The directors present the strategic report for the year ended 30 April 2026.

Our principal activity remains the design, manufacture, installation, commissioning and through-life support (spares, consumables and service) of water treatment equipment, specifically Reverse Osmosis (RO) desalination packages used to produce potable water from seawater.

Turnover is £15.7 million, up by 42% on the previous year and pre tax profitability has increased to 19%, being £3 million.

Exports increased from 32% in the prior year to 38% this year. Our main export markets are Australia, Canada, Monaco and USA.

The SLT (Senior Leadership Team) has developed further within the business and are helping to drive the Company forward to support our growth aspirations.

There are several ongoing process and efficiency improvements, led by the SLT, which will further improve the bottom line and stabilise the business for its future growth.

An additional unit was rented on-site to provide additional office space for our growing team, which was sorely needed as the number of employees increased to 99 as at the year end.

The Company has several on-going long-term contracts, mainly in the naval and marine sectors, which provide continuity of work for the next 10 years and beyond.

Our sales pipeline has a number of significant opportunities, primarily in the naval and marine markets, which present long-term work against which we can plan future expansion.

The Company undertakes R&D activity to develop packages and components that are fit for purpose in mission critical applications.

The Knowledge Transfer Partnership (KTP) that was started last year in co-operation with Northumbria University developed working prototypes. A subsequent KTP is being applied for to cover the production engineering phase of this product.

The Company has a strategy in place to grow organically over the next 4 years with a target of £30M turnover at 18% profit by 2030. We are on target to achieve this.

Growth in the defense and marine markets, both domestically and overseas, is pivotal to achieving this target. Additional work in the offshore and industrial markets will also support this growth plan.

Construction work for the additional workshop and office facilities to support our growth aspirations commenced in July 2026 and will take approximately 9 months to complete. This investment will effectively double our manufacturing capacity.

The Directors are aware of the principal risks and uncertainties facing the Company. A brief, but not exhaustive list is as follows:

The availability and retention of suitably skilled people

Recruitment of staff, particularly with engineering skills, has been challenging. We are managing this with a revised recruitment strategy.

Although we have operated apprenticeship schemes on an ad-hoc basis, in early 2025 we committed to a permanent scheme. In September 2025, the “SaltSep Academy” had its first intake of 5 apprentices. It is our intention to recruit and train a fresh intake of apprentices every year. We have partnered with a local college to help facilitate this programme. Having a pipeline of young talent is one of our mitigation strategies for the recruitment challenge.

Financial risk

Financial risk embodies foreign currency risk, liquidity risk, credit risk and interest rate risk. Liquidity is managed by ensuring sufficient cash is available to meet foreseeable needs. The Company has no bank loans. The principal credit risk arises from the company’s trade debtors. All customers who trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary. Where possible, we trade in GBP. We manage foreign currency on an ad-hoc basis, although we do occasionally utilise FOREX facilities for buying forward currency where large projects are executed in a foreign currency. FOREX risk is also managed by having foreign currency accounts for our main overseas markets, particularly where we are using local partners or suppliers to support local content requirements.

Inflationary risk

Inflation in the global economy is a risk for the Company. Increasing costs from suppliers may impact all businesses and the Company may or may not be able to pass on supply chain price increases to its customers. High inflation affects the Company’s employees, who are impacted by increases in living costs including fuel, energy and food costs.

Wage inflation is also a risk within the Company with associated pressure on salaries and remuneration packages for both specialist skills in engineering and technology as well as more generalist skills such as human resources, marketing and finance. Higher employee costs may or may not be passed onto customers.

UK political landscape

The UK Government and their first budget did little to instill confidence in businesses, especially SMEs such as Salt Separation Services Ltd.

The increase in employer National Insurance contributions has had an impact on our pricing and is having an influence on recruitment decisions.

As the Company operates in the defense industry, we may be impacted by changes in UK Government defense policies and legislation. The Government’s commitment to defense spending is viewed positively. The delayed Defense Investment Plan was a significant concern for all UK companies involved in the defense sector. The plan does commit to increasing defense spending, but some key naval programmes have been removed (i.e. Type 83). However, the plan does appear to support British industry, with a “back British” pledge.

The Company seeks to mitigate these risks by developing long-term, close working relationships with defense industry customers and maintaining current industry knowledge, providing visibility of future defense programmes and spending.

World political landscape

The geopolitical landscape in 2026 is marked by significant tensions, ongoing conflicts, and shifting alliances, particularly influenced by the USA-Iran war, the Russia-Ukraine war, the Israel-Palestine conflict, and rising nationalism globally.

This heightened geopolitical risk impacts both our UK and overseas customers and can impact on our supply-chain, both directly and indirectly, with logistical delays and energy price fluctuations.

To an extent we can manage the situation by forward buying and improved planning.

Supply-chain risks

The Company relies on the supply of materials and components for the manufacture of our products. An inability to source these materials and components on time and in full is a risk to the Company’s ability to fulfil customer orders. Component and/or materials shortages may also result in increased prices which we may not be able to pass on to customers.

The Company seeks to mitigate these risks by proactively managing inventory levels and identifying alternative, competitive suppliers of certain components and materials. In addition, we are undertaking a significant amount of work building relationships with key suppliers and increasing resilience in our supply-chain.

Where possible, local suppliers are used.

Changes in technology

Our principal activity is the design, manufacture and through-life support of RO desalination equipment. New and emergent technologies could result in RO becoming obsolete.

We work very closely with the manufacturers of key technologies used in our equipment. This gives us access to latest generation membrane technology and pumping/energy recovery technology.

A recent study that we conducted into future military water purification and desalination technologies confirmed that membrane technologies are the best available technology for both current and future operations, with no credible emerging alternative technologies.

Reputational risk

Failure to deliver service or product deliverables to agreed budgets, timetables and/or quality may result in reputational damage to the Company that may affect future sales.

The risk is mitigated by having in place Quality Assurance procedures, review meetings with customers, formal customer feedback procedures, and various accreditations, such as ISO 9001 (Quality Management System).

We also undertake Learning from Experience (LFE) meetings on the completion of projects and other significant activities, with a no blame culture, applying the findings of each LFE to drive improvement.

Dependence on key personnel

Failure to recruit and retain key staff could threaten the business’s ability to deliver its services and products to customers or to win new work or to maintain market competitiveness.

The Company seeks to mitigate these risks by encouraging staff retention through both competitive remuneration packages and a stimulating work environment. In addition to base salary, remuneration can include annual bonus (subject to Company performance), pension contributions (with option of salary sacrifice), health benefits for key personnel and life assurance. Remuneration packages are reviewed regularly.

A vibrant, dynamic, supportive and inclusive environment for all employees is encouraged with diverse and technically challenging work for both small and large customers across a broad spectrum of industries and markets.

The creation of the “SaltSep Academy” in 2025 is one of our mitigation strategies to the recruitment challenge.

Increased competition

The Company is aware of increased competition in our key markets, particularly in the naval defense and marine sectors.

The Company seeks to mitigate these risks by designing and manufacturing best in class solutions to our clients, backed up with highly responsive and pro-active after-sales support.

Developing long-term, close working relationships with our customers and undertaking regular market studies will also help to mitigate these threats.

We are also increasing our marketing efforts, primarily in the digital space.

The sales team has also expanded to support future growth and we have taken tentative steps into the world of trade shows, having successfully exhibited at the UK’s Combined Naval Event in May 2026.

In January 2026, Salt Separation Services underwent a comprehensive re-branding exercise with a cleaner, more versatile logo being central to creating an identity that feels modern and confident, whilst honouring our history and the values that have shaped us.

On behalf of the board

The directors present their annual report and financial statements for the year ended 30 April 2026.

The principal activity of the company continued to be that of the design, manufacture, installation, commissioning and through-life support (spares, consumables and service) of water treatment equipment, specifically Reverse Osmosis (RO) desalination packages used to produce potable water from seawater.

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to £600,000. The directors do not recommend payment of a further dividend.

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

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.

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

We have audited the financial statements of Salt Separation Services Limited (the 'company') for the year ended 30 April 2026 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 30 April 2026 and of its profit for the year then ended;

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

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

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

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

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

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

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

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

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

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

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

In identifying and assessing risks of material misstatements in respect of irregularities (including fraud) we considered the following:

• The nature of the industry, the company’s control environment, the significant laws and regulations relevant to the company, and the company’s policies on detection of fraud;

• Results of our enquiries of management and of those charged with governance;

• Our review of disclosures included in the financial statements, and

• Engagement team discussions in respect of any potential indicators of non-compliance or fraud.

We have also performed specific procedures to consider the risk of management override and of fraud arising in significant transactions outside the normal course of business.

We did not identify a material risk of non-compliance with laws and regulations or of fraud.

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.

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

Salt Separation Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is Grosvenor House, Gorrell Street, Rochdale, Lancashire, OL11 1AP.

During the year the company's year end was extended, by just one day, from 29 April 2026 to 30 April 2026. In substance both periods represent a year of trade for comparability purposes.

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

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

The financial statements have been prepared under the historical cost convention modified to incorporate certain asset classes at fair value. The principal accounting policies adopted are set out below.

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

Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.

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

The company recognises revenue from the following major sources:

• New Plant        

• Aftersales

• Support contract sales, services and repairs

• Refurbishments

• Services

• Plant Hire

The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:

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

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

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 assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

When the outcome of a long term contract can be estimated reliably, contract revenue is recognised by reference to the degree of completion of each contract, based on the amounts certified and to be certified by the customer.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately in full. Where costs incurred exceed the level of contract billings, the balance is shown as long term contracts within stock. Where progress billings exceed the level of cost incurred, the balance is shown as deferred income.

Profit is recognised according to the stage of completion of the contracts. The assessment of profit requires the exercise of judgement when preparing estimates of the forecast costs and revenues of a contract. A number of factors are relevant to this assessment, including in particular the expected recovery of costs. Given the length of the company's contracts, management estimates the total expected profitability of contracts to recognise revenue and profit as a contract progresses.

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

Their aggregate remuneration comprised:

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:

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

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

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.

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:

After the balance sheet date, the company entered into a five year lease with an average annual rental of £249,015 in relation to the rental of the company property.

Osmosis Property (formally known as Desal Supplies) is an unincorporated partnership in which D Shackleton is a partner. During the year the company sold goods amounting to £NIL (2025: £16,839) and purchased services amounting to £191,154 (2025: £211,167) from the partnership. All transactions occur at commercial market rates.

At the balance sheet date, included within other debtors was an amount owed from Osmosis Property of £NIL (2025: £167) and included within creditors was an amount owed to Osmosis Property of £NIL (2025: £15,208).

Desal Supplies Ltd is a company in which D Shackleton is a director. During the year, the company purchased goods amounting to £1,897,834 (2025: £1,364,595) from the company. During the year, the company also recharged costs including labour and insurance amounting to £21,949 (2025: £75,547) to the company.

At the balance sheet date, included within debtors was an amount owed from Desal Supplies Ltd of £43,007 (2025: £8,295) and included within creditors was an amount owed to Desal Supplies Ltd of £82,211 (2025: £193,708). All transactions occur at commercial market rates.

By virtue of 50% shareholding in the company, The Stephen Grindrod Discretionary Trust is a related party. During the year dividends of £300,000 (2025: £120,000) were paid to the trust.

By virtue of 25% shareholding in the company, The Shackleton Waller Discretionary Trust 2022 is a related party. During the year dividends of £150,000 (2025: £60,000) were paid to the trust.

Dividends totalling £150,000 (2025 - £60,000) were paid in the year in respect of shares held by the company's directors.

The ultimate controlling parties are D Shackleton, The Trustees of The Stephen Grindrod Discretionary Trust and The Trustees of the Shackleton Waller Discretionary Trust 2022, by virtue of their holding in total of 100% of the issued share capital.