The Group’s and Company’s principal financial instruments include cash in hand and at bank and interest-bearing loans and borrowings, the main purpose of which is to provide finance for the Group’s and Company’s operations. Foreign exchange derivatives are used to help manage the Group’s and Company’s currency exposure. Per the Group’s and Company’s policy, no trading in financial instruments is undertaken.
The main risks arising from the Group’s and Company’s financial instruments are credit risk, interest rate risk, liquidity risk and foreign currency risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies have remained consistent throughout the year.
Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances. Each local entity is responsible for managing and analysing the credit risk for each of their new customers before standard payment and delivery terms and conditions are offered. Credit risk arises from cash and cash equivalents and derivative financial instruments with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. A financial asset is considered in default when the counterparty fails to pay its contractual obligations. Financial assets are written off when there is no expectation of recovery.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed for customers offered credit over a certain amount. The Group and Company do not require collateral in respect of financial assets.
At the statement of financial position date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position.
Credit quality of financial assets
Group | Company | ||||
|---|---|---|---|---|---|
Counterparties without external credit rating: | 2025 £’000 | 2024 £’000 | 2025 £’000 | 2024 £’000 | |
Existing customers with no defaults in the past | 32,384 | 28,823 | 17,729 | 19,133 | |
Existing customers with some defaults in the past, net of impairment allowance | – | 10 | – | – | |
| 32,384 | 28,833 | 17,729 | 19,133 | |
Group | Company | ||||
|---|---|---|---|---|---|
Cash at bank | 2025 £’000 | 2024 £’000 | 2025 £’000 | 2024 £’000 | |
Moody’s P-1 | 13,277 | 10,161 | 6,399 | 5,449 | |
Moody’s P-2 | 588 | – | – | – | |
Moody's P-3 | 117 | 373 | – | – | |
| 13,982 | 10,534 | 6,399 | 5,449 | |
Group | Company | ||||
|---|---|---|---|---|---|
Derivative financial assets | 2025 £’000 | 2024 £’000 | 2025 £’000 | 2024 £’000 | |
Moody’s P-1 | 980 | 42 | 980 | 42 | |
| 980 | 42 | 980 | 42 | |
While cash and cash equivalents are subject to impairment review under IFRS 9 “Financial Instruments”, the identified impairment loss was immaterial (2024: immaterial).
Trade receivables are analysed as follows:
Group | Company | ||||
|---|---|---|---|---|---|
2025 £’000 | 2024 £’000 | 2025 £’000 | 2024 £’000 | ||
Gross carrying amount | 32,673 | 29,003 | 17,729 | 19,133 | |
– due for less than 60 days | 32,380 | 28,423 | 17,729 | 19,127 | |
– due for more than 60 days | 293 | 580 | – | 6 | |
Expected loss rate | |||||
– due for less than 60 days | – | – | – | – | |
– due for more than 60 days | 98.6% | 29.6% | – | – | |
Loss allowance | 289 | 170 | – | – | |
Trade receivables net of allowances | 32,384 | 28,833 | 17,729 | 19,133 | |
Loss allowances are analysed as follows:
Group £’000 | Company £’000 | |
|---|---|---|
At 1 January 2024 | 247 | 11 |
Increase in loss allowance recognised in profit or loss during the year | 33 | – |
Reversal of loss allowance on collection of dues | (110) | (11) |
At 31 December 2024 | 170 | – |
At 1 January 2025 | 170 | – |
Acquisition of subsidiary | 23 | – |
Increase in loss allowance recognised in profit or loss during the year | 96 | – |
At 31 December 2025 | 289 | – |
The normal terms of trade are between 30 and 90 days from the end of the month of invoice.
The credit quality of trade receivables that are neither past due nor impaired is assessed individually based on credit history and experience. In 2025 and 2024, the Group and Company insured a material portion of their trade receivable balances to mitigate credit risk. The uninsured exposure as at 31 December 2025 for the Group was £18,742k (2024: £18,078k) and for the Company was £11,292k (2024: £12,599k). The Group and the Company make provisions against trade receivables, such provisions being based on the debtor’s prior credit history and knowledge of any adverse conditions affecting the debtor (e.g. receivership or liquidation). The Directors believe an adequate provision has been made for trade receivables at the year end. None of the amounts owed by Group undertakings are impaired.
Interest rate risk
The Group’s and Company’s interest rate risk arises from short-term borrowings. Borrowings issued at variable rates expose the Group and Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
The Group and Company have strong cash generation from their operations and closely monitor borrowing levels to manage the interest rate risk.
The interest rate profile of the Group’s and Company’s borrowings at 31 December is shown below:
2025 | 2024 | ||||||
|---|---|---|---|---|---|---|---|
Group | Effective interest rate | Fixed | Variable | Effective interest rate | Fixed | Variable | |
US dollar short-term borrowings | 5.60% | – | 14,127 | 6.57% | – | 21,559 | |
Sterling short-term borrowings | – | – | – | – | – | – | |
Euro short-term borrowings | 3.52% | – | 31,419 | 5.06% | – | 13,229 | |
US dollar long-term borrowings | – | – |
| – | – | – | |
Total* |
|
| 45,546 | – | 34,788 | ||
* The total amount of £45,546k is gross of an outstanding amount of £35k of loan origination fees paid up front and being amortised over the period of the loan (2024: £34,788k, gross of £186k of loan origination fees).
2025 | 2024 | ||||||
|---|---|---|---|---|---|---|---|
Company | Effective interest rate % | Fixed rates | Variable rates | Effective interest rate % | Fixed rates | Variable rates | |
US dollar short-term borrowings | 5.60% | – | 14,127 | 6.57% | – | 21,559 | |
Sterling short-term borrowings | – | – | – | – | – | – | |
Euro short-term borrowings | 3.52% | – | 31,419 | 5.06% | – | 13,229 | |
US dollar long-term borrowings | – | – |
| – | – | – | |
Total* |
|
| 45,546 | – | 34,788 | ||
* The total amount of £45,546k is gross of an outstanding amount of £35k of loan origination fees paid up front and being amortised over the period of the loan (2024: £34,788k, gross of £186k of loan origination fees).
The impact on pre-tax profit of a 1% shift in the variable rate borrowings would be £455k (2024: £400k).
Liquidity risk
Group Finance performs cash flow forecasting in the operating entities of the Group, which is then aggregated. Group Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure that it has sufficient cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities (note 19) at all times, so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and any applicable external regulatory or legal requirements.
The following are the contractual maturities of financial liabilities, including estimated payments and excluding the effect of netting agreements:
2025 | 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Group | Carrying amount £’000 | Contractual cash flows £’000 | 1 year or less | 1 to 2 years | More than | Carrying amount £’000 | Contractual cash flows £’000 | 1 year or less | 1 to 2 years | More than | |
Non-derivative financial liabilities | |||||||||||
Interest-bearing loans and borrowings | (45,511) | (45,546) | (45,839) | – | – | (34,602) | (34,788) | (34,788) | – | – | |
Trade and other payables | (16,348) | (16,348) | (16,348) | – | – | (8,142) | (8,142) | (8,142) | – | – | |
Lease liabilities | (11,503) | (13,154) | (3,238) | (3,176) | (6,740) | (8,955) | (10,180) | (2,625) | (2,401) | (5,154) | |
Total non-derivative financial liabilities | (73,362) | (75,048) | (65,425) | (3,176) | (6,740) | (51,699) | (53,110) | (45,555) | (2,401) | (5,154) | |
Derivative financial liabilities | (67) | (67) | (67) | – | – | (1,164) | (1,164) | (1,164) | – | – | |
2025 | 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Company | Carrying amount £’000 | Contractual cash flows £’000 | 1 year or less | 1 to 2 years | More than | Carrying amount £’000 | Contractual cash flows £’000 | 1 year or less | 1 to 2 years | More than | |
Non-derivative financial liabilities | |||||||||||
Interest-bearing loans and borrowings | (45,511) | (45,546) | (45,839) | – | – | (34,602) | (34,788) | (34,788) | – | – | |
Trade and other payables | (9,874) | (9,874) | (9,874) | – | – | (5,655) | (5,655) | (5,655) | – | – | |
Lease liabilities | (6,650) | (7,369) | (2,267) | (2,253) | (2,849) | (7,762) | (8,847) | (2,081) | (2,081) | (4,685) | |
Total non-derivative financial liabilities | (62,035) | (62,789) | (57,980) | (2,253) | (2,849) | (48,019) | (49,290) | (42,524) | (2,081) | (4,685) | |
Derivative financial liabilities | (67) | (67) | (67) | – | – | (1,164) | (1,164) | (1,164) | – | – | |
Foreign currency risk
The Group and Company operate internationally and are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the euro and US dollar. Foreign exchange risk arises from recognised assets and liabilities and future commercial transactions.
Foreign exchange risk is managed centrally by Group Finance and arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the Company’s functional currency.
The Group’s policy is to use forward currency contracts to cover approximately 67-80% of the estimated net cash foreign exchange trading exposure for the euro and US dollar for the next twelve months, as well as approximately 25% of the estimated net cash foreign exchange trading exposure for the following six months. The Group also hedges its exposure to foreign currency denominated assets, where possible, by offsetting them with same‑currency liabilities, primarily through borrowing in the relevant currency. These foreign currency denominated assets, which are translated on a mark to market basis every month and with the resulting movement being taken to the income statement, include loans made by the Company to, and intercompany trading balances with, its overseas subsidiaries, the effect of which is cash neutral. They also include non-sterling accounts receivable, held on the Company’s statement of financial position, which are impacted by foreign exchange movements between revenue recognition and cash receipt, the impact of which is mitigated through further hedging activities but remains exposed to the exact timing of cash receipts.
The euro and US dollar rates used in preparing the financial statements are as follows:
2025 | 2024 | ||||
|---|---|---|---|---|---|
Average | Closing | Average | Closing | ||
Euro/sterling | 1.173 | 1.146 | 1.177 | 1.210 | |
US dollar/sterling | 1.312 | 1.345 | 1.278 | 1.252 | |
In respect of other monetary assets and liabilities held in currencies other than the euro and the US dollar, the Group and the Company ensure that the net exposure is kept to a manageable level by buying or selling foreign currencies at spot rates, where necessary, to address short-term imbalances.
Where possible, the Group tries to hold the majority of its cash and cash equivalent balances in the local currency of the respective entity or, for borrowings, in a currency which provides an offset, albeit often partial, against monetary working capital net assets in that currency.
Recognised assets and liabilities
The table below shows non-derivative financial instruments of the Group and Company in currencies other than sterling:
Group – 2025 | Euro £’000 | US dollar £’000 | Other £’000 | Total £’000 |
|---|---|---|---|---|
Cash and cash equivalents | 3,578 | 3,808 | 1,548 | 8,934 |
Trade receivables | 7,848 | 21,016 | 346 | 29,210 |
Trade payables | (4,166) | (3,875) | (252) | (8,293) |
Group – 2024 | Euro £’000 | US dollar £’000 | Other £’000 | Total £’000 |
|---|---|---|---|---|
Cash and cash equivalents | 1,593 | 4,066 | 1,264 | 6,923 |
Trade receivables | 4,952 | 17,887 | 1,192 | 24,031 |
Trade payables | (2,048) | (995) | (267) | (3,310) |
Company – 2025 | Euro £’000 | US dollar £’000 | Other £’000 | Total £’000 |
|---|---|---|---|---|
Cash and cash equivalents | 1,079 | 235 | 109 | 1,423 |
Trade receivables | 2,755 | 10,712 | 113 | 13,580 |
Trade payables | (1,956) | (1,999) | – | (3,955) |
Company – 2024 | Euro £’000 | US dollar £’000 | Other £’000 | Total £’000 |
|---|---|---|---|---|
Cash and cash equivalents | 363 | 1,489 | 49 | 1,901 |
Trade receivables | 3,160 | 10,600 | 201 | 13,961 |
Trade payables | (1,989) | (96) | – | (2,085) |
Forecast transactions
The Group and the Company classify their forward exchange contracts used to hedge forecast transactions as cash flow hedges. The fair value of such forward exchange contracts is shown in the table below:
31 December 2025 | Level 1 £’000 | Level 2 £’000 | Level 3 £’000 | Total £’000 |
|---|---|---|---|---|
Assets | ||||
Forward exchange contracts | – | 980 | – | 980 |
Total assets | – | 980 | – | 980 |
Liabilities |
|
|
|
|
Forward exchange contracts | – | (67) | – | (67) |
Total liabilities | – | (67) | – | (67) |
31 December 2024 | Level 1 £’000 | Level 2 £’000 | Level 3 £’000 | Total £’000 |
|---|---|---|---|---|
Assets | ||||
Forward exchange contracts | – | 42 | – | 42 |
Total assets | – | 42 | – | 42 |
Liabilities | ||||
Forward exchange contracts | – | (1,164) | – | (1,164) |
Total liabilities | – | (1,164) | – | (1,164) |
The hedged highly probable forecast transactions denominated in foreign currencies are expected to occur at various dates during the next twelve months. Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as of 31 December 2025 are recognised in the income statement in the period or periods during which the hedged forecast transaction affects the income statement. This is generally within twelve months of the end of the reporting period.
Hedge ineffectiveness
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. In hedges of forward exchange contracts, ineffectiveness mainly arises if the timing of the forecast transaction changes from what was originally estimated. There was no ineffectiveness during 2025 or 2024 in relation to the forward exchange contracts.
Estimation of fair values
The following summarises the major methods and assumptions used in estimating fair values of financial instruments reflected in the table above.
They are classified according to the following fair value hierarchy:
- Level 1: quoted process (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted process included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (derived from prices)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Derivative financial instruments are valued using Handelsbanken and NatWest mid-market rates (2024: Handelsbanken and NatWest mid-market rates) at the statement of financial position date.
The maturity profile of the forward contracts as at 31 December is as follows:
2025 | 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Group and Company | Foreign | Contract | Transaction fair value | Contract | Foreign | Contract | Transaction fair value | Contract | |
Sell USD | $71,566k | 54,181 | 55,094 | 913 | $67,100 | 52,467 | 51,345 | (1,122) | |
Sensitivity analysis
In managing currency risks, the Group and Company aim to reduce the impact of short-term fluctuations on their earnings. Over the longer term, however, changes in foreign exchange would have an impact on earnings.
In respect of retranslation of monetary items, at 31 December 2025, it is estimated that an increase of one percentage point in the value of sterling against the US dollar would decrease the Group’s profit before tax by approximately £608k (2024: £555k) before forward exchange contracts and £17k (2024: £140k) after forward exchange contracts are included. The effect of an increase of one percentage point against the euro is considered marginal.
Financial instruments by category
2025 | 2024 | ||||||
|---|---|---|---|---|---|---|---|
Group | Financial assets at amortised cost | Derivatives used for hedging £’000 | Financial liabilities at amortised cost | Financial assets at amortised cost | Derivatives used for hedging £’000 | Financial liabilities at amortised cost | |
Trade and other receivables | 34,631 | – | – | 30,151 | – | – | |
Cash and cash equivalents | 13,982 | – | – | 10,534 | – | – | |
Derivative financial instruments – assets | – | 980 | – | – | 42 | – | |
– liabilities | – | (67) | – | – | (1,164) | – | |
Interest-bearing loans and borrowings | – | – | (45,511) | – | – | (34,602) | |
Trade and other payables | – | – | (16,348) | – | – | (8,142) | |
Lease liability | – | – | (11,503) | – | – | (8,955) | |
2025 | 2024 | ||||||
|---|---|---|---|---|---|---|---|
Company | Financial assets at | Derivatives used for hedging | Financial liabilities at amortised | Financial assets at amortised | Derivatives used for hedging | Financial liabilities at amortised | |
Trade and other receivables | 19,617 | – | – | 19,784 | – | – | |
Cash and cash equivalents | 6,399 | – | – | 5,449 | – | – | |
Derivative financial instruments – assets | – | 980 | – | – | 42 | – | |
– liabilities | – | (67) | – | – | (1,164) | – | |
Interest-bearing loans and borrowings | – | – | (45,511) | – | – | (34,602) | |
Trade and other payables | – | – | (9,874) | – | – | (5,655) | |
Lease liability | – | – | (6,650) | – | – | (7,762) | |
Capital management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group can adjust the amount of dividends paid to shareholders, issue new shares or redeem existing ones or borrow funds from financial institutions.
The Group monitors capital on the basis of the following leverage ratio: net borrowings divided by EBITDA (as per bank facility agreement).
Loan covenants
Under the terms of its borrowing facilities, the Group is required to comply with the following financial covenants:
- the ratio of net borrowings on the last day of the relevant period to earnings before interest, tax, depreciation and amortisation, share of profit/(loss) from joint venture, equity-settled share-based payments and exceptional items (EBITDA) shall not exceed 3.50:1.00
- the ratio of EBITDA to net finance charges in respect of the relevant period shall not be less than 4.00:1.00.
The Group has complied with its covenants throughout the financial year.
As at 31 December 2025 | As at 31 December 2024 | |
|---|---|---|
Net borrowings | 31,529 | 24,068 |
EBITDA* | 37,794 | 28,190 |
|
| |
Net borrowings/EBITDA | 0.83 | 0.85 |
Net finance charges | 1,638 | 2,600 |
EBITDA/net finance charges | 23.07 | 10.84 |
* For the purposes of this calculation EBITDA has been adjusted to reflect a full year of the newly acquired subsidiary OKC being part of the Group.
Net borrowings comprise current and non-current interest-bearing loans and borrowings of £45,511k (2024: £34,602k), as per note 19, and cash and cash equivalents of £13,982k (2024: £10,534k) as per note 17.
The definition of net finance charges for the purpose of calculating the ratio of EBITDA to net finance charges includes bank loan interest expensed of £1,860k (2024: £2,738k), less interest income of £222k (2024: £138k), that being gross interest of £350k (2024: £274k) less interest income from customers of £128k (2024: £136k).
Note | 2025 £’000 | 2024 £’000 | |
|---|---|---|---|
Profit/(loss) for the year | 25,820 | (2,755) | |
Depreciation and amortisation | 11,12,13 | 9,632 | 8,983 |
Finance costs | 7 | 1,665 | 2,873 |
Share of profit from joint venture | 10 | (46) | (74) |
Equity-settled share-based payments | 25 | 1,674 | 1,077 |
Taxation | (1,897) | 2,908 | |
EBITDA before exceptional items | 36,848 | 13,012 | |
Add back exceptional items | 946 | 15,178 | |
EBITDA | 37,794 | 28,190 |
The definition of finance costs when calculating EBITDA includes finance costs expensed of £2,058k (2024: £3,147k) less interest income of £393k (2024: £274k), as per note 7, and the income statement with the effect of a full year of OKC added on.
The Group’s objective is to maintain leverage below the Board’s appetite of 2.0. However, it is prepared to accept increases in this ratio at times of sizeable, capacity‑related, capital expenditure in order to support continued growth. Subject to short-term macroeconomic and geopolitical volatility, this is always expected to reduce quickly back below the Board’s appetite, and to significantly lower levels, as capacity utilisation improves.
The bank covenant definition does not include the impact of IFRS 16 “Leases”, which would have moved the ratio from 0.83 to 1.30.
The Group defines its return on capital as operating profit before exceptional items divided by the average sum of its equity, net debt and other non‑current liabilities. This measure excludes acquired intangible assets and their amortisation costs. The Group also excludes significant capacity investments under construction until they enter production. In 2025, the return on capital was 13.9% (2024: 11.7%), mostly reflecting improved profitability in the year.