Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing
borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of
transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account
over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable
and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement
of the liability for at least twelve months after the reporting date.
Bank borrowings
Bank loans is denominated in Sterling with a nominal interest rate of 3.05%, and the final instalment is due on
5 February 2031. The carrying amount at year end is £308,276 (2023 - £342,369).
The bank loans are secured as follows:
1. Debenture dated 5 February 2016 from the company over the leasehold properties occupied by the company;
2. Personal guarantee from the directors for a sum of £638,757; and
3. Life cover policy assigned from one of the directors for a minimum sum of £600,000 over a 16 year term.