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

Principal Activities

The company delivers a portfolio of ten products and services across three strategic pillars of environmental solutions:

• Environmental Compliance & Data Management – Helping businesses meet complex regulatory requirements with ease and accuracy.

• Packaging Data Insights & SaaS Solutions – Providing actionable intelligence to optimise packaging design, reduce costs, and ensure compliance.

• Trading & Recycling Services – Enabling circular economy practices through efficient material recovery and trading solutions.

Environmental Compliance & Data Management 

Our award-winning compliance portfolio positions us as a trusted partner for UK and international businesses:

Packaging Compliance Scheme – One of the UK’s leading schemes, enabling members to meet Extended Producer Responsibility (EPR) obligations cost-effectively. We source Packaging Recovery Notes (PRNs) and provide expert guidance to ensure full compliance with UK legislation, including the Recyclability Assessment Methodology.

Packaging Data Management (UK and International) – Leveraging advanced technology to transform raw data into regulatory-ready reports and actionable insights. We support all UK EPR reporting requirements and other mandatory submissions throughout the year.

EU Packaging & Packaging Waste Reporting – Delivering PPWR assessments for products sold in the EU, providing analytics that inform sustainable packaging decisions and ensure legislative compliance.

WEEE Compliance Scheme – A long-established, approved scheme helping producers of electrical and electronic equipment (EEE) meet WEEE regulations through flexible, cost-effective compliance packages.

Packaging Data – Software as a Service (SaaS)

We remain customer-centric, delivering future-ready, automation-focused packaging data software that simplifies complex compliance requirements. Our flagship RAM Assess platform, built on scalable architecture, transforms recyclability assessments into value-driven business intelligence, empowering better product design, packaging decisions, and supply chain management.

Recognised with two major industry awards – Gamechanger of the Year and Best Use of Customer Insight – our innovative platform combines AI, automation, and advanced analytics to deliver the optimal balance between regulatory compliance and commercial advantage. This positions our SaaS offering as a high-growth, recurring revenue stream with strong market differentiation and long-term scalability.

Trading & Recycling Services

PRN Sourcing & Supply – Operating one of the UK’s leading PRN divisions, we specialise in sourcing and supplying Packaging Recovery Notes (PRNs) to help producers meet Environment Agency requirements ethically and cost-effectively. Our established market position ensures reliable access to PRNs, even in volatile market conditions.

Approved Export of Lead Acid Batteries – As the UK’s largest and most experienced battery export operation, we provide safe, compliant collection and recycling solutions for scrap lead batteries nationwide, supporting both environmental responsibility and regulatory compliance.

Materials Trading – Leveraging deep industry expertise and a nationwide network, we solve complex materials challenges, securing optimal end destinations for all grades and maximising financial returns. Through our two specialist trading divisions, we help customers unlock more value from every movement while advancing circular economy goals.

Fair review of business

In 2025, the company achieved a profit after tax of £6.7m, representing 13.94% year-on-year growth. This performance reflects our ability to deliver sustainable revenue expansion while maintaining strong profitability.

Gross profit increased by 16.80% during the year, contributing to an impressive 58.92% growth over the past two years — clear evidence of the strength of our business model, recurring revenue streams, and market positioning.

Strategic investment in systems and continuous improvement initiatives led to a 24.87% increase in overheads, enabling enhanced operational efficiency, exceptional customer retention, and accelerated new client acquisition. These investments position the company for long-term scalability, resilience, and competitive advantage.

In 2025, the company delivered continued growth in profit after tax, underpinned by an exceptional customer retention rate exceeding 99%, strong new client acquisition, and accelerated product innovation. These achievements enabled expansion into new markets and verticals, reinforcing our position as one of the UK’s leading environmental compliance providers.

Growth was achieved across all compliance services, supported by the diversification into three new offerings designed to address emerging customer challenges, anticipate legislative change, and deliver measurable value.

We continued to invest strategically in people and technology, increasing headcount by over 16% and advancing our secure-by-design, AI-enabled data platforms. These investments have enhanced operational efficiency, strengthened compliance capabilities, and elevated customer service standards.

Looking ahead, our focus remains on scalable innovation, expanding our service portfolio, and securing long-term contracts that provide predictable, recurring revenue. With a robust market position, a loyal customer base, and a proven ability to adapt, we are well-placed to capture growth opportunities in the evolving environmental services sector.

Key performance indicators

The key performance indicators (KPIs) used by the company are as follows:

Commentary

The company delivered solid year-on-year growth across all key financial metrics in 2025. Turnover increased by 1.54%, while gross profit growth of 16.80% reflects improved operational efficiency and higher-value service delivery. Profit after tax rose by 13.94%, underpinned by strong customer retention, new client acquisition, and product innovation.

Net assets increased by 24.95%, strengthening the company’s balance sheet and providing a robust platform for continued investment in technology, talent, and market expansion.

Principal risks and uncertainties

The company recognises that exposure to both risks and opportunities is inherent in our operations. We are committed to maintaining a rigorous and robust risk management framework, supported by comprehensive quality procedures and aligned with ISO standards. Risks are continuously monitored through our reporting processes to ensure early identification and mitigation.

Legislative Risks

Our compliance business is regulated by the Environment Agency and other relevant authorities, requiring adherence to evolving UK and international standards. Legislative revisions may materially impact our operating model, making proactive engagement essential.

Through direct engagement with government departments, environmental regulators, and key industry bodies, our policy experts play an active role in shaping and responding to regulatory developments. This ensures we remain at the forefront of legislative change, providing customers with early insight, practical guidance, and strategic support. By acting as a bridge between policymakers and industry, we help communicate the needs of producers to government while translating regulatory priorities into commercially effective solutions for our customers.

Across all compliance, trading, and recycling services, we uphold the highest quality procedures and apply robust strategic and operational planning to manage the risks associated with regulatory change.

Financial Risk Management

Market price fluctuations within the Packaging Recovery Note (PRN) market can create volatility and, in some cases, delays in payments due to sudden price increases. We mitigate this risk through a robust credit control process, providing customers with market visibility and proactive support ahead of anticipated price movements. This approach ensures both the company and our customers are financially prepared for market changes, safeguarding cash flow, and operational stability.

Price Risk

Pricing strategy continues to be a principal focus, ensuring the company remains competitive and upholds the mission to provide the most cost-effective environmental services.

Credit Risk

Trade debt represents the most significant credit exposure. To mitigate this, we closely monitor payment terms and payment performance, with the contractual right to terminate agreements if terms are not met. In 2025, our robust financial management ensured that no memberships were terminated due to non-payment, reflecting the strength of our customer relationships and credit control processes.

Customer Risk

Our diverse client portfolio — spanning large international corporations to sole traders — ensures that financial performance is not dependent on any single customer. The company remains resilient to external economic pressures, as environmental compliance and sustainability continue to be high global priorities, driving consistent demand for our services.

People and Talent

In 2025, we strengthened our employee value proposition, enhancing rewards and benefits, with 96% of staff stating they would recommend the company as a great place to work. Our innovative talent development programmes and forward-thinking career pathways earned us the national Engage Awards – Great Place to Work Award, reflecting our commitment to attracting, developing, and retaining exceptional talent.

Employee Wellbeing

We continued to invest in comprehensive wellness initiatives, including in-office fitness activities, enhanced healthcare provision, and onsite sessions led by wellness experts. These were complemented by a range of social and community-based programmes designed to support mental, emotional, and physical wellbeing, fostering a positive and engaged workplace culture.

Customer Experience

With consistently high retention rates across all services, our commitment to service excellence continues to deliver measurable value for customers. In 2025, client case studies and testimonials played a pivotal role in securing six industry awards, reinforcing our reputation for delivering outcomes that combine compliance, innovation, and commercial advantage.

Corporate Social Responsibility (CSR)

As a certified B-Corp, we are committed to creating a positive impact on both people and the planet. In 2025, we increased charitable donations through our annual profit-sharing programme, supporting sixteen charities and volunteering in three community initiatives. These actions reflect our belief that commercial success and social responsibility go hand in hand, strengthening our role as a purpose-driven business.

Regulatory Requirements

The company maintained full compliance with all regulatory obligations, achieving high-quality standards across financial, quality, and regulatory audits. We successfully retained our ISO 9001 and ISO 27001 certifications, reflecting our commitment to operational excellence, data security, and continuous improvement.

Research & Development (R&D)

In 2025, we made significant investments in technological innovation to address the evolving legislative landscape, including the Extended Producer Responsibility (EPR) framework, the Recyclability Assessment Method (RAM), and the Packaging and Packaging Waste Regulations (PPWR).

Our customer-centric product development approach led to the launch of new packaging data software designed to meet emerging compliance requirements while delivering actionable insights for sustainability and cost optimisation.

Looking ahead to 2026, we will continue to advance our innovation pipeline, ensuring our solutions provide the most robust compliance capabilities, support sustainability objectives, and deliver financial forecasting tools that create a clear commercial advantage for our customers.

Supplier Quality

Our Company’s Evidence Quality Standard (CREQS) underpins excellence across our supplier network, ensuring robust due diligence and trading only with ethical, market-leading suppliers.

In 2025, the Environment Agency maintained heightened scrutiny of PRN suppliers. Acknowledging the ongoing risk of waste crime within the industry, we further strengthened our supplier assessment processes in collaboration with regulatory bodies. This ensures we only engage with PRN suppliers who can demonstrate compliance and meet our ethical quality standards.

As our business grows, we have expanded our supplier network to mitigate the risk of supplier loss or market fluctuations, ensuring continuity of supply and resilience in our operations.

IT Systems and Infrastructure

Our operations rely on highly efficient and secure IT systems. In 2025, we increased investment in data services and cybersecurity, ensuring resilience, scalability, and compliance readiness.

Regulatory transitions can create ambiguity and compressed timelines for system updates. To address this, we expanded our software engineering team, accelerating the development of future-ready data management and analytics solutions.

Our systems successfully adapted to the evolving regulatory landscape, including the introduction of the Recyclability Assessment Methodology (RAM) and updates to the Packaging and Packaging Waste Regulations (PPWR). Looking ahead to 2026, we will continue to expand and enhance our core software platforms to deliver customer-friendly compliance solutions that meet emerging legislative demands.

Our mission is to make a meaningful difference to the world and all who share it — improving lives, protecting nature, and creating a better environment for future generations.

We achieve this by delivering cost-effective, high-quality environmental services that make regulatory compliance simpler for businesses, uniting organisations in the shared goal of protecting our planet.

Looking ahead, we are well-positioned for growth with a clear long-term vision to expand our market leadership. Our focus on scalable innovation, customer-centric solutions, and operational excellence will enable us to deliver sustainable value for shareholders, customers, and employees in the year ahead.

Position of the company at balance sheet date

The Directors have reviewed the financial results for the year and the company's statement of financial position at the reporting date. Both the financial performance and the year-end position are considered satisfactory, reflecting the company's continued operational efficiency, effective management of resources, and overall financial stability.

Future Developments

The company remains committed to ongoing technological innovation, reinforcing our position as a market leader in packaging compliance and data management. Building on the success of our 2025 acquisition strategy, we are well-positioned for significant financial growth in 2026, with new services and recurring revenue streams continuing to scale.

We anticipate growth across all service lines in 2026, further diversifying profit sources and strengthening our long-term resilience. Our strategic focus will remain on expanding market share, enhancing customer value, and leveraging technology to deliver measurable compliance, sustainability, and commercial benefits.

As the business grows, our charitable contributions will increase in line with our commitment to corporate social responsibility, ensuring that our success continues to create a positive impact for both people and the planet.

On behalf of the board

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

As detailed in the Strategic Report, the company’s three strategic pillars are:

• Environmental compliance and data management

• Packaging data insights and SaaS solutions

• Trading and recycling services

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

Ordinary dividends were paid amounting to £4,775,000. 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:

In accordance with the company's articles, a resolution proposing that Friend-James Limited be reappointed as auditor of the company will be put at a General Meeting.

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.

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

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; 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.

We have audited the financial statements of Clarity Environmental Limited (the 'company') for the year ended 31 December 2025 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, 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.

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

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

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

• we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector in which the company operates;

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, relevant UK taxation legislation, the Data Protection Act, the Bribery Act 2010, relevant employment laws and environmental and health and safety legislation;

• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

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

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

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

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

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

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

• tested journal entries to identify unusual transactions;

• assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 2 were indicative of potential bias;

• investigated the rationale behind significant or unusual transactions; and

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

• agreeing financial statement disclosures to underlying supporting documentation;

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

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

• reviewing correspondence with HMRC and the company’s legal advisors.

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

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or 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 company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

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

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

Clarity Environmental Limited is a private company limited by shares incorporated in England and Wales. The registered office is CEL House, 9 & 10 Hunns Mere Way, Woodingdean Business Park, Brighton, East Sussex, BN2 6AH.

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 directors have prepared the financial statements on a going concern basis, which assumes that the company will continue in operational existence for the foreseeable future.true

In assessing going concern, the directors have considered:

• the company’s financial position at the reporting date;

• cash flow forecasts and budgets for a period of at least 12 months from the date of approval of the financial statements;

• the level of available cash; and

• the outlook for the company’s core activities, including environmental compliance schemes, PRN trading, export activities, and consulting services.

In forming their assessment, the directors have also taken into account a number of sector-specific risks and uncertainties, including:

• Volatility in PRN/PERN markets, where prices are influenced by supply, regulatory targets, and market demand, which may impact revenue and margins;

• Fluctuations in commodity prices, particularly for recyclable materials such as lead, which affect revenues from export activities;

• Changes in environmental regulation, including potential amendments to packaging regulations, WEEE requirements, or producer responsibility regimes, which may affect demand for the company’s services;

The forecasts and projections, taking account of reasonably possible changes in trading performance and sensitivity analysis on key assumptions, show that the company will be able to operate within the level of its current resources.

On this basis, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and accordingly continue to adopt the going concern basis in preparing the financial statements.

Turnover is measured at the fair value of the consideration received or receivable, net of value added tax, rebates, and discounts. Turnover is recognised when the amount can be measured reliably and it is probable that future economic benefits will flow to the entity.

Sale of goods and materials: Revenue from trading materials, battery exports, and Packaging Recovery Notes (PRNs) is recognised when the significant risks and rewards of ownership have transferred to the buyer, typically upon physical delivery or transfer of title.

Rendering of services: Revenue from compliance scheme memberships, EPR reporting, and data management services is recognised by reference to the stage of completion of the performance obligations at the reporting date, or evenly over the relevant compliance period.

Intangible fixed assets other than goodwill are initially measured at cost. Subsequent measurement is also at cost, net of amortisation and any impairment losses. Internally developed software is recognised as an intangible asset when the criteria in Section 18 of FRS 102 are met.

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

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

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

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

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

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

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

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

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

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

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

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

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

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.

Group accounts

The company has taken advantage of the exemption under sections 402 and 405 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

The company's subsidiary undertakings are dormant and hence their inclusion is not material for the purposes of giving a true and fair view. Details of the company's subsidiary undertakings can be found in Note 13 to these financial statements.

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

Their aggregate remuneration comprised:

The rate applicable to the company's profits in the year ended 31 December 2025 was 25.00% (2024: 25.00%).

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:

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

'Other borrowings', above, represents invoice discounting advances and are secured by fixed and floating charges over the assets of the company.

The aggregate amount of secured creditors due after more than one year is £0 (2024: £0).

Included within amounts payable within one year, above, is £218 (2024: £795,882) in respect of invoice discounting advances which are secured by fixed and floating charges over the assets of the company.

The long-term loans represent amounts owed to the company's directors and are unsecured.

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

Based on current depreciation rates, it is expected that the net reversal of the deferred tax liability in the following financial year will be £58,494.

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.

Contributions totalling £13,198 (2024: £9,870) were payable to the fund at the year-end and are included in creditors.

Other ordinary shares comprise 10,000 ordinary 'C' shares of £1 and 10,000 ordinary 'D' shares of £1. Ordinary 'B', Ordinary 'C' and Ordinary 'D' shares do not carry voting rights.

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:

Dividends totalling £4,775,000 (2024 - £3,434,000) were paid in the year in respect of shares held by the company's directors.

In the period under review the movement on the directors' loan accounts was as follows (negative amounts brought forward and carried forward indicate credits). Where relevant, the company charges interest on debit balances in accordance with the prevailing official interest rate relating to beneficial loans.

The company's ultimate controlling parties are Mr David Honcoop and Mr John Adams, who each own 50% of the company's voting share capital.