REGISTERED NUMBER: 02591706 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31 December 2025

for

Harris & Harris Construction Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Statement of Directors' Responsibilities

5

Report of the Independent Auditors

6

Statement of Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Cash Flow Statement

12

Notes to the Cash Flow Statement

13

Notes to the Financial Statements

14

DIRECTORS:

A J Harris

Mrs J E Harris

G A Harris

S J Harris

REGISTERED OFFICE:

Unit 1E

Polden Business Centre

Bristol Road

Bridgwater

Somerset

TA6 4AW

REGISTERED NUMBER:

02591706 (England and Wales)

SENIOR STATUTORY AUDITOR:

Adam Knight FCA

AUDITORS:

A C Mole LLP

Chartered Accountants

& Statutory Auditor

Stafford House

Blackbrook Park Avenue

Taunton

Somerset

TA1 2PX

BANKERS:

National Westminster Bank Plc

9 York Buildings

Cornhill

Bridgwater

Somerset

TA6 3BS

SOLICITORS:

Ashfords LLP

Ashford Court

Blackbrook Park Avenue

Taunton

Somerset

TA1 2PX

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

REVIEW OF BUSINESS

The construction and housebuilding sectors continued to experience challenging trading conditions throughout 2025, with ongoing pressure from labour and material costs, programme delays and a generally cautious housing market.

As with the previous year, these conditions have continued to place pressure on contract margins. The company has remained focused on managing its existing contracts carefully, strengthening commercial controls and maintaining a stable workload.

The reported results for the year continue to be influenced by the accounting treatment of Long Term Contracts. Contract profitability is reviewed throughout the life of each project and, where anticipated margins change, the expected overall contract position is reflected within the accounts. This can result in adjustments to profit previously recognised and can have a significant effect on the reported result in an individual financial year.

During 2025, the company continued to concentrate on building a solid base for future operations, securing new contracts and developing its pipeline of future work. The business continues to benefit from established relationships with existing clients while also developing opportunities with new clients.

The company has maintained a good level of trading activity and enters the next financial year with a strong workload and a number of further opportunities in the pipeline.

The directors remain focused on improving contract margins, maintaining appropriate cost and commercial controls and ensuring that future work is secured on commercially sustainable terms.

Despite the continued challenges within the wider construction sector, the directors believe the company is well positioned moving forward and expect the current workload and pipeline of new opportunities to provide a solid basis for improved future performance.

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face in these uncertain times.

Given the straightforward nature of the business, the directors are of the opinion that analysis using KPIs is not necessary for an understanding of the development, performance or position of the company.

PRINCIPAL RISKS AND UNCERTAINTIES

The main risks of 2025 continued to be materials and wage increases and the challenging construction and housebuilding market on the whole. However, the Company has benefitted from a good cross section of contracts and ended the year in a stable position with strong profits.

The directors are confident that the ongoing contracts and potential new contracts in the pipeline will continue to show good results moving forwards.

GOING CONCERN

These financial statements have been prepared on the going concern basis. The directors have assessed the company's ability to continue as a going concern, including consideration of its cash flow forecasts, expected trading performance and available financial resources. Based on this assessment, the directors consider that the company has sufficient resources to meet its liabilities as they fall due for at least 12 months from the date of approval of these financial statements.

The directors have prepared detailed cash flow forecasts covering the going concern assessment period. The forecasts include only turnover arising from contracts and projects which have been confirmed at the date of preparation of the forecasts and do not assume the award of any unconfirmed future contracts or variations to contracts. The directors consider this to provide an appropriately prudent basis for assessing the company's expected cash position.

The forecasts include a number of key assumptions and estimates. These include the estimated gross margins achievable on the confirmed contracts, based on the directors' current assessment of anticipated contract costs and the circumstances applicable to each project. The forecasts also include assumptions regarding the timing of the completion of works and the consequent timing of invoicing and receipt of income from customers. These timings are based on the directors' current expectations of project progress and completion dates, together with the agreed or anticipated payment terms applicable to the relevant contracts.

The directors have also considered the potential for short-term cash flow pinch points arising from the timing differences between expenditure incurred on projects and the receipt of customer income. Where such short-term pressures arise, the directors will manage the company's cash position through close monitoring of expenditure and working capital, careful timing of payments where appropriate, and management of the timing of project expenditure and other discretionary costs. The directors will continue to monitor actual cash flows against forecast and take appropriate action where variances arise.

The company's ability to meet its longer-term financial commitments is also supported by the continued availability of its banking facilities and the expected continued financial support of the directors. The directors have received confirmation of continued support from the company's banking partners and the directors and have taken this support into account in their going concern assessment.

The directors consider that the company's confirmed order book, together with its existing customer relationships and long-term contracts, provides a reasonable basis for the forecast level of activity over the assessment period. The directors have considered the current market conditions and their potential impact on trading performance, contract margins and cash flows.

Having considered the above matters, including the key assumptions and estimates within the cash flow forecasts, the measures available to manage any short-term cash flow pressures and the expected continued support of the company's banking partners and directors, the directors consider it appropriate to prepare the financial statements on the going concern basis.

ON BEHALF OF THE BOARD:

G A Harris - Director

30 September 2026

The directors present their report with the financial statements of the company for the year ended 31 December 2025.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the provision of ground work services to the new house building industry.

DIVIDENDS

The company's profit after tax for the financial year is £784,504 (2024: loss of £645,018). Dividends of £140,160 were distributed in 2025 (2024: £151,934). The directors do not recommend the payment of any final dividends.

FUTURE DEVELOPMENTS

The company will continue to develop relationships with new and existing customers in the forthcoming year.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2025 to the date of this report.

A J Harris

Mrs J E Harris

G A Harris

S J Harris

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The directors are responsible for monitoring financial risk. Appropriate policies have been developed and implemented to identify, evaluate and manage the key risks.

a) Price risk - materials and fuel prices are more stable and having built more regular price reviews into our contracts, the Directors consider the price risk to be lower than in recent years.

b) Credit risk - the Directors are aware of and are managing this risk. The Company has implemented policies that require appropriate credit checks. The credit given to customers is subject to limits which are determined and regularly reassessed by the Directors.

c) Liquidity risk - the Company has arranged an adequate bank overdraft to aid daily cash flow. The directors have confirmed they will support the business financially should it be required beyond the overdraft facility.

d) Interest rate cash flow risk - the Covid 19 business loan which the Company received is being steadily repaid at £12,500 per month. The Company has repaid £150,000 during 2025 without a detrimental affect to the cashflow or supplier payment terms.

e) Economic risk - with mortgage rates more stable the Directors have seen an increase in activity on sites which have previously been slowed down. This more stable operating environment gives the Directors confidence for 2026 and they are looking forward to a productive year.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

G A Harris - Director

30 September 2026

The directors are responsible for preparing the Strategic report, the directors' 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, including Financial Reporting Standard 102 Reduced Disclosure Framework (FRS 102).

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-

select suitable accounting policies and then apply them consistently;

-

make judgements and accounting estimates that are reasonable and prudent;

-

state whether applicable United Kingdom Accounting Standards, including FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

-

notify the company's shareholders in writing about the use of disclosure exemptions, if any, of FRS 102 used in the preparation of financial statements; and

-

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

company will continue in business.

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

Opinion

We have audited the financial statements of Harris & Harris Construction Limited (the 'company') for the year ended 31 December 2025 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' 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 directors are responsible for the other information. The other information comprises the information in the Strategic Report, the Report of the Directors and the Statement of Directors' Responsibilities, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Report of the Directors.

We have nothing to report in respect of the following matters where 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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.

Auditors' responsibilities for the audit of the financial statements

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 a Report of the Auditors 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:

Identifying and assessing potential risks of material misstatement due to irregularities

We considered the following when identifying and assessing risks of material misstatement due to irregularities, including fraud and non-compliance with laws and regulations:

- the legal and regulatory framework in which the company operates

- the nature of the sector in which the company operates

- the control environment and controls established to mitigate such risks

- the results of our enquiries of management about their identification and assessment of risks of irregularities

- discussions with the audit engagement team about where fraud might occur

- the incentives for fraud.

Laws and regulations which are considered to be significant to the company include those relating to the requirements of financial reporting framework FRS102, the Companies Act 2006, UK tax legislation, employment law and health and safety. In addition we consider other laws and regulation which may not directly impact the financial statements but may impact on the operation of the company.

In accordance with International Auditing Standards we concluded that a risk in relation to the potential for management override of controls existed together with a risk that the estimated profit margins on contracts could be misstated.

Audit responses to risks identified

We undertook audit procedures to respond to the risks identified, and designed our audit testing to respond to these risks. The additional procedures we undertook included the following:

- gaining an understanding of the company's procedures for ensuring compliance with laws and regulations

- testing the appropriateness of journal entries and other adjustments

- considering whether accounting estimates were indicative of potential bias

- considering whether any transactions arose outside the normal course of business

- making enquiries of management

- considering the estimated profit margins on contracts taking into account post year end performance.

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

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Adam Knight FCA (Senior Statutory Auditor)

for and on behalf of A C Mole LLP

Chartered Accountants

& Statutory Auditor

Stafford House

Blackbrook Park Avenue

Taunton

Somerset

TA1 2PX

30 September 2026

TURNOVER

9,794,894

11,061,622

Cost of sales

7,915,662

10,723,561

GROSS PROFIT

1,879,232

338,061

Administrative expenses

902,356

1,080,246

976,876

(742,185

)

Other operating income

46,666

46,610

OPERATING PROFIT/(LOSS)

3

1,023,542

(695,575

)

Interest receivable and similar income

4

98

175

1,023,640

(695,400

)

Interest payable and similar expenses

5

63,344

43,547

PROFIT/(LOSS) BEFORE TAXATION

960,296

(738,947

)

Tax on profit/(loss)

6

175,792

(93,929

)

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

784,504

(645,018

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

784,504

(645,018

)

FIXED ASSETS

Tangible assets

8

227,883

224,144

CURRENT ASSETS

Stocks

9

87,394

155,878

Debtors: amounts falling due within one year

10

1,384,211

1,337,620

Debtors: amounts falling due after more than one year

10

2,092,524

2,248,761

Cash in hand

59

143

3,564,188

3,742,402

CREDITORS

Amounts falling due within one year

11

2,135,678

2,938,764

NET CURRENT ASSETS

1,428,510

803,638

TOTAL ASSETS LESS CURRENT LIABILITIES

1,656,393

1,027,782

CREDITORS

Amounts falling due after more than one year

12

(242,193

)

(314,896

)

PROVISIONS FOR LIABILITIES

16

(56,970

)

-

NET ASSETS

1,357,230

712,886

CAPITAL AND RESERVES

Called up share capital

17

1,000

1,000

Capital redemption reserve

18

1,010

1,010

Retained earnings

18

1,355,220

710,876

SHAREHOLDERS' FUNDS

1,357,230

712,886

The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2026 and were signed on its behalf by:

G A Harris - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2024

1,000

1,507,828

1,010

1,509,838

Changes in equity

Dividends

-

(151,934

)

-

(151,934

)

Total comprehensive income

-

(645,018

)

-

(645,018

)

Balance at 31 December 2024

1,000

710,876

1,010

712,886

Changes in equity

Dividends

-

(140,160

)

-

(140,160

)

Total comprehensive income

-

784,504

-

784,504

Balance at 31 December 2025

1,000

1,355,220

1,010

1,357,230

Cash flows from operating activities

Cash generated from operations

1

148,360

113,057

Interest paid

(58,334

)

(41,996

)

Interest element of hire purchase payments paid

(5,010

)

(1,551

)

Tax paid

(1,764

)

(22,138

)

Net cash from operating activities

83,252

47,372

Cash flows from investing activities

Purchase of tangible fixed assets

-

(5,576

)

Sale of tangible fixed assets

22,667

95,502

Interest received

98

175

Net cash from investing activities

22,765

90,101

Cash flows from financing activities

Repayment of bank loan

(150,000

)

(150,000

)

Capital element of hire purchase payment

(26,126

)

(22,512

)

Amount introduced by directors

48,335

3,052

Equity dividends paid

(140,160

)

(151,934

)

Net cash from financing activities

(267,951

)

(321,394

)

Decrease in cash and cash equivalents

(161,934

)

(183,921

)

Cash and cash equivalents at beginning of year

2

(106,691

)

77,230

Cash and cash equivalents at end of year

2

(268,625

)

(106,691

)

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2025

2024

£

£

Profit/(loss) before taxation

960,296

(738,947

)

Depreciation charges

65,070

61,490

(Profit)/loss on disposal of fixed assets

(10,433

)

17,093

Finance costs

63,344

43,547

Finance income

(98

)

(175

)

1,078,179

(616,992

)

Decrease/(increase) in stocks

68,484

(115,878

)

Decrease in trade and other debtors

109,648

23,401

(Decrease)/increase in trade and other creditors

(1,107,951

)

822,526

Cash generated from operations

148,360

113,057

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2025

31.12.25

1.1.25

£

£

Cash and cash equivalents

59

143

Bank overdrafts

(268,684

)

(106,834

)

(268,625

)

(106,691

)

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

143

77,230

Bank overdrafts

(106,834

)

-

(106,691

)

77,230

3.	ANALYSIS OF CHANGES IN NET DEBT

Other

non-cash

At 1.1.25

Cash flow

changes

At 31.12.25

£

£

£

£

Net cash

Cash at bank

and in hand

143

(84

)

59

Bank overdrafts

(106,834

)

(161,850

)

(268,684

)

(106,691

)

(161,934

)

(268,625

)

Debt

Finance leases

(14,267

)

26,126

(81,043

)

(69,184

)

Debts falling due

within 1 year

(150,000

)

150,000

(112,500

)

(112,500

)

Debts falling due

after 1 year

(112,500

)

-

112,500

-

(276,767

)

176,126

(81,043

)

(181,684

)

Total

(383,458

)

14,192

(81,043

)

(450,309

)

1.	ACCOUNTING POLICIES

General information

Harris and Harris Construction Limited engages in the provision of ground work services to the new house building industry.

The company is incorporated and domiciled in the UK. The address of its registered office is Unit 1E, Polden Business Centre, Bridgwater, Somerset TA6 4AW.

Going concern

These financial statements have been prepared on the going concern basis. The directors have assessed the company's ability to continue as a going concern, including consideration of its cash flow forecasts, expected trading performance and available financial resources. Based on this assessment, the directors consider that the company has sufficient resources to meet its liabilities as they fall due for at least 12 months from the date of approval of these financial statements.

The directors have prepared detailed cash flow forecasts covering the going concern assessment period. The forecasts include only turnover arising from contracts and projects which have been confirmed at the date of preparation of the forecasts and do not assume the award of any unconfirmed future contracts or variations to contracts. The directors consider this to provide an appropriately prudent basis for assessing the company's expected cash position.

The forecasts include a number of key assumptions and estimates. These include the estimated gross margins achievable on the confirmed contracts, based on the directors' current assessment of anticipated contract costs and the circumstances applicable to each project. The forecasts also include assumptions regarding the timing of the completion of works and the consequent timing of invoicing and receipt of income from customers. These timings are based on the directors' current expectations of project progress and completion dates, together with the agreed or anticipated payment terms applicable to the relevant contracts.

The directors have also considered the potential for short-term cash flow pinch points arising from the timing differences between expenditure incurred on projects and the receipt of customer income. Where such short-term pressures arise, the directors will manage the company's cash position through close monitoring of expenditure and working capital, careful timing of payments where appropriate, and management of the timing of project expenditure and other discretionary costs. The directors will continue to monitor actual cash flows against forecast and take appropriate action where variances arise.

The company's ability to meet its longer-term financial commitments is also supported by the continued availability of its banking facilities and the expected continued financial support of the directors. The directors have received confirmation of continued support from the company's banking partners and the directors and have taken this support into account in their going concern assessment.

The directors consider that the company's confirmed order book, together with its existing customer relationships and long-term contracts, provides a reasonable basis for the forecast level of activity over the assessment period. The directors have considered the current market conditions and their potential impact on trading performance, contract margins and cash flows.

Having considered the above matters, including the key assumptions and estimates within the cash flow forecasts, the measures available to manage any short-term cash flow pressures and the expected continued support of the company's banking partners and directors, the directors consider it appropriate to prepare the financial statements on the going concern basis.

Statement of compliance

These financial statements have been prepared in compliance with UK accounting standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102").

The significant accounting policies adopted by the Company and applied consistently in the preparation of these financial statements are as follows:

Basis of preparation

These financial statements have been prepared in accordance with the Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared on the going concern basis, under the historical cost convention as modified by certain financial assets and liabilities measured at fair value through profit or loss.

The financial statements are prepared in Sterling which is the functional currency of the company.

Turnover

Turnover represents income from ordinary activities, stated after trade discounts, other sales taxes and excluding value added tax, from contract valuations recognised at the fair value of the consideration received or receivable.

Long term contracts

Turnover is recognised in-line with monthly valuations for individual contracts. The overall profit margin on each contract is reviewed and, where necessary, a cost accrual provided to bring the actual profit margin on the sales recognised in turnover to date in line with the overall profit margin for the contract. Contract cost provisions are included within creditors due within one year as accruals. Any loss making contracts are provided for in full.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Plant and machinery

-

20-25% on reducing balance

Fixtures and fittings

-

20% on reducing balance

Motor vehicles

-

25% on reducing balance

Fixed assets are stated at cost less depreciation.

Stocks

Stock is valued at the lower of cost and net realisable value.

Current and deferred tax

Current tax, including UK corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax liability is settled.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account in proportion to the obligations outstanding in each period.

Rentals payable under operating leases are charged against income on a straight line basis over the lease term.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits that are readily convertible to known amounts of cash with insignificant risk of change in value. Bank overdrafts are shown within current liabilities on the balance sheet.

Distribution to equity holders

Dividends to company shareholders are recognised as a liability in the financial statements in the period in which the dividends are approved by the company shareholders. These amounts are recognised in the statement of changes in equity.

Financial instruments

The company only enters into basic financial instruments that result in the recognition of financial assets and liabilities such as trade and other debtors and creditors.

Debt instruments, such as trade debtors and creditors, are initially measured at transaction price and subsequently measured at amortised cost.

Financial assets are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the income statement.

Critical accounting judgements and estimates

The preparation of these financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

Judgements and estimates are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Having given due consideration to the estimates and assumptions that form part of the carrying amounts of assets and liabilities within the financial statements, the directors are of the opinion that the only material judgement or estimate relates to forecast profit margins on long term contracts. The accounting policy for long term contracts is summarised above.

Turnover is recognised in-line with monthly valuations for individual contracts. The overall profit margin on each contract is reviewed and, where necessary a cost accrual is provided to bring the actual profit margin on the sales recognised in turnover to date, in line with the overall forecast profit margin for the contract as a whole.

As at 31 December 2025 the cost accrual in relation to long term contracts amounted to £497,294 (2024: £1,198,987).

Management forecast total contract profit margins based on their experience of the industry, the specific contract, and contract performance to date. Where appropriate, contract performance after the balance sheet date is also taken into account. However, contracts may span a number of years, and actual profit margins could be materially different to those forecast.

2.	EMPLOYEES AND DIRECTORS

2025

2024

£

£

Wages and salaries

2,569,552

2,594,421

Social security costs

311,806

286,808

Other pension costs

63,283

63,991

2,944,641

2,945,220

The average number of employees during the year was as follows:

2025

2024

Production

47

53

Administration

9

10

56

63

2025

2024

£

£

Directors' remuneration

33,065

33,038

Directors' pension contributions to money purchase schemes

375

375

3.	OPERATING PROFIT/(LOSS)

The operating profit (2024 - operating loss) is stated after charging/(crediting):

2025

2024

£

£

Depreciation - owned assets

41,633

57,254

Depreciation - assets on hire purchase contracts

23,437

4,235

(Profit)/loss on disposal of fixed assets

(10,433

)

17,093

Auditors remuneration

16,445

13,545

Auditors' remuneration for accounts and tax compliance services

2,105

2,005

Other operating leases

48,475

48,475

4.

INTEREST RECEIVABLE AND SIMILAR INCOME

2025

2024

£

£

Deposit account interest

98

175

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2025

2024

£

£

Bank interest

17,148

6,579

Bank loan interest

13,387

27,230

Other interest

27,799

8,187

Hire purchase

5,010

1,551

63,344

43,547

6.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the year was as follows:

2025

2024

£

£

Current tax:

UK corporation tax

118,822

-

Deferred tax

56,970

(93,929

)

Tax on profit/(loss)

175,792

(93,929

)

Reconciliation of total tax charge/(credit) included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2025

2024

£

£

Profit/(loss) before tax

960,296

(738,947

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 25% (2024 - 25%)

240,074

(184,737

)

Effects of:

Expenses not deductible for tax purposes

139

(45

)

Capital allowances in excess of depreciation

(935

)

-

Utilisation of tax losses

(63,486

)

90,853

Total tax charge/(credit)

175,792

(93,929

)