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

Damm 1876 is the UK subsidiary of the Spanish company SA Damm. Damm 1876 brews, imports, distributes, markets and sells a full portfolio of own and third-party premium and superpremium beers as well as other beverages both in the on trade and in the off trade sales channels in the UK.

This portfolio currently includes own brands such as our flagship Estrella Damm Mediterranean lager, Victoria Málaga, Rosa Blanca, Damm Lemon, Daura, the world’s most awarded gluten-free beer, Complot Mediterranean IPA, and Inedit, our gastronomic beer. In 2025 we successfully launched Estrella Damm 0.0, our alcohol-free Mediterranean lager, in the UK. We also brew and co-pack third-party brands for some of our customers including Kirin, Aldi, M&S, and LIDL. In 2025 we have started our non-beer operations with the first production of soft drinks for a 3rd party.

In 2023, Damm 1876 acquired the Eagle Brewery in Bedford from CMBC. This strategic decision represented Damm’s commitment to play an important role in establishing a local footprint in the UK market. Through this acquisition, we expect Damm’s diversified premium and superpremium beer portfolio to evolve into a total beverage portfolio, including beer and non-beer products, to appeal to a wider spectre of UK consumers. Since the acquisition in 2023, Damm has invested heavily in modernizing the plant, elevating the quality standards to match our Group’s expectations with the aim to operate the most modern and efficient brewery in the UK. 2024 was the first full year of brewing and kegging our draught beers, mainly Estrella Damm and Victoria Málaga, while at the end of 2Q 2025, a 90.000 cans/hour canning line has become operative. The Eagle Brewery does not only brew beers, but investments have also been made to equip the plant to produce beyond beer products, mainly soft drinks. This new line of business in the UK has started in 2025, in a clear commitment by Damm 1876 to invest in the UK, offering our consumers the choice of a strong and diverse portfolio of beer and beyond beer brands, while revitalising the job market as a cornerstone to the community.

In terms of business, 2025 has proved to be an excellent year for Damm 1876 in the UK as we have delivered a strong performance despite several factors that have continued to hinder our business and our consumers. Increases in alcohol duties, have continued to push prices higher in pubs and hospitality venues, generally dampening consumption in the on-trade channel and putting pressure on the margins of pubs and breweries already affected by rising energy, labour and raw material costs in a context of persistent inflation and modest economic growth. This has contributed to financial strain across parts of the hospitality sector, negatively impacting beer sales in traditional outlets. On the other hand, and generally speaking, certain segments such as premium and specialty beers have shown relative resilience, supported by consumers willing to trade up despite economic pressures, particularly in the off-trade, while the growth of low- and no-alcohol beers reflects changing consumer preferences that have partially offset the broader macroeconomic headwinds.

Damm 1876 has been able to perform ahead of the Beer category as a whole. Total beer market volume in the UK is expected to have declined -3%, pending 2025 end of the year official data, while Damm 1876 achieved a +18.6% growth in volume in 2025 when compared to 2024.

Damm has managed to overcome another challenging year in the on-trade channel derived from the cost of living crisis, reduced footfall, and an increase in the beer duty in the UK which has endangered the sustainability of many pubs and entertainment venues all across the UK. A slight reduction of the excise duty in pubs through the draught relief scheme has not been enough to compensate these setbacks. Operators had to be more focused on attracting consumers to their venues through experiences and a more superpremium offering. Cost increases meant spend was up but overall volume was down. Nevertheless, Damm 1876 has achieved an 48.6% growth in the on-trade sales channel thanks to the great investment put into our flagship Estrella Damm, together with the launching of Estrella Damm 0.0 which has enabled us to approach many customer tenders maintaining a first mover advantage in the non-alcoholic category, even negotiating Estrella Damm 0.0 as the exclusive non-alcoholic lager in most cases. We also took over the sales of parent brands Kirin Ichiban and Northern Monk, which have all been very well received by UK customers. Growth in the on-trade has come mainly from the Free Trade after putting into place a strong growth plan underpinned by strong JBPs with our key partners.

In the off-trade channel, Damm has continued to grow, marking a new record-high volume with a 6.9% increase vs last year. The performance in the off-trade was challenging, driven mainly by three isolated issues affecting a customer negotiation, a cyber-attack affected sales volumes in a significant proportion within another retailer, and the removal of some of our SKUs from the Discounters. Outside of these, the performance was strong. In Sainsbury’s we were the fastest growing of the major brewers and we enjoyed a similar success with Tesco. In the impulse channel we grew our market share by more than 20%; all of which were driven by increases in distribution and improvements in rate of sale. In terms of portfolio introductions we launched Estrella Damm 0.0 with huge success and have now gained distribution across all the major retailers. In the final quarter of 2025 the rate of sale performance was #2 in the No/Low fixture. Damm Lemon had a similarly successful year and had gains in distribution across all of the grocers. The launch of our parent brand Kirin Ichiban was also ahead of initial targets through retail listings with an equally impressive rate of sale.

Main drivers of this growth have been a combination of successes with both branded and private label beers. Estrella Damm, Estrella Damm 0.0 and Damm Lemon have continued to grow as well as Northern Monk craft beer and Kirin Ichiban, our partner brands which complete Damm’s superpremium diversified portfolio in all of the few growing categories in the beer spectre: World Lager, No/Low, Flavoured Beers, and Superpremium.

The growth in the on-trade means a growth in the sales volumes in keg formats, which has remained stable when compared to 2024, representing 40% of the product mix vs 39% in 2024. Cans have increased its weight in the product mix from 26% in 2024 to 34% in 2025. Main reasons are the growth in sales to some of our largest off-trade customers with their own third-party beer brands, mainly in the can format, as well as the decrease of sales in non-returnable bottles (weight in product mix decreased from 30% to 23%) due to the high comparative taxation of this format in EPR/PRN when compared to kegs and cans. The launching in 2025 of the soft drinks business has been completely executed in can format.

Damm continues to invest in the UK market and throughout 2025 we increased the number of hired employees from 141 to 160 by the end of the year, mostly in the commercial side. This increase in personnel together with an increase in salaries and benefits is reflected in an increase of Personnel costs of over 23% in 2025.

Among other operating expenses, during 2025 we have experienced an increase in the cost of rented assets, mainly additional forklifts and CHEP pallets, due to an increase in volumes produced as well as the start-up of the canning line, including the rental of a new packaging machine. We experienced an overall 14.5% increase in logistics costs in the UK, due to the 18.6% increase in volumes distributed at a more efficient cost per unit.

Damm 1876’s beers are well considered amongst sellers and consumers, which explains the growth in sales distribution both in the on and off trade as well as the increased rate of sale. Our unparalleled portfolio includes beers in all of the few growing beer segments in the UK. During 2025 we kept investing behind our brands increasing our Marketing & Sponsorship expenses by 12.7%, our highest investment in the UK market to date. We shall continue launching new products, whether they be new brands or new, more suitable packaging formats, to develop and expand the superpremium portfolio while investing in promoting our brands and into the community. We shall keep investing and promoting events closely tied to gastronomy, sport and music festivals. In October 2025, after having invested GBP 70Mio in the plant, we celebrated the official re-opening of the Eagle Brewery with guests including His Majesty’s Trade Commissioner for Europe, Ceri Morgan CBE, and the mayor of Bedford, Mr. Tom Wootton. Throughout 2025 we have been proud to invest in our community sponsoring local sports clubs such as the Bedford Blues and Bedford Town FC. Additionally and around the UK, we have continued to invest with our brands in high profile events such as sponsoring for the 10th year the UK Top 50 Gastropubs Awards and the National Restaurant Awards, the LIV Golf UK by JCB tournament celebrated at the JCB Golf & Country Club in Rocester, as well as the Betfred British Masters hosted by Sir Nick Faldo. 2025 marked the 125th anniversary of FC Barcelona, of which Damm has been a beloved partner for decades. To mark this anniversary, we launched a special limited edition FC Barcelona-Estrella Damm in cans and bottles with great consumer success. Finally, with our brands we have been behind experiential events including some of the best music festivals in the UK such as Gala, Houghton, Labyrinth on the Thames or We Out Here.

To summarise, Damm 1876’s activity in 2025 has resulted in an improved Operating Profit/Loss of more than GBP 5.4Mio when compared to 2024, continuing to set the base for future growth, opening and implementing the new canning line, continuing to sustainably develop new brands and products including beers and soft drinks, investing in our brands and in our people to increase sales and distribution in all sales channels, while we support our local community.

The company faces a number of business risks and uncertainties in a climate of difficult trading conditions and new competition. This table sets out the main risks and the company’s approach to mitigating them.

The Directors of Damm 1876 Ltd acknowledge their duty under Section 172(1) of the Companies Act 2006 to act in a way they consider, in good faith, would most likely promote the success of the company for the benefit of its members as a whole. In doing so, the Directors have regard to a range of factors, including the long-term consequences of their decisions, the interests of employees, fostering business relationships with suppliers and customers, and maintaining a reputation for high standards of business conduct.

Our governance framework supports active business management and the mitigation of risk across the Company. Damm 1876 Ltd as part of the SA Damm Group has established policies and controls in key areas such as anti-bribery and corruption, data protection, risk management, labour and human rights, health and safety, diversity and inclusion, and responsible business practices.

The management team is responsible for maintaining adequate systems and resources to ensure compliance with these policies. Directors play an active role in identifying, evaluating, and addressing key business risks, and ensure that these are appropriately reported and reviewed.

Risk management is embedded in decision-making processes across the Company. Responsibility for managing and mitigating identified risks lies with local risk owners, who implement appropriate risk management actions. Risk assessments and internal controls are reviewed regularly, and a formal a self-assessment is carried out every six months under our control framework.

The Directors believe that the systems and procedures in place enable them to effectively discharge their duties under Section 172(1), and to act fairly between members of the Company, while promoting its long-term success.

Future developments

The Directors remain focused on the continued development of the Company’s UK operations and performance. Investment will continue in the Eagle Brewery to enhance capacity, efficiency and product capability, including the expansion of non-beer production. The Company will also continue to support growth of its premium and super-premium portfolio across both on-trade and off-trade channels, while responding to evolving consumer preferences, including the growth of low- and no-alcohol products. The Directors will continue to monitor cost pressures, including raw materials, logistics and duties, and take appropriate actions to protect margins.

Financial Instruments

The Company’s financial instruments comprise cash balances, trade receivables, trade payables and loans from group undertakings. The principal risks arising from these instruments are credit risk, liquidity risk and interest rate risk. Credit risk is managed through ongoing monitoring of customer balances across a diversified customer base. Liquidity risk is managed through cash flow forecasting and continued financial support from the group. The Company’s borrowings are mainly from group undertakings, and no hedging instruments were in place.

Research and Development

The Company continues to undertake product development activities as part of its core operations, including the introduction of new products, packaging formats and the expansion into non-beer beverages. While these activities do not constitute formal research and development, they represent an important element of the Company’s innovation strategy and support its ability to respond to changing consumer preferences.

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 importation and distribution of beer and the provision of marketing and support services.

The results for the year are set out on page 12.

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 has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

Ballards LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have 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 KwH, the recommended ratio for the sector.

We are currently using 100% renewable energy for all the electricity purchased. We are also trying to increase the usage of well water instead of purchasing it from the council. Our aim is to increase the usage of renewable energies more and more every year, and the investments planned for the brewing facilities should contribute to improve the efficiency of the plant.

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.

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 believe that the company's financial statements should be prepared on a going concern basis on the grounds that current and future sources of funding or support will be more than adequate for the company's needs.  We have considered a period of twelve months from the date of approval of the financial statements.  We believe that no further disclosures relating to the company's ability to continue as a going concern need to be made in the financial statements.

The ultimate parent company, S.A. Damm, has the financial resources available to provide on-going financial support to Damm 1876 Ltd and the parent company will extend the credit facility in place should it be required to enable Damm 1876 Ltd to continue its operations for at least one year from the date of signing of this report. The credit line has a limit of £110M (see note 16 of the Financial Statements) and will be extended if considered necessary.

We have audited the financial statements of Damm 1876 Ltd (the 'company') for the year ended 31 December 2025 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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 company's affairs as at 31 December 2025 and of its profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

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

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

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

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

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

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

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

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

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance;

• results of our enquiries of management about their own identification and assessment of the risks of irregularities;

• any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to: – identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; – detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; – the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

• the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

As a result of performing the above, we identified revenue recognition as a key audit matter related to the potential risk of fraud.

In addition to the above, our procedures to respond to risks identified included the following:

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

• reading minutes of those charged with governance; and

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

• Revenue recognition: recalculation of discounts and rebates and agreeing supporting documentation; and agreeing sales invoices to delivery notes to confirm the revenue has been recognised in the correct financial period.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, UK Bribery Act as well as pensions legislation and tax legislation.

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 member 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 member those matters we are required to state to the member 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 member, 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.

Damm 1876 Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 5a Bear Lane, Southwark, London, United Kingdom, SE1 0UH. The principal place of business is Eagle Brewery, Havelock Street, Bedford, Bedfordshire, United Kingdom, MK40 4LU.

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. The principal accounting policies adopted are set out below.

The company incurred a net loss before tax of £3.689 million for the year ending on December 31, 2025true.

Management is conducting a review of the company's strategies and operations and has initiated several actions to improve its profitability.

The company's financial statements should be prepared on a going concern basis on the grounds that current and future sources of funding or support will be more than adequate for the company's needs.  We have considered a period of twelve months from the date of approval of the financial statements. 

Additionally, the company has previously had the financial support of the group, mainly evidenced by the credit lines with a limit of £110M (see note 16 of the Financial Statements). The ultimate parent company, S.A. Damm, has the financial resources available to provide on-going financial support to Damm 1876 Ltd and the parent company, Damm Internacional, SGPS, Unipessoal LDA., will extend the credit facility in place should it be required to enable Damm 1876 Ltd to continue its operations for at least one year from the date of signing of this report.

Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of turnover 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.

When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which is recognised as interest income.

Turnover is recognised in respect of the goods delivered over the year, excluding Value Added Tax, excise duty, customs and sales rebates and other discounts.

Turnover is usually recognised at the point of dispatch (upon leaving the company’s or the logistic operator’s warehouses to the final customer). When other terms are agreed with the customer (i.e. Delivery at Place – DAP Incoterm), revenue is recognised upon unloading of the goods at the destination place agreed with the customer.

Sales discounts are recognised based on sales transactions (invoices) where the customer receives a discount in the sales price. Those include rebates (volume and activity-related discounts), incentives to promote sales, discounts paid as lump sums, or discounts for meeting certain sales targets. Other discounts include listing fees (i.e. fees for listings on customer taps, placement in favourable locations, shelves, or coolers, where the customer has the commitment to purchase certain amount of volumes).

Goodwill represents the excess of the cost of acquisition of unincorporated 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 years.

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.

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 measured at cost less depreciation.

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

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.

Cost is calculated using the weighted average method.

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

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’ 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.

Basic financial assets, which include trade and other 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.

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 trade and other creditors and loans from fellow group companies are initially recognised at transaction price.

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.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

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.

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

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 cost 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.

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

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.

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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Tangible fixed assets are measured at cost less depreciation. At the end of 2022 the Company made a significant acquisition of business assets (see note 12 to the financial statements). The consideration paid for those assets had to be allocated against the various asset classes. This allocation required judgements to be made which were based upon the consideration of the type and use of the asset and the opinions of technical engineers on the current status of the assets.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful economic life. Different rates of depreciation are charged depending upon the class of the asset. Determining the useful economic life of an asset requires judgments to be made which were based upon the consideration of the type and use of the asset; the opinions of technical engineers on the current status of the assets; and the Group Accounting Policies.

An analysis of the company's turnover is as follows:

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2024 - 1).

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

The company has a potential deferred tax asset of £5,059,166 at 31 December 2025 (£8,973,867 at 31 December 2024) relating to unrecognised losses, which has not been recognised in the financial statements.

The company previously recognised a deferred tax liability in 2023 and 2024, resulting from accelerated capital allowances. The deferred tax liability has now been removed through recognition and offsetting of an equivalent deferred tax asset.

During the year, the loan from S.A Damm was reassigned to Damm Internacional, SGPS, Unipessoal LDA. During the year total loans of £15,202,394 (2024 : £20,231,388) were made from the parent company. No interest accumulated during the year of in respect of this loan, following a change in the terms whereby an operating profit is required for interest to accrue (2024 : £2,544,636). No previously accumulated interest remained outstanding at the reporting date (2024 : £1,638,101).

The principal shall be due for repayment, subject to qualifying for early repayment, on 29 December 2027. If the terms for interest to be charged are met then this will be charged at the rate equal to the aggregate of the 3-month SONIA base rate for a one-year base rate loan plus 2%.

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 has a potential deferred tax asset of £5,059,166 at 31 December 2025 (£8,973,867 at 31 December 2024) relating to unrecognised losses. Losses only equal to the deferred tax liability have been recognised in the financial statements.

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

The charge to profit or loss in respect of defined contribution schemes was £277,211 (2024 - £390,067).

2,000,000 £1 ordinary shares were allotted on 29 December 2022 for a consideration of £11 per share.

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 operating leases represent machinery rented from third parties.

There are no other material operating lease commitments.

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting applicable in the UK and Republic of Ireland', not to disclose related party transactions with group companies.

The ultimate holding company is S.A. Damm a company registered at C/ Rossello, 515, 08025, Barcelona, Spain.

S.A. Damm prepares group financial statements and copies can be obtained from the Registro Mercantil de Barcelona.

The immediate parent company is Damm Internacional, SGPS, Unipessoal LDA., a company registered at Quinta da Mafarra, freguesia da Várzea, Santarém, Portugal. Its individual accounts can be obtained from the “Registro Comercial de Lisboa”.