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

Daler-Rowney Limited is a manufacturer and distributor of art and craft materials in both the UK and globally. Daler-Rowney has grown into an internationally-renowned fine arts manufacturing company with colours & pigments still at its core. From paint, brushes and surfaces to accessories, luggage and easels, Daler-Rowney produces & sells products for artists of all experience levels.

The principal risks and uncertainties are outlined below.

• Global tensions - The increase in international tensions over recent years increases the risks in supply chain of raw materials used in production and the risk of customs duties being implemented on products. The company continues to mitigate this risk by investing in R&D for potential substitute materials and developing relationships with alternative suppliers.

• Impact of inflation, price rises and interest rates – Inflation and interest rates remain high, impacting the cost of materials and employment costs. The company has continued to adapt and work to drive efficiency within the business to combat these increases and mitigate risks where possible.

• Exchange rates - The Company managed the exchange rates exposure by matching timing of foreign currencies receipts and payments.

• Cyber security - The Company increases awareness of cyber security by providing ongoing and regular training across the business.

The audited financial statements for the year ended 31 December 2025 are set out on pages 11 to 39.

The company's operating profit before exceptional costs, depreciation and amortisation ("EBITDA") for the year was £513k (2024: £994k) on sales of £29,125k (2024: £33,089k).

The company's loss before tax for the financial year after exceptional costs of £5,256k (2024: £639k) and impairment costs of £nil (2024: £2,036k) was £6,393k (2024: £3,878k).

In 2025, the company continued its restructuring plans with the closure of the Dudley manufacturing and warehouse site thereby consolidating all activities in Bracknell. The reorganization of the business is expected to drive financial and operational efficiencies.

The directors see Key Performance Indicators (KPIs) as a way to provide a well-balanced and comprehensive review of the company's overall performance. The following table highlights some of the KPIs the company measures:

2025     2024

EBITDA operating margin before exceptional costs              1.8%     3.0%

Stock turnover                             1.1         1.1

The directors of the company must act in accordance with S.172 of the UK Companies Act 2006. Section 172 of the Companies Act 2006 requires directors to take into consideration the interests of stakeholders in their decision-making having regard for matters set out in S172 (1)(a)-(f) of the Act and to act in good faith and promote the long terms success of the company. This S.172 statement, focuses on matters of strategic importance to the company, and the level of information disclosed is consistent with the size and complexity of the business.

The company’s key stakeholders are considered to be fellow group companies, the company’s employees, customers and suppliers.

The company, in common with fellow group undertakings operate within the strategic framework and core principles established by FILA S.P.A. Each director of the company ensures when making decisions that they act in good faith to ensure decision promote the company’s success for the benefit of its members.

Employees

The company considers its employees to be a valuable assets and the company is committed to inclusion and diversity, training and development, engagement and safety. The directors communicate with the employees through regular meetings and information disseminated through local management representatives.

Customers and suppliers

The company is committed to building strong relationships with its customers and suppliers. The company meets regularly with customers and suppliers to build open, constructive and long-term business relationships built around a business partnering approach.

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 in the year under review was the manufacture and global distribution of artist materials under the Daler-Rowney brand names.

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

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

No ordinary dividends were paid. The directors do not recommend payment of a final dividend (2024: £nil).

The company’s operations expose it to a variety of financial risks that include the effects of changes in market prices of commodities, credit risk, foreign exchange risk, liquidity risk and interest rate risk.

The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs. The company currently does not use derivative financial instruments to manage interest rate costs, and as such, no hedge accounting is applied.

Given the size of the company, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board.

The company is exposed to commodity price risk as a result of its operations. Given the size of the company, the cost of managing the exposure to commodity price risk is considered to exceed the potential benefits. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature. The company has no exposure to equity securities price risk as it holds no listed or other equity investments, other than subsidiary undertakings.

The company actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the company has sufficient available funds for operations and planned expansions.

The company has both interest bearing assets and liabilities. Interest is accrued using a floating rate. The directors will revisit the appropriateness of using a floating rate should the company's operations change in size or nature.

The company in the normal course of business buys and sells in US dollars and Euros, and is thus exposed to the risk of changes in foreign currency exchange rates. However, the company transfers surplus foreign currency to other group companies as part of the group's currency matching policies. The foreign exchange risk may be further managed through the use of forward foreign currency exchange contracts taken out by the company.

The company has implemented policies that require appropriate credit checks on potential customers before new accounts are accepted.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The company is committed to involve all employees in the performance and development of the company.

The Company continues to explore revenue and cost synergies with F.I.L.A. group that will enhance the future growth prospects.

Ormerod Rutter Limited 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.

The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 introduced requirements for large unquoted companies to disclose their annual energy use, greenhouse gas emissions and related information. The required information is presented below.

Energy efficiency ratio

Measures taken to improve energy efficiency

Daler Rowney has continued it's collaboration with an energy consultancy with a view to create a carbon reduction program that achieves Carbon Neutral status by the end of 2026 and Net Zero status by 2050.

The Company is continuing to restructure its operations, consolidating all production into the Bracknell site thereby reducing it's overall consumption of energy both for production and transportation between sites.

Moving forward, the Company continues to invest in new manufacturing equipment and processes to reduce its carbon footprint. During 2025, the purchase and installation of a bulk storage Silo has reduced the number of deliveries to site and the installation of a second PET blow moulding machine has increased the company's ability to produce bottles in house.

A signed contract, valid until 2028, is in place to use only 100% renewable electricity with a REGO (Renewable Energy Guarantee of Origin).

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;

• 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.

Each of the persons who is a director at the date of approval of this report confirms that:

• so far as the director is aware, there is no relevant audit information of which the company’s auditor is unaware; and

• the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company’s auditor is aware of that information.

The accompanying financial statements have been prepared on the assumption that the company will continue as a going concern.

The company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report above. This includes the financial position of the company.

The company's forecasts and projections, taking account of reasonably possible changes in trading performance and inclusion in the wider F.I.L.A. group, show that the company should be able to operate within the level of its current funding facilities. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, the company continues to adopt the going concern basis in preparing the financial statements.

In May 2026, a fire affected the Company’s production site in Bracknell. While production capacity was temporarily impacted, emergency business continuity plans were implemented to minimise disruption to our customers. The financial impact of the fire is still being assessed, however the company maintains a comprehensive insurance coverage, further details are disclosed in note 34 of the accounts.

Although the fire had a significant impact on operations, the company and parent company are confident in the recovery plans that have been activated to ensure the company will make a full recovery moving forwards.

The company contributed £nil (2024: £100) to charities. There were no political contributions (2024: £nil).

Supplier payment policy

The company's policy is to settle terms of payment with suppliers when agreeing the terms of each transaction and to ensure that suppliers are made aware of the terms of payment. Trade creditors of the company at 31 December 2025 were equivalent to 61 (2024: 53) days' purchases, based on the average daily amount invoiced by suppliers during the year.

We have audited the financial statements of Daler-Rowney Limited (the 'company') for the year ended 31 December 2025 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

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

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

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

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

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

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

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

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 industry sector;

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or operations of the company and group, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, 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; and

• considering 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 transactions 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; and

• investigated the rationale behind significant or unusual transactions.

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

• agreeing financial statement disclosures to underlying supporting documentation;

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

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

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

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://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 statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

Daler-Rowney Limited is a private company limited by shares incorporated in England and Wales. The registered office is Daler Rowney House, Southern Industrial Area, Bracknell, Berkshire, RG12 8SS.

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 £'000.

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

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

• Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;

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

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

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

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

The financial statements of the company are consolidated in the financial statements of F.I.L.A. group. These consolidated financial statements are available from its website www.filagroup.it.

These financial statements have been drawn up on the going concern basis. If the going concern basis were not appropriate, adjustments would have been made to reduce assets to recoverable amounts, to provide for any further liabilities that might arise, and to re-classify fixed assets as current assets and long term liabilities as current liabilities.true

The company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. This includes the financial position of the company.

The company's forecasts and projections, taking account of reasonably possible changes in trading performance and inclusion in the wider F.I.L.A. group, show that the company should be able to operate within the level of its current facilities.

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

Turnover comprises the value of sales (net of VAT and similar taxes, trade discounts and intra-group transactions) of goods and services in the normal course of business. Turnover from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the customers which is either on dispatch or when the goods are physically delivered depending on agreed terms.

Dividend income is recognised when the right to receive payment is established.

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is calculated, using the straight-line method, to allocate the depreciable amount of the assets to their residual values over their estimated useful lives, as follows:

Where factors, such as changes in market price or reduction in quantity sold under these acquired brands and trademarks, indicate that residual value or useful life have changed, the residual value, useful life or amortisation rate are amended prospectively to reflect the new circumstances.

The assets are reviewed for impairment if the above factors indicate that the carrying amount may be impaired.

Land and buildings are shown at original historical cost or subsequent valuations. Other fixed assets are shown at cost, net of depreciation and provision for impairment.

Freehold land is not depreciated. Assets under construction are not depreciated until completed and in use. Other fixed assets are depreciated at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line basis over its expected useful life as follows:

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.

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

Income from investments is included in the financial statements of the year in which it is receivable.

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

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

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks are stated at the lower of cost and estimated selling price less costs to sell. Cost incurred in bringing each product to its present location and condition is based on:

Raw materials - purchase cost on a weighted average basis, including an element of transport cost where appropriate.

Work-in-progress and finished goods - cost of direct materials and labour, plus a reasonable proportion of manufacturing overheads based on normal levels of activity.

Provision is made for obsolete, slow-moving or defective items where appropriate.

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 or loss account. Reversals of impairment losses are also recognised in the profit or loss account.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

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

For defined contribution schemes the amount charged to the profit and loss account in respect of pension costs and other post-retirement benefits is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.

Defined benefit schemes are funded, with the assets of the scheme held separately from those of the group, in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The resulting defined benefit asset or liability, net of the related deferred tax, is presented separately after other net assets on the face of the balance sheet.

The amounts charged to operating profit are the current service costs and gains and losses on settlements and curtailments. They are included as part of staff costs. Past service costs are recognised immediately in the profit and loss account if the benefits have vested. If the benefits have not vested immediately, the costs are recognised over the period until vesting occurs. The interest cost and the expected return on assets are shown as a net amount of other finance costs or credits adjacent to interest. Actuarial gains and losses are recognised immediately in the statement of total recognised gains and losses.

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

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

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

Transactions denominated in foreign currencies are recorded in the local currency at actual exchange rates as of the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year-end are reported at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account.

Exchange differences on foreign currency borrowings, to the extent that they relate to investments in overseas operations, are taken to reserves and separately reported.

Related party transactions

Under the provisions of Financial Reporting Standard 102 Section 33, the company is not required to disclose details of certain related party transactions as it is a subsidiary, and the consolidated financial statements of F.I.L.A. - Fabbrica Italiana Lapis ed Affini S.p.A. in which the company's results are included are available to the public.

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.

Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year include:

• Inventories provision is made accordance with the Stock accounting policy above.

• Defined benefit pension assets or liabilities are measured in accordance with the Retirement Benefits accounting policy above.

Contributions to turnover and profit on ordinary activities before taxation all arise from the company's principal activity. Further segmental information is as follows:

Exceptional revenue of £Nil (2024: £Nil).

Exceptional costs of £5,256,339 (2024: £2,675,508) comprise:

• Restructuring costs of £2,076,057.

• Intercompany loan write off £3,180,282

Exceptional costs in the prior year comprised:

• Restructuring costs of £558,005;

• Fees related to onerous lease £80,529;

• Impairment charge of £2,035,974 on the Ferrario brand.

In addition within operating costs an amount of £635k (2024: £581k) has been charged as part of the annual management fee from the ultimate Parent Company  in relation to capital cost of the SAP Implementation.  This cost will be charged for 3 years whilst the group depreciate the implementation cost as per the group policy.

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

Their aggregate remuneration comprised:

2025: Redundancy costs of £541k were included within exceptional costs relating to the Dudley site closure.

2024: Staff costs of £196k were included within exceptional costs relating to the Middlewich site closure.

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

The directors received total emoluments of £257,000 (2024: £217,000) from Daler-Rowney Limited for services to the company and services provided to other companies within the wider Daler-Rowney group. However it is not practicable to allocate their remuneration between their services as directors of the company and those services provided to other the group companies.

The actual credit 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:

In addition to the amount credited to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

Amortisation charged for the year is included in the statement of comprehensive income within other operating expenses.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Freehold land amounting to £6,673,560 (2024: £6,673,560) has not been depreciated.

The main freehold property, land and buildings, of the company was revalued on an existing use value basis as at 12 June 2023 by Vail Williams LLP, Consultant Surveyors, at £7,800,000.

If revalued assets were stated on a historical cost basis rather than a fair value basis, the total amounts included would have been as follows:

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

Raw material stocks include a valuation of labels for manufactured colour products.

In the opinion of directors, there is no material difference between the book value of stocks and their replacement cost.

The amounts owed group undertakings are unsecured, interest free and have no fixed term of repayment.

Included within trade debtors is a non-recourse factoring creditor of £1,383k (2024: £1,650k). In 2024 the creditor was shown within other creditors in note 19, however has been presented against trade debtors in 2025 and the comparative within trade debtors and other creditors restated for comparability. All monies due or to become due from the company to the factoring company, International Factor Italia S.p.A., are secured against trade debtors.

Amounts owed to parent undertakings are unsecured, carry interest at Euribor 3 months plus 3% and are repayable on demand.

Amounts owed to other group undertakings are unsecured, carry interest at LIBOR plus 1.5% per annum and are repayable over 10 years in equal annual instalments from 2021.

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

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

Deferred taxation has been provided to the extent that the directors have concluded on the basis of reasonable assumptions and the intentions of management that it is probable that sufficient future profits will arise against which to offset the asset.

The share premium account represents the amount by which shares have been issued at a price greater than nominal value less issue costs.

The revaluation reserve represents the unrealised gain generated on revaluation of freehold land and buildings. Excess depreciation is transferred from the revaluation reserve to profit and loss reserves in the statement of changes in equity.

Profit and loss reserves represent accumulated realised earnings from prior and current periods as reduced by accumulated realised losses and dividends.

Daler-Rowney Retirement and Death Benefit Scheme

As from the 1 July 2012 the company operates a defined contribution retirement benefit scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in funds under the control of trustees. The company is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the company with respect to the retirement benefit scheme is to make the specified contributions.

The total cost charged to income of £164,000 (2024: £186,000) represents contributions payable to the scheme by the company at rates specified in the rules of the plan. As at 31 December 2025 contributions of £2,000 (2024: £29,000) were due in respect of the current reporting period that had not been paid over to the scheme.

The company operates a defined benefit scheme for qualifying employees. The scheme is closed to future accrual on 30 June 2012.

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 6 April 2024, initial results of this triennial valuation have been used as a basis for calculations and updated to 31 December 2025 by a qualified independent actuary Megan Seccombe of First Actuarial LLP, a Fellow of the Institute of Actuaries.

The major assumptions used by the actuary were:

Assumed life expectations on retirement at age 65:

The scheme is closed to new entrants. In accordance with FRS 102 the present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.

In these circumstances the use of this method can now lead to the contribution rate underlying the current service cost increasing in future years. The actual pension liability is £978,000 (2024: £1,232,000).

Amounts recognised in the profit and loss account

The net interest has been restricted due to a proportion of the scheme asset not being recoverable. The restricted net interest paid in the Profit and loss account is £66,000(2024: £111,000 received).

Amounts taken to other comprehensive income

The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:

Movements in the present value of defined benefit obligations

The defined benefit obligations arise from plans which are wholly unfunded.

Movements in the fair value of plan assets

The actual return on plan assets was £1,141,000 (2024: £1,321,000 loss).

Fair value of plan assets at the reporting period end

The company contributions during the accounting year amounted to £123,000 (2024: £Nil) and the best estimate of contributions to be paid to the scheme by the company for the year coming is £212,500.

The most recent triennial valuation of the company's pension scheme was carried out as at 6 April 2024 which is currently ongoing. The prior triennial valuation was carried out on 6 April 2021. The Trustee is required to carry out an actuarial valuation every 3 years.

For the latest actuarial valuation, the company and trustees agreed that the funding objective is to ensure that the scheme is fully funded, using the assumptions that contain a margin for prudence.

The company is registered with HM Customs & Excise as a member of a group for VAT purposes and, as a result, is jointly and severally liable on a continuing basis for amounts owing by other members of that group in respect of unpaid VAT.

The company has given a cross guarantee to secure the banking arrangements of F.I.L.A. group.

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:

Amounts contracted for but not provided in the financial statements:

The immediate parent undertaking at the balance sheet date was Renoir Bidco Ltd, a company registered in England and Wales. The registered office is Daler-Rowney House, Peacock Lane, Southern Industrial Area, Bracknell, RG12 8SS, United Kingdom.

The group considers that F.I.L.A. — Fabbrica Italiana Lapis ed Affini S.p.A., a company quoted on the Milan stock exchange, is the ultimate parent company and controlling party.

The largest group of which Daler-Rowney Limited is a member and for which group financial statements are drawn up is that headed by F.I.L.A., whose financial statements are available to the public via its website www.filagroup.it.

On 25 May 2026, a significant fire occurred at the Company’s production site in Bracknell. The fire caused damage to the building, plant and machinery and inventory.

Following the fire the company has implemented robust business continuity plans and work is continuing to restore full production capacity and mitigate the impact on our customers.

While the incident has a material financial impact on the operations of the Company, it represents a non-adjusting post-balance sheet event. Accordingly, no adjustments have been made to the financial statements for the year ended 31 December 2025.

At the date of approval of these financial statements the full financial impact of the fire is still being assessed, however the company maintains a comprehensive insurance coverage and a claim has been initiated with the insurers.