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

In the financial year ending April 2026, Morgenrot recorded total revenue of £14.21 million, a record level for the business and an increase of 7.3% from £13.24 million in 2024/25. Gross profit rose to £3.16 million, delivering a margin of 22.2%, down marginally vs 2025 (23.0%). Profit before tax for the year was £161,518 (2025: £225,743).

Profitability has been materially affected by the introduction of the Extended Producer Responsibility (EPR) packaging scheme, with the first invoices issued in October 2025. EPR fees represented a new cost to the business of approximately £104,000 in the year. Overheads also rose significantly, driven by higher employment costs following the April 2025 increases to employer National Insurance contributions and the National Living Wage, and by a deliberate increase in advertising and sales promotion investment behind our agency brands, which we expect to support volume growth in future periods.

Operationally, the company completed the closure of its Brighton operation in January 2026, as announced in last year's report, and transitioned the Southeast operation to Tapin 3PL logistics (which now services Central London and postcodes to the West and North of London) and Page & Sons, which has taken on the South and East area. This will reduce overall overheads and streamline distribution while maintaining service levels.

The Bristol operation remains an area of concern, with sales performance the weakest of our direct regions. We are monitoring the situation closely and will review our position in the region during 2026/27.

The new financial year has started strongly, with first-quarter sales (May to July 2026) of £4.06 million, up 15.5% on the same period last year, and gross margin improving to 24.3% (2025: 18.9%).

Market Trends and Strategy

UK On-Trade Market (Wine & Beer) Overview – 2025/26

The UK on-trade continued to navigate a demanding cost environment between May 2025 and April 2026. Inflation remained moderate, but regulatory and employment cost pressures intensified, and consumers continued to visit less frequently while spending more per occasion, favouring quality-led experiences over volume.

Since the year end, the appointment of Andy Burnham as Prime Minister in July 2026 introduces a degree of policy uncertainty. However, the new administration's strong emphasis on regional devolution and investment in the North (including the establishment of a Downing Street presence in Manchester) offers potential long-term strategic benefits both to the on-trade and to the company as a Manchester-headquartered business.

Economic and regulatory environment

• The increase in employer National Insurance contribution rates and the reduction in thresholds took effect from April 2025, materially increasing payroll costs across the trade.

• The National Living Wage increased to £12.21 in April 2025, with a further rise to £12.71 from April 2026 confirmed at the November 2025 Budget.

• The Extended Producer Responsibility (EPR) scheme came into force, with the first invoices issued from October 2025, introducing a significant new cost for importers of packaged goods.

• Alcohol duty rose in line with RPI inflation (3.66%) from 1 February 2026. Draught duty rates remain below those for packaged products, continuing to support on-trade beer volumes.

• UK-wide Deposit Return Scheme implementation remains scheduled for October 2027.

• The lower duty band for sub-3.5% ABV products continued to shape product development strategies across the industry.

Consumer Behaviour

Consumer patterns remained consistent with recent years: fewer visits, but higher spend per occasion, with strong demand for quality, provenance, and premium experiences. No/low alcohol continued its steady growth, supported by health-conscious consumers and favourable duty treatment.

Beer Trade

Imported world lager remained one of the most dynamic on-trade categories in 2025/26. CGA data to P06 2026 shows total on-trade beer volumes declined 2.7% in the year while imported beer grew 5.3% in volume and 10.4% in value: the market is drinking less overall, but paying more for authenticity and provenance.

Headline category growth continued to be driven by brands brewed under licence in the UK by multinational brewers, which offer low pricing but compromise on authenticity and quality. Morgenrot occupies a clear and differentiated position in this landscape, with a portfolio focused exclusively on authentic imported lagers and speciality beers with genuine provenance, directly aligned with where the market's growth now sits.

This year we cemented our position as the only importer of genuinely Spanish-brewed lagers in the UK. In Spring 2026 we launched Ambar, a 3.4% ABV lager from Zaragoza, delivering the commitment made in last year's report and combining authentic Spanish brewing credentials with a duty-efficient ABV. Early volumes have been encouraging. Shortly after the year end, we signed Moritz, the iconic Barcelona beer. Both brands are managed by the Zaragoza-based Grupo Agora, and together with Alhambra they give Morgenrot an unrivalled Spanish beer portfolio at a time when Spanish beer has grown to 2.28 million hectolitres in the on-trade, representing 14% of the entire beer market and almost half of all world lager, with 99% of that volume sold on draught.

Beer volumes performed strongly. Total volumes grew 10% in calendar year 2025 to 28,411 hectolitres, and growth has accelerated in 2026, with first-half volumes up 11.9% year on year to 14,713 hectolitres. Krombacher remains the core of the business, accounting for approximately 60% of total beer volumes, and continues to grow strongly, up 15% in the first half of 2026, a significant outperformance of a German beer category that CGA data shows in double-digit decline, and clear evidence of continued share gains. Alhambra grew 22% over the same period, and newer additions including Birra Alpetti - imported from Italy - also delivered strong growth.

The relaunched Haacht portfolio (Super 8, Primus and Tongerlo) is performing well ahead of the prior year, led by the continuing growth of Super 8 Fruit. Super 8 has been deliberately repositioned to compete in the UK fruit beer category, the fastest-growing category in on-trade beer: the latest CGA data (P06 2026) shows fruit beer up 58% in volume and 73% in value year on year, having doubled in size over two years and overtaken the entire speciality beer category, with draught accounting for over 90% of volume. The category is currently dominated by a single brand, leaving a clear opportunity for a credible, brewery-backed Belgian alternative, and Super 8 Fruit is establishing itself in exactly that space, supported by a material increase in fruit beer demand from our own customer base.

Wine Trade

Wine remains a competitive and evolving category in the UK on-trade, with the RPI duty uprating from February 2026 adding further cost, particularly for higher-strength still wines. Despite this, premiumisation persisted, with consumers continuing to trade up on fewer occasions and favouring quality, character, and story.

Morgenrot's portfolio is built around authentic, characterful imported wines, and 2025/26 was a year of significant portfolio development. In Germany, we restored a classic agency to the range with Rudi Ruttger, a family business of 400 years' standing. In Austria, we are developing a broad range from Domäne Wachau under our MK label, including an orange Grüner Veltliner, Zweigelt, Riesling, St Laurent, cool-climate Sauvignon Blanc, Grauburgunder and Weissburgunder. In France, additions included the Loud & Clear Sauvignon Blanc at 10.5% ABV, aligned with the moderation trend, and grower Champagne from Simon Rion.

Elsewhere, we extended our eclectic Australian offer with the Farm Hand natural range and Wild Folk Nouveau wines, launched the five-strong Red Hut range from New Zealand, and added premium Spanish wines from DOQ Priorat. In Italy, new listings included the Cantina Ventiventi Lambrusco range spanning Charmat and traditional method styles, Etna Bianco and Rosso from Carranco, the Senza Rete wines from Costa Toscana, and a Valpolicella Ripasso Superiore. In Belgium, we added the Hoenshof Wit and Rood.

Innovation in format was also delivered. During the year we launched our Glou Glou wine in keg, fulfilling the commitment made in last year's report to address demand for sustainable formats. The launch has been well received, reducing packaging waste and offering outlets quality wine by the glass at scale.

Strategic Developments

During the year, the company agreed to acquire a share holding in Page & Sons, a Kent-based drinks distributor, with options to increase its shareholding in stages over the medium term.

The investment secures a key distributor in the Southeast, which we intend to drive and grow, and ultimately provides the company with improved access to the London market. It also creates the opportunity to convert a portion of Page & Sons' purchasing toward Morgenrot agency brands over time.

The principal risks to the business remain broadly consistent, with several key developments shaping the outlook:

• Employment Costs: The National Living Wage rise to £12.71 from April 2026, and higher employer National Insurance contributions will continue to increase payroll costs.

• EPR and Environmental Regulation: EPR fees now represent a recurring cost and administrative burden, with the Deposit Return Scheme to follow in October 2027.

• Alcohol Duty: The RPI uprating from February 2026 adds cost across the portfolio, with further inflationary uprating expected in future years.

• Cost of Living: Consumer disposable income remains under pressure, and frequency of on-trade visits remains below pre-pandemic levels.

• Interest Rates and Currency: Borrowing costs remain elevated, and the business retains exposure to Euro exchange rate movements on imports.

Financial Risk Management

Our financial risk management strategy remains focused on maintaining revenue growth while controlling costs. In 2026/27 we will continue to:

• Hedge currency exposure to limit import cost volatility.

• Manage pricing and mix carefully to protect margins.

• Maintain strong cash flow management and working capital discipline.

• Monitor gearing and maintain constructive relationships with lenders.

Key Performance Indicators

The company continues to measure performance using the following KPIs:

• Turnover Growth: 7.3% achieved in 2025/26 to a record £14.21m, supporting progress toward the £21m revenue target by 2028/29. The new financial year has begun with growth of 15.5%.

• Net Profit Margin: 1.1% (2025: 1.7%), impacted by EPR fees and rising employment costs; the long term target remains 5%.

• GP: 22.2% (2025: 23.0%), with improvement to 24.3% in the first quarter of 2026/27.

• Channel Performance: The on-trade remains the core focus, however, the Off Trade margin should see incremental increase over the course of FY, as well as significant brand growth.

Sustainability and Corporate Responsibility

We remain committed to reducing our environmental impact through improved logistics, the transition to 3PL distribution in the Southeast, and the development of sustainable formats such as our Glou Glou keg wine, which materially reduces packaging waste per serve. The continued development of no/low and reduced-ABV products, including the 3.4% Ambar lager, supports responsible drinking objectives. We are fully engaged with our EPR obligations and are working with our supplier base and national customers on sustainability disclosure and improvement.

Summary

Morgenrot delivered record revenue in 2025/26, underpinned by strong beer volume growth, a significantly strengthened wine portfolio, and a unique position in Spanish lager that will be further reinforced by the launch of Moritz. The business absorbed substantial new regulatory and employment costs during the year, and these pressures will persist, but the investment in Page & Sons Wine Merchants, the successful Southeast logistics transition, and a strong start to 2026/27 leave the company well positioned for continued growth.

Long-term consequences of decisions

The Board takes a long-term view when investing in stock, warehouse capacity, and systems, balancing sustainable growth with the financial resilience needed to manage duty, currency, and supply chain exposures.

Interests of employees

Our people are fundamental to our service and product knowledge, and we support them through fair pay, training (including wine and spirit qualifications such as WSET), a safe warehouse environment and open communication.

Relationships with suppliers, customers, and other stakeholders

We build long-term partnerships with the producers we represent and the trade customers we supply, based on fair dealing, prompt payment and consistent quality, and we maintain constructive relationships with HMRC and our logistics providers.

Impact on the community and environment

We seek to reduce our environmental impact through efficient logistics, consolidated shipments, packaging reduction, and responsible sourcing, and to support the local communities in which we operate.

Maintaining a reputation for high standards of business conduct

The Board maintains high standards of conduct through robust compliance with HMRC excise and bonded warehouse requirements, alcohol licensing, and Alcohol Wholesaler Registration Scheme (AWRS) obligations, together with anti-bribery, ethical sourcing, and whistleblowing policies.

Acting fairly between members of the company

The Board is committed to treating all shareholders fairly and equally, with timely and transparent reporting of performance and material developments.

By order 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 an importer, bonded warehouse keeper, national and regional wholesaler of wines, spirits, beers and related promotional products.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

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

The auditor, DJH Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

[Amend this as an introductory paragraph or use as an explanation concerning lower user status] As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

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

We have audited the financial statements of Morgenrot Group PLC (the 'company') for the year ended 30 April 2026 which comprise the statement of comprehensive income, the statement of financial position, 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.

As part of our planning process:

• We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.

• We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, The Warehousekeepers and Owners of Warehoused Goods Regulation Act 1999, Producer Responsibility Obligations, Alcohol Wholesaler Registration Scheme, General Data Protection Regulation (GDPR) and Anti-Money Laundering Supervision.

• We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.

• Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

• Identifying and testing journal entries, in particular those that were significant and unusual.

• Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.

• Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to depreciation rates and estimated useful lives of assets, categorisation of leases, stock provisions and provision for bad debts.

• Assessing the extent of compliance, or lack of, with the relevant laws and regulations in particular those that are central to the entities ability to continue in operation.

• Testing key turnover lines, in particular cut-off, for evidence of management bias.

• Performing a physical verification of key assets, including stock.

• Obtaining third-party confirmation of material bank and loan balances.

• Documenting and verifying all significant related party balances and transactions.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors of the entity.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

Morgenrot Group PLC is a private company limited by shares incorporated in England and Wales. The registered office is Unit 2, Canary Way, Agecroft Commerce Park, Swinton, Manchester, M27 8AW.

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

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

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.

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.

The company meets the day-to-day working capital requirements using an agreed overdraft facility and working capital loan. The directors' expectations, which include increases in turnover and taking account of reasonable possible changes in trading performance, indicate that the company should be able to operate within the level of its current facility.

The company is in regular contact with its finance providers. During these discussions about the company's future borrowing needs, no matters have been drawn to the directors' attention that suggest that the existing facilities will not continue on acceptable terms beyond the current arrangement.

Turnover represents sales of goods, excluding value added tax. Sale of goods are recognised when the company has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is fairly assured.

Goodwill has been amortised evenly over its estimated useful life of 10 years.

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.

The residual values, estimated useful lives and depreciation method of tangible fixed assets are reviewed, and adjusted as appropriate, at each statement of financial position date. The effects of any revision are recognised in the income statement when the change arises.

Stocks are valued at the lower of cost and net realisable value on a first-in, first-out basis, after making due allowance for obsolete and slow moving items. Cost is based on the invoice value of goods plus a variable charge for duty, levy and delivery and stocking costs. Net realisable value is estimated selling price less costs to complete and sell.

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 statement of financial position 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 income statement 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 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.

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 related liability is included in the statement of financial position 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 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.

Dividends

Equity dividends are recognised when they become legally payable and are no longer at the discretion of the company.

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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below:

• Estimating the useful economic life of an asset and the anticipated residual value are considered key estimates in calculating an appropriate depreciation charge.

• In categorising leases as finance or operating leases, the directors make judgements as to whether significant risks and rewards of ownership have transferred to the company as lessee.

• Making judgement based on historical experience on the level of provision required for impairment of stock. Further information received after the statement of financial position date may impact on the level of provision required.

• Determining the recoverability of trade debtors is considered the key judgement in calculating the bad debt provision at the year end.

The turnover and profit before taxation are attributable to the principal activities of the company.

All turnover is generated in the United Kingdom.

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:

Included within tangible fixed assets are assets held under finance leases or hire purchase contracts, as follows:

Freehold land and buildings and plant and machinery are pledged as security for the company's bank loan and bank overdraft under a fixed charge in favour of National Westminster Bank plc.

The bank overdraft and bank loan are secured by a fixed charge over the company's freehold land and buildings and plant and machinery.

Hire purchase liabilities included within obligations under finance leases are secured on the assets to which they relate.

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.

The company has given a guarantee in favour of HM Revenue and Customs for £20,000 (2025: £20,000).

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:

Included within creditors falling due within one year is a director's loan account balance of £295,164 (2025 - £344,142) owed to Mr C M Plath.

This advance is unsecured, interest free and repayable on demand.

During the year, excluding directors' remuneration, key management personnel compensation totalling £434,490 (2025 - £404,237) was paid.

During the prior year, dividends totalling £21,500 were paid to directors and key management personnel.

The company is jointly controlled by Mr C M Plath and Mrs V E Plath, the majority shareholders.