timber cladding ranges and have further developed the Wingham brand of high-quality fencing and landscaping products, broadening our choice for customers.

As the Board of Covers, we have a legal responsibility under Section 172 of the Companies Act 2006 to act in a way that promotes the company’s success for the benefit of its members as a whole, while considering the long-term impact of our decisions on stakeholders. This statement outlines how we fulfil that responsibility.

Promoting the company’s success for its members

Covers’ history dates back to its founding by the Cover family in 1846. In 1946, control passed to the Greens family, who continue to run it today. We’re proud of how, over 180 years, the company has provided employment, training, and financial rewards for its owners and employees.

We aim to be the first choice for SME builders in the Southeast, while also serving larger corporate and retail customers. In a crowded market dominated by large corporates and private equity-backed groups, Covers has retained its distinctive independent position by investing in its people, depots, and timber production facilities.

Our long-term strategy is to continue investing in our people, premises, technology, and lower-carbon equipment to serve more customers, more effectively, while building a sustainable business for the future.

Engaging with stakeholders

Our key stakeholders, and how we engage with them, are as follows:

Our employees

We rely on a skilled team—including salespeople, mill operatives, forklift and lorry drivers—supported by depot staff and head office functions such as purchasing, finance, and HR.

Recruitment and retention of staff are critical. We engage with staff by:

• Offering competitive pay and performance-based bonuses;

• Providing training and career development opportunities;

• Ensuring regular meetings with depot/department managers and at least one annual meeting with a director.

Our customers and suppliers

We aim to offer a market-leading service to our customers of all sizes. We aim to build long-term relationships with our suppliers both directly and through our membership in the Fortis buying group of like-minded independent companies. We have built and will maintain a reputation for transparency and fair dealing in our interactions with customers and suppliers.

Our community

As a family-run business rooted in Chichester, we support the communities we serve—particularly through regular donations and fundraising for hospices. We also support local charities, clubs, and schools with both funds and materials. Staff are encouraged to engage in community initiatives through paid days off and matched donations.

On behalf of the board

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

The principal activity of the company continued to be that of the manufacture, processing and supply of timber and building materials to trade and retail customers from depots across Sussex, Hampshire, Kent and Surrey.

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

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

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

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.

Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the Board.

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

People of disability are given full consideration for employment and subsequent training (including, if needed, retraining for alternative work where employees have become disabled), career development and promotion on the basis of their aptitudes and abilities.

The company continues to involve staff in the decision-making process and communicates regularly with them during the period. Their involvement in the company's performance is further encouraged with employee bonus schemes. The company's aim for all members of staff and applicants for employment is to fit the qualifications, aptitude and ability of each individual to the appropriate job, and to provide equal opportunity, regardless of age, gender, sexual orientation, religion or ethnic origin.

Sumer Auditco Limited were appointed as auditor to the company following BHP LLP becoming part of the Sumer Group on 31 December 2025, which required a change in audit firm to comply with applicable regulatory requirements. 

In accordance with section 487(2) of the Companies Act 2006, Sumer Auditco Limited are deemed to be reappointed annually.

For several years, one of the company's key strategic priorities has been environmental sustainability. We procure timber from sustainable sources and have invested in Solar PV on most depot roofs. We aim to eliminate or recycle waste materials and continue to invest in lower energy-consumption lighting. We have maintained an eco-specialist department since 2007 to help our customers build more sustainably. The company is procuring electric (rather than diesel) powered forklift trucks and electric/hybrid cars, and has also continued to invest in lower emission Euro 6 lorries. Roughly 50% of our forklift fleet is fully electric, and 100% of designated company cars are hybrid or electric. We have also switched to buying green energy as existing contracts lapse, meaning our 2026 emissions will be approximately 90% lower than our pre-switch baseline, and will be 100% green in 2027.

In the year, 1,104,238 (2024: 992,468) kwh of renewable energy was generated through Solar PV, of which 525,420 (2024: 541,821) kwh was used and 578,818 (2024: 450,648) kwh was exported.

The figures for 2025 include a full year of NYEs post their integration versus 3 months in 2024. On a like-for-like basis, emissions reduced versus 2024.

We have followed the 2019 HM Government Environment Reporting Guidelines in preparing these statistics. We have also used the GHG Reporting Protocol—Corporate Standard and the 2025 & 2024 UK Government Conversion Factors for Company Reporting. Copies of the conversion factors used are provided in the “UK Gov Carbon Conversion Factors.” UK Government carbon conversion factors for reporting spreadsheets are available at https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2024.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

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

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s 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.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments and research and development.

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.

We have audited the financial statements of David Cover and Son Limited (the 'company') for the year ended 31 December 2025 which comprise the statement of comprehensive income, the balance sheet, 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 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2025 and of its loss 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.

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

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

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

• we identified the laws and regulations applicable to the Company through discussions with directors and other management, and from our commercial knowledge and experience of the company's sector.

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Company;

• we assessed the extent of compliance with the laws and regulations considered above through making enquiries of management; and

• identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by;

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

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

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

• performed analytical procedures to identify any unusual or unexpected relationships;

• tested journal entries to identify unusual transactions;

• assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

• investigated the rationale behind significant or unusual transactions.

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

• agreeing financial statement disclosures to underlying supporting documentation;

• reading the minutes of meetings of those charged with governance;

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

• discussions with senior management regarding relevant regulations and reviewing the company’s legal and professional fees.

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

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

Use of our report

This report is made solely to the 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.

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

David Cover and Son Limited is a private company limited by shares incorporated in England and Wales. The registered office is Sussex House, Quarry Lane, Chichester, England, PO19 8PE.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention modified to include investment properties at fair value. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

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

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

David Cover and Son Limited is a wholly owned subsidiary of J.H. & F.W. Green Limited and the results of David Cover and Son Limited are included in the consolidated financial statements of J.H. & F.W. Green Limited which are available from its registered address.

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.

Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The Company is funded through a combination of trading cash flows and long-term funding provided by fellow group undertakings. Amounts due to group undertakings are not repayable within the going concern assessment period without prior notice and the Directors expect continued financial support from the wider Group where required.true

Detailed forecasts and cash flow projections have been prepared covering a period of at least 12 months from the date of approval of these financial statements. These forecasts demonstrate that the Company is expected to maintain adequate liquidity throughout the assessment period.

Sensitivity analysis has been performed to assess the impact of reasonably possible downside scenarios, including lower sales volumes and margin pressure arising from current market conditions in the construction industry. The results of this analysis indicate that the Company is expected to retain sufficient liquidity and access to group funding throughout the assessment period.

Accordingly, the Directors have concluded that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements and that the going concern basis of accounting remains appropriate.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Goodwill represents the excess of the cost of acquisition of businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10-15 years depending on the business it relates to.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

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

At each reporting period end date, the 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.

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in 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 estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and 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.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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

The company operates a defined contribution scheme for the benefit of its employees. Certain employees are members of the Group defined benefit pension plan which is included in the parent company's balance sheet. Contributions payable are charged to the profit and loss account in the year they are payable.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

When the company acts as a lessor, a lease is classified as a finance lease whenever it transfers substantially all the risks and rewards of ownership of the underlying asset to the lessee, either at the end of the lease term or for the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains both lease and non-lease components, the company allocates the consideration in the contract to the two elements.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The investment property valuations are made by the directors annually based on rental yields and their knowledge of the market. Given the subjectivity of the valuations, there is a degree of estimation uncertainty involved. The value of investment properties at the year end was £2,447,619 (2024: £2,181,215).

Determining whether goodwill or intangible assets are impaired requires an estimation of the value in use of each of the cash-generating units to which goodwill and intangible assets have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and to apply an appropriate discount rate in order to calculate the present value of those cash flows.

In assessing the carrying value of goodwill, the directors have considered indicators of impairment and taken into account events up to the date of approving the financial statements. Impairment losses have been recognised in the year of £260,000 (2024: £1,350,000).

At the year, the directors review the tangible fixed asset carrying values for indications of impairment. This impairment is based on the estimation of the value in use of each of the cash-generating units to which tangible fixed assets have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and to apply an appropriate discount rate in order to calculate the present value of those cash flows.

In assessing the carrying value of tangible fixed assets, the directors have considered indicators of impairment and taken into account events up to the date of approving the financial statements. No impairment losses have been recognised in the year (2024: £2,474,895).

The total turnover of the company is derived from its principal activity wholly undertaken in the United Kingdom.

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

Their aggregate remuneration comprised:

During the year, the services of the directors were provided by J H & FW Green Limited, the Company’s parent undertaking. The cost of these services has been recharged to the Company and represents the total aggregate directors’ remuneration disclosed above.

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2024 - 2).

The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

Included within tangible fixed assets are assets held under finance leases or hire purchase contracts, as follows:

Freehold land and buildings with a carrying amount of £11,419,693 (2024 - £11,529,436) have been pledged to secure liabilities of the company.

More information on impairment movements in the year is given in note 14.

The valuations of investment properties have been determined by the directors on the basis of open market value. No depreciation is provided in respect of these properties.

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

The closing stock value includes provisions for impairment of £709,582 (2024: £679,541).

Obligations under finance leases are secured against the assets to which they relate.

Obligations under finance leases are secured against the assets to which they relate.

The amounts owed to group undertakings attract interest at SONIA daily rate plus a margin and is not repayable without 13 months written notice.

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The company is a member of the group pension scheme operated by the holding company, J.H. and F.W. Green Limited.

The group operates a pension scheme providing benefits based on final pensionable pay and a defined contribution pension scheme. Both of the schemes are funded by the payment of contributions to separately administered trust funds. The company is unable to identify its share of the underlying assets and liabilities of the defined benefit scheme.

Full details of the surplus for the final pensionable pay scheme are disclosed in the group accounts of J.H. and F.W. Green Limited.

The company has given its bankers a composite unlimited multilateral guarantee in favour of certain other companies within the group. The bankers have a charge over several freehold properties.

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

The company has taken advantage of the exemption available in accordance with Section 33 'Related party disclosures' not to disclose transactions entered into with between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the group to which it is party to the transactions.

Transactions with related parties outside of the group were:

The directors also have sales ledger accounts with the company. All transactions are made at arms length and on normal trading terms.

The ultimate parent company is J.H. and F.W. Green Limited, a company registered in England and Wales.

The following are the parents of the largest and smallest groups in which this company's results are consolidated: