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

Health, Safety, and Environment

As a company operating in the fuel sector, we uphold the highest standards in health, safety, and environmental stewardship. Regular training and risk assessments are a key priority.

Competitive Risks

The industry remains highly competitive; however, our diverse customer base and service excellence mitigate overreliance on any single market segment.

Credit Risks

A robust credit assessment and management process, including appropriate use of credit insurance, ensures minimal exposure to customer defaults.

Liquidity and Cash Flow Risk

With diligent credit control, the Group maintains flexible banking facilities to meet its operational needs.

Employee Growth and Development

As an employee-owned business, the Group remains committed to investing in both the professional and personal development of its employees. During the year, colleagues continued to benefit from the Group's established digital learning and development platform, providing access to a broad range of training resources designed to support skills development, professional progression and personal growth. The platform remains an important component of the Group's commitment to fostering a culture of continuous learning as well as having the right skills and competencies to support them in their daily roles.

The Group also undertook a review of employee wellbeing benefits during the year and subsequently appointed a provider to introduce private medical cover support for all employees, with implementation scheduled for January 2026. This significant enhancement to the employee benefits package was directly influenced by feedback received through the Company's employee ownership framework, demonstrating the value of employee engagement in shaping business decisions and reinforcing the Group's commitment to supporting the health, wellbeing and long-term welfare of its beneficiaries.

The average number of employees rose from 254 to 283.

Governance and Stakeholder Engagement

The Board remains committed to fostering strong relationships with stakeholders, including employees, customers, suppliers, and regulators. Regular meetings and strategic planning ensure that decisions are made in alignment with long-term business sustainability.

In line with our commitment to sustainability, we continue to work with UKIFDA and OFTEC to support decarbonisation efforts and participate in UK-wide trials of low-carbon liquid fuels.

This section of the Strategic Report describes how the Directors have had regard to the matters set out in section 172(1), and forms the Directors' statement required under section 414CZA, of the Companies Act 2006.

The Directors have acted, and continue to act in a way that they consider, in good faith, would be most likely to promote the success of the company and Group 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

The Group has a strong board of experienced industry and finance professionals. The Board comprises the roles of Chair, Managing Director, Sales, Operations and Health & Safety, Finance, Retail, and one Non-Executive Director.

Regular Board meetings are held to review key aspects of the business, including health & safety, financial performance, working capital and cash flow, sales and marketing, employee matters, regulatory compliance, capital expenditure, and stakeholder feedback.

The Board considers the long-term goals of the Group and the impact that decisions may have on stakeholders, including shareholders, employees, suppliers, customers, creditors, regulators (including HMRC), local communities, and the environment. Strategy reviews are conducted to ensure that decisions align with the best interests of the Group and its members, with information provided through reports and presentations.

The interests of the group's employees

The Board prioritises a strong and stable foundation for employees to grow. In August 2023, the company implemented an Employee Ownership Trust (EOT), securing the long-term future of its workforce.

To support leadership growth, the company has continued with its a Leadership and Management Development programme for senior management. This initiative fosters continuous improvement and a high-performance culture across the organisation.

For the year ending 31 December 2025, the Group employed an average of 283 people across 11 depots, 16 filling stations, a sales office and a head office. Each department is led by an executive director who maintains close engagement with employees. Managers at each location conduct regular briefings and discussions with staff. Health & safety remains a top priority, with ongoing training and updates provided to all employees.

The need to foster the group's business relationships with suppliers, customers and others

The Board and senior management actively engage with key customers and suppliers to enhance relationships and gain valuable insights. Supplier relationships are managed by senior Board members through regular meetings and participation in industry trade associations such as the United Kingdom & Ireland Fuel Distributors Association (UKIFDA).

The Group’s banking facilities are provided by Royal Bank of Scotland. As of the year-end, the Group held approximately £9.2m in cash (2024 - £9.0m) and operated without bank borrowings throughout the year. An unused invoice discounting facility of £9m remained available, ensuring financial flexibility. Senior Directors maintain regular engagement with banking and legal partners to safeguard the Group’s financial stability.

The impact of the group's operations on the community and the environment

The Group is committed to conducting business responsibly and leading by example in community and environmental stewardship.

Compliance with all relevant legislation is a fundamental principle, and the company regularly undergoes internal and external audits to maintain its accreditations for ISO 9001 (Quality Management), ISO 14001 (Environmental Management), and ISO 45001 (Health & Safety Management).

The Group actively supports the decarbonisation of transport and heating for rural homes through the supply and distribution of low-carbon liquid fuels. The Group remains in active dialogue with local and national stakeholders to promote low-carbon solutions for consumers.

Maintain a reputation for high standards of business conduct

The Group upholds a strong commitment to ethical business conduct across all locations and business activities. Its organisational structure and leadership oversight enable rigorous governance, with Board meetings providing regular opportunities to assess and refine business practices.

Act fairly as between members of the company

The Highland Fuels Group remains privately held, with all subsidiary companies fully owned. Shares in the ultimate holding company are held by the Highland Fuels Employee Ownership Trust and George Shand, the company’s Chairman. With Highland Fuels Employee Ownership Trust holding the majority stake, governance is overseen by a dedicated Board of Trustees. The principal trading activities of the Group continue to be conducted within Highland Fuels Limited.

On behalf of the board

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

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

Ordinary dividends were paid amounting to £2,000,000. 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 interest of G G M Shand is in the issued share capital of the ultimate holding company, Highland Fuels (Investments) Limited.

The financial statements have been prepared under the going concern basis. The Group closely monitors and manages its funding position and liquidity risk throughout the year to ensure that it has access to sufficient funds to meet forecast cash requirements.

The Group’s business activities together with the factors likely to affect its financial position and its exposure to credit, liquidity and interest rate risk are described in the Strategic Report.

In assessing the Group's ability to continue as a going concern, the Directors have reviewed detailed profitability, liquidity and cash flow forecasts covering the period to 31 September 2027. These forecasts incorporate a range of scenarios, including downside sensitivities reflecting potential reductions in demand, margin pressures, fluctuations in commodity markets, and the continued impact of geopolitical uncertainty on energy prices and operating costs.

Continued consideration has been given to the ongoing effects of the conflict in Ukraine, which influences European energy markets and wider economic conditions. The Directors have also considered the resulting inflationary pressures on labour, logistics and operating costs, together with the impact of elevated living costs on customer demand and affordability across certain market sectors.

Following completion of this assessment, the Directors are satisfied that the Group retains substantial headroom within its available funding facilities and forecast cash resources under both the base case and sensitised trading scenarios. The Group's diversified operations, strong market position and prudent financial management provide additional resilience against foreseeable economic and market challenges.

The Directors intend to continue with the management policies which have resulted in significant business growth in recent years. This essentially involves organic growth, combined with appropriate synergetic acquisitions as and when suitable opportunities arise.

The following statements are given in accordance with the Companies (Miscellaneous Reporting Regulations) 2018, for reporting periods beginning on or after 1 April 2019, in respect of GHG and Energy Use.

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per total sales revenue, the recommended ratio for the sector.

In addition to the measures introduced last year, the Group has taken the following actions to further improve its energy consumption and efficiency:

• Continued investment in the delivery fleet and replacing our old trucks with EURO6 powered vehicles together with consumption of AdBlue to reduce and improve fuel efficiency, which has lowered the average age of our fleet to c3 years.

• Increased the use of HVO across our fleet, which has helped to reduced the volume of Diesel used by the fleet.

• Upgraded refrigeration units across our filling station as part of our planned improvement programme, which also included replacing lighting with modern energy efficient LED lighting.

• Continued to investment in software technology to under-pin more efficient delivery vehicle routing.

• Provide the option to select a hybrid/electric vehicles when it comes to company car replacements.

While the overall emissions produced by the Group has seen a slight increase, which is mainly due to higher Scope 1 emissions these have been offset by lower Scope 2 emissions and an increase in the use of HVO as an alternative to Diesel across several of the Group’s tanker fleet. These actions have helped the overall Intensity Ratio remain in line with the previous year.

The Group continues to be an accredited supplier of HVO/Renewable Diesel (a low carbon liquid renewable fuel) under the Renewable Fuels Assurance Scheme (“RFAS”) and successfully passed its RFAS audit with accreditation renewed in September 2025. The RFAS scheme enables fleet operators (including ourselves) to receive independently verifiable GHG emission data that encompasses the complete renewable fuel supply chain from feedstock cultivation or waste raw material collection, production and distribution of the final product to the customer; thereby ensuring accurate and representative information for company carbon reporting.

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

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

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

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

• select suitable accounting policies and then apply them consistently;

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

• state whether applicable United Kingdom 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 group and parent company will continue in business.

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

We have audited the financial statements of Highland Fuels Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2025 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent 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 group's or the parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The directors are responsible for the other information. The other information comprises the information included in the Annual Report and Group Financial Statements, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

• the information given in the 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 group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.

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

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

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

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

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

As explained more fully in the Directors' Responsibilities Statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or parent 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operate.

Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006, and UK Tax legislation.

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company’s records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company’s policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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

As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The company’s profit for the year was £5,891,440 (2024 - £6,031,724 profit).

Highland Fuels Limited (“the company”) is a private company limited by shares incorporated in Scotland. The registered office is 2 Marischal Square, Broad Street, Aberdeen, Scotland, AB10 1DQ.

The group consists of Highland Fuels Limited and all of its subsidiaries.

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 the revaluation of freehold properties. The principal accounting policies adopted are set out below.

The consolidated group financial statements consist of the financial statements of the parent company Highland Fuels Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in associates.

All financial statements are made up to 31 December 2025. No profit and loss account is presented for Highland Fuels Limited as permitted by section 408 of the Companies Act 2006.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

The financial statements have been prepared under the going concern basis. The Group closely monitors and manages its funding position and liquidity risk throughout the year to ensure that it has access to sufficient funds to meet forecast cash requirements.

The Group’s business activities together with the factors likely to affect its financial position and its exposure to credit, liquidity and interest rate risk are described in the Strategic Report.

The Directors have assessed profitability and cash flow forecasts, including significant but plausible downside sensitivities, applied to turnover and profitability for a range of issues including the continuing impact of the war in Ukraine on the global oil markets. This assessment shows substantial headroom within forecasts as regards the funding resources available to the Group. The Directors believe that sufficient funds are available to allow the company and all subsidiaries to continue to meet their obligations for the going concern period to 31 September 2027, and that it therefore remains appropriate to prepare the financial statements on a going concern basis.

As part of the Group, the company has access to financial resources as required. We remain confident that our financial resources are strong, well balanced and suitably liquid. The Group has a positive cash at bank position of approximately £11.3m at the time of this report, and the current year trading performance remains strong in terms of profitability and cash generation.

Revenue is recognised to the extent that the group obtains the right to consideration in exchange for its performance. Turnover is measured at the fair value of the consideration received 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.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Positive goodwill acquired on each business combination is capitalised, classified as an asset on the statement of financial position and amortised on a straight-line basis over its useful life. If a subsidiary, associate or business is subsequently sold or discontinued, any goodwill arising on acquisition that has not been amortised through the income statement is taken into account in determining the profit or loss on the sale or discontinuance.

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.

Licences to operate have an indefinite life and are amortised over a 20 year period on a straight line basis, which is their estimated useful life. Amortisation will start from 1 January 2026.

Tangible fixed assets under the cost model are measured at cost less depreciation and any impairment losses.

The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Land is not depreciated. Depreciation on other assets 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 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.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

In the parent company financial statements, investments in subsidiaries are initially measured at cost less any accumulated impairment losses.

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

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method.

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

At each reporting period end date, the group 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).

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset 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.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

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.

Cash and cash equivalents comprise cash in hand and at banks. Bank overdrafts are shown within borrowings in current liabilities.

In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

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

Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements 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, 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.

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

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, 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.

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

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 income statement 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 group’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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.

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 Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the income statement when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Group in independently administered funds.

Rentals payable under operating leases are charged to profit or loss on a straight line basis over the term of the relevant lease.

In the application of the group’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 following are the group's key sources of estimation uncertainty:

Land and buildings and petrol stations and fuel storage are carried at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The Company engaged Graham & Sibbald, Chartered Surveyors, to determine fair value at 31 December 2023, and the directors have considered these values to be a reflection of fair value at 31 December 2025, enhanced by additions since the valuation took place.

The only exception is the group's Balfron site, which had a valuation prepared as at 31 October 2025, by the above surveyors.

The Group establishes a reliable estimate of the useful life of goodwill and intangible assets arising on business combinations. The estimate is based on a variety of factors such as the expected use of the acquired business, the expected useful life of the cash generating unit to which the goodwill is attributed, any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses.

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

Their aggregate remuneration (including directors' remuneration) comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 6 (2024 - 6).

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

Goodwill arising on the acquisition of Thames Gold Holdings Limited and Lunargem Limited is being amortised over its useful economic life of 20 years.

During the year the company acquired Project Red Holdco 1 Limited, the parent company of Carnegie Fuels. The goodwill arising on this acquisition is also being amortised over its useful life of 20 years.

Included in land and buildings is land at valuation of £465,000 (2024 - £280,000) (cost £281,449 (2023 - £96,449)) which is not depreciated.

Included in petrol stations and fuel storage is land at valuation of £2,930,000 (2024 - £2,930,000) (cost £2,513,086 (2024 - £2,513,086)) which is not depreciated.

Land and buildings and petrol stations were revalued at 31 December 2023 by Graham & Sibbald, independent valuers not connected with the company on the basis of market value. The valuations were carried out in accordance with the RICS valuation guidelines and IFRS 13. The directors have considered these values to be a reflection of fair value at 31 December 2025, enhanced by additions since that date. There are two exceptions to this. The first is the land and buildings at Carnegie Fuels which was acquired on 31 July 2025, and is based on a valuation performed as at that date. Another is the land and site at Balfron, which was valued as at 30 October 2025, after capital works had been completed.

The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:

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

* Held by a subsidiary undertaking.

Other than Thames Petroleum (Scotland) Limited and Highland Electricity Limited, the registered address of all the subsidiary undertakings is 2 Marischal Square, Broad Street, Aberdeen, Scotland, AB10 1DQ.

The registered address of Thames Petroleum (Scotland) Limited and Highland Electricity Limited is Connect House 133-137 Alexandra Road, Wimbledon, London, United Kingdom, SW19 7JY.

Financial assets measured at amortised cost comprise trade debtors and other debtor balances. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, less impairment.

Financial liabilities measured at amortised cost comprise trade creditors, other creditors and hire-purchase lease rentals.

Highland Fuels Limited has granted a bond and a floating charge in favour of RBS Invoice Finance Limited.

Highland Fuels Limited and Thames Petroleum (Scotland) Limited have granted a multi-client guarantee in favour of RBS Invoice Finance Limited.

On 19 September 2012, Highland Fuels Limited granted a floating charge in favour Phillips 66 Limited over the whole of the assets of the Company.

The Group overdraft facility is secured by a bond and floating charge in favour of The Royal Bank of Scotland plc over the whole of the property of Highland Fuels Limited and its subsidiaries and standard securities granted over certain of the Group's assets.

The above securities grant by Highland Fuels Limited are subject to a ranking agreement.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

This reserve is used to record increases in the fair value of land and buildings and petrol stations and fuel storage and decreases to the extent that such decrease relates to an increase on the same asset.

In 2016, the land and buildings, and petrol stations and fuel storage previously held by Highland Fuels Limited were transferred to other Group companies. The consideration received was not considered to be qualifying and so the balance in the Company's revaluation reserve remains unrealised and is therefore not distributable.

The Group's land and buildings and petrol stations and fuel storage were revalued by Graham & Sibbald, Chartered Surveyors, on an open market existing use basis and the resulting gain was recognised in other comprehensive income.

On 31 July 2025 the group acquired 100 percent of the issued capital of Project Red Holdco 1 Ltd.

The remuneration of key management personnel is as follows.

All directors and certain senior employees who have authority and responsibility for planning, directing and controlling the activities of the Group are considered to be key management personnel. The above amounts reflect the remuneration in respect of these individuals.

The immediate parent company is Highland Fuels Holdings Limited, a company registered in Scotland.

Highland Fuels (Investments) Limited is the parent undertaking of the only Group undertakings to consolidate these financial statements.

The consolidated financial statements may be obtained from Affric House, Beechwood Park, Inverness IV2 3BW.

The controlling party is Highland Fuels Employee Ownership Trust.