REGISTERED NUMBER: 03345292 (England and Wales)

JTEKT AUTOMOTIVE UK LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2025

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

6

Income Statement

10

Statement of Comprehensive Income

11

Statement of Financial Position

12

Statement of Changes in Equity

13

Statement of Cash Flows

14

Notes to the Statement of Cash Flows

15

Notes to the Financial Statements

16

DIRECTORS:

M Toyohara

M J Hemsley

REGISTERED OFFICE:

Neath Vale Supplier Park

Resolven

Neath

SA11 4SP

REGISTERED NUMBER:

03345292 (England and Wales)

SENIOR STATUTORY AUDITOR:

Henry Lloyd Davies

AUDITORS:

Bevan Buckland LLP

Chartered Accountants

And Statutory Auditors

Ground Floor Cardigan House

Castle Court

Swansea Enterprise Park

Swansea

SA7 9LA

BANKERS:

MUFG Bank

Sumitomo Mitsui Banking Corporation

Lloyds Banking Group PLc

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

Principal Activities

JTEKT Automotive UK Ltd specialises in the design, manufacture, and distribution of advanced automotive systems. The company's operations include the machining of axle components, the assembly of manual steering gears, and, from this year, the development and production of electronic control units (ECUs) and related systems.

Following the acquisition of the business and assets of Mechatronics Systems Wales Ltd in March 2024, the company has now fully integrated electronic production into its capabilities, aligning with the industry's transition toward electrification, automation, and enhanced vehicle control systems.

Business Review

The year has been one of strategic consolidation and growth. While maintaining its core manufacturing activities, the company has focused on integrating the newly acquired mechatronics division and preparing for full-scale production of ECUs.

Integration of the Electronics production line at the beginning of the reporting period marked a significant milestone. Over the course of the year, integration efforts have centred on set up of production lines, validation testing and establishing production processes for the new electronic product lines. This has expanded the company's manufacturing scope to include ECU assembly, supporting the diversification of its product offering in line with automotive industry trends.

Clean Room Production and ECU Development

A key development this year has been the operational launch of a dedicated clean room within the manufacturing facility. This state-of-the-art environment has been critical for supporting the production of high-precision ECUs, ensuring compliance with automotive-grade quality and safety standards.

ECU Validation Testing

The company commenced a comprehensive programme of validation testing for its new ECU products during the year. This ongoing activity is essential for meeting both customer and regulatory requirements and represents the final stage before volume production. Feedback from initial customer trials has been positive, and we anticipate full production commencing in the 2025-26 financial year.

KEY PERFORMANCE INDICATORS

Sales for the year decreased by 14% to £31.3m (2024: £36.6m), reflecting a shift towards Axle production which yields a lower per unit selling price.

2025

2024

Quality

Number of returned goods

10

13

Safety

Number of Accidents

-

3

Delivery

Number of Short shipments

17

155

Gross Margin

-5.56%

-1.5%

Operational Performance and Customer KPIs

The company concluded the year having achieved its strongest customer performance results in recent years. JTEKT Automotive UK Ltd secured an A Rank with Toyota Motor Europe (TME) and L1 status with Nissan Manufacturing UK (NMUK) - both representing the highest possible performance ratings from these key customers. Additionally, the company achieved 100% delivery performance to TME, a milestone not accomplished in several years. These outcomes reflect the success of the company's 2024 strategy to stabilise core operations and embed strong foundations in Safety, Quality, and Delivery. With these pillars now in place, management's focus in the coming years will increasingly shift toward financial recovery, with the goal of returning to at least break-even point (BEP) while maintaining operational excellence.

PRINCIPAL RISKS AND UNCERTAINTIES

The company operates in a competitive automotive market with continuous pressure on pricing, quality, and delivery. Key risks include:

Market and Customer Risk

Customer concentration and price pressures are mitigated through value-added services, technical innovation, and long-term relationship management.

Cost and Margin Risk

The company is exposed to increases in raw material and overhead costs. While prices are not contractually fixed, negotiating price increases with customers to cover these rises is challenging due to commercial pressures they also face. This dynamic limits the company's ability to recover rising costs and has contributed to the gross loss incurred during the year. Reduced margins remain a key risk in the current environment, particularly where costs increase more rapidly than pricing are adjusted.

Foreign Currency Risk

The company earns revenue and incurs cost in Euros, exposing it to foreign exchange fluctuations. The company no longer uses forward contracts to hedge foreign currency exposure. Instead, exchange rate risk is managed operationally through spot purchases and limited natural hedging. While foreign currency movements present a financial risk, this is not actively reviewed by the Board.

Liquidity Risk

Liquidity is managed using internal cash resources and group support. During the year additional a loan of £2.5m from the parent company, JTEKT Japan, has been made to support the investment in new business activities. Total loan amount at 31st March 2025 is £6m. This loan is due to be repaid by February 2026 and will be serviced through the group's centralised cash pooling arrangement. There is no going concern risk associated with this loan.

Credit Risk

Customer credit risk remains low, with sales concentrated among financially stable multinational OEMs and Tier 1 suppliers.

FUTURE PROSPECTS

JTEKT Automotive UK Ltd enters the next financial year well-positioned for growth. With ECU validation nearing completion and preparations underway for production ramp-up, the company is prepared and on plan for the start of production in the financial year to March 2026.

Continued investment in employee development, automation, and clean room capacity will further strengthen competitiveness and product quality. The company is also exploring opportunities to expand its customer base within Europe as it leverages the capabilities gained through the ECU production line acquisition.

GOING CONCERN

Despite the challenges of high input costs and margin pressure, the directors have assessed the company's financial position and consider it a going concern. The backing of JTEKT Corporation provides strategic and financial support, ensuring the availability of adequate resources to sustain operations and fund future development.

The company's current order book extends for five years, supporting long-term stability and planning.

DISABLED EMPLOYEES

The company is committed to equal opportunities in employment and welcomes applications from disabled persons wherever the role is suitable. We comply fully with the Equality Act 2010 and promote inclusively in recruitment and workplace practices.

ENVIRONMENT

JTEKT Automotive UK Ltd takes its environmental responsibilities seriously. The company is certified to ISO 14001:2004 and maintains active policies on energy use reduction, waste management, and recycling. The clean room and new electronics processes have been designed with efficiency and environmental compliance in mind.

EMPLOYEE INVOLVEMENT

The company values employee input and maintains open communication channels through regular ECCF (Employee Committee Consultation Forum) meetings. Suggestion schemes relating to safety, quality, and working conditions are actively encouraged and responded to with transparency and action where appropriate.

ON BEHALF OF THE BOARD:

M J Hemsley - Director

24 July 2025

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

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2025.

DIRECTORS

M Toyohara has held office during the whole of the period from 1 April 2024 to the date of this report.

Other changes in directors holding office are as follows:

K J Gittins - resigned 14 May 2024

P McNally - resigned 1 October 2024

M J Hemsley - appointed 1 October 2024

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 UK-adopted international accounting standards. 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;

-	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.

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 ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Bevan Buckland LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

M J Hemsley - Director

24 July 2025

Opinion

We have audited the financial statements of Jtekt Automotive UK Limited (the 'company') for the year ended 31 March 2025 which comprise the Income Statement, 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 Statement of Cash Flows, 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 International Financial Reporting Standards (IFRSs) as adopted by the UK.

In our opinion the financial statements:

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

-	have been properly prepared in accordance with IFRSs as adopted by the UK; 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.

Material uncertainty 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 and the Report of the Directors, 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:

Extent to which the audit was considered capable of detecting irregularities, including fraud

We identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, and then, design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

We discussed our audit independence complying with the Revised Ethical Standard 2019 with the engagement team members whilst planning the audit and continually monitored our independence throughout the process.

Identifying and assessing potential risks related to irregularities.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

-

enquiring of management, including obtaining and reviewing supporting documentation, concerning the Company's policies and procedures relating to:

-

identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

-

detecting and responding to the risks of fraud and whether they have knowledge of any actual. suspected or alleged fraud;

-

the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations;

-

discussing among the engagement team how and where fraud might occur in the Financial Statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in the following areas;

-

Assumptions used when valuing debtors provision at the year end, and;

-

Potential for overstating contract income

-

obtaining an understanding of the legal and regulatory frameworks that the Company operates in, focusing on those laws and regulations that had a direct effect on the Financial Statements or that had a fundamental effect on the operations of the Company, The key laws and regulations we considered in this context included the UK Companies Act and relevant tax legislation.

Audit response to risks identified

In addition to the above, our procedures to respond to risks identified included the following:

-

reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations;

-

enquiring of management concerning actual and potential litigation and claims; performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

-

reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and

-

in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;

-

assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and

-

evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications 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.

Henry Lloyd Davies (Senior Statutory Auditor)

for and on behalf of Bevan Buckland LLP

Chartered Accountants

And Statutory Auditors

Ground Floor Cardigan House

Castle Court

Swansea Enterprise Park

Swansea

SA7 9LA

28 July 2025

CONTINUING OPERATIONS

Revenue

3

31,335

36,594

Cost of sales

(33,076

)

(37,148

)

GROSS LOSS

(1,741

)

(554

)

Other operating income

-

35

Administrative expenses

(3,019

)

(2,829

)

OPERATING LOSS BEFORE EXCEPTIONAL ITEMS

(4,760

)

(3,348

)

Exceptional items

5

(1,751

)

-

OPERATING LOSS

(6,511

)

(3,348

)

Finance costs

6

(268

)

-

Finance income

6

92

221

LOSS BEFORE INCOME TAX

7

(6,687

)

(3,127

)

Income tax

8

61

-

LOSS FOR THE YEAR

(6,626

)

(3,127

)

LOSS FOR THE YEAR

(6,626

)

(3,127

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(6,626

)

(3,127

)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment

9

4,603

5,636

Investments

10

-

-

4,603

5,636

CURRENT ASSETS

Inventories

11

2,325

2,472

Trade and other receivables

12

3,810

5,549

Cash and cash equivalents

13

3,996

7,206

10,131

15,227

TOTAL ASSETS

14,734

20,863

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

14

12,000

12,000

Retained earnings

15

(8,854

)

(2,228

)

TOTAL EQUITY

3,146

9,772

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

16

11,288

10,857

Provisions

18

300

234

11,588

11,091

TOTAL LIABILITIES

11,588

11,091

TOTAL EQUITY AND LIABILITIES

14,734

20,863

The financial statements were approved by the Board of Directors and authorised for issue on 24 July 2025 and were signed on its behalf by:

M J Hemsley - Director

Called up

share

Retained

Total

capital

earnings

equity

£'000

£'000

£'000

Balance at 1 April 2023

12,000

899

12,899

Changes in equity

Total comprehensive income

-

(3,127

)

(3,127

)

Balance at 31 March 2024

12,000

(2,228

)

9,772

Changes in equity

Total comprehensive income

-

(6,626

)

(6,626

)

Balance at 31 March 2025

12,000

(8,854

)

3,146

Cash flows from operating activities

Cash generated from operations

1

(4,247

)

(3,486

)

Tax paid

61

-

Net cash from operating activities

(4,186

)

(3,486

)

Cash flows from investing activities

Purchase of tangible fixed assets

(1,347

)

(3,097

)

Sale of tangible fixed assets

(1

)

-

Interest received

92

221

Net cash from investing activities

(1,256

)

(2,876

)

Cash flows from financing activities

New loans received in year

2,500

5,000

Loan from subsidiary

-

5,868

Interest paid

(268

)

-

Net cash from financing activities

2,232

10,868

(Decrease)/increase in cash and cash equivalents

(3,210

)

4,506

Cash and cash equivalents at beginning of year

2

7,206

2,700

Cash and cash equivalents at end of year

2

3,996

7,206

1.	RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

2025

2024

£'000

£'000

Loss before income tax

(6,687

)

(3,127

)

Depreciation charges

621

767

Impairment on fixed assets

1,751

-

Finance costs

268

-

Finance income

(92

)

(221

)

(4,139

)

(2,581

)

Decrease/(increase) in inventories

147

(1,366

)

Decrease/(increase) in trade and other receivables

1,739

(502

)

(Decrease)/increase in trade and other payables

(1,994

)

963

Cash generated from operations

(4,247

)

(3,486

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 March 2025

31.3.25

1.4.24

£'000

£'000

Cash and cash equivalents

3,996

7,206

Year ended 31 March 2024

31.3.24

1.4.23

£'000

£'000

Cash and cash equivalents

7,206

2,700

1.	STATUTORY INFORMATION

Jtekt Automotive UK Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparation

The company financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").

The accounting policies set out below have , unless otherwise stated, been applied consistently to all periods presented in these financial statements. The presentation currency of these financial statements is sterling. All amounts in the financial statements have been rounded to the nearest £1,000.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Going concern

The company has made a loss before tax in the year of £6,687m (2024 £3.127m). The company is reliant on the support from its parent company, JTEKT Corporation, in way of loans to support and cover its day to day liabilities.

The Directors acknowledge the significant historical and forecasted losses incurred by the Company. Despite this, they are satisfied that it remains appropriate to prepare the financial statements on a going concern basis for the following reasons:

Continued Financial Support: The Company continues to receive financial support from its parent company, JTEKT Japan, in the form of intercompany loans. The parent company has confirmed its intention to provide ongoing financial support for at least 12 months from the date of approval of the financial statements.

Business Development Activities: The Company is actively quoting for new contracts, with a number of opportunities currently under review that are expected to contribute positively to future revenue.

Price Adjustment Negotiations: The JTEKT Group are in the process of negotiating increased selling prices with key customers to offset current and future cost pressures and reduce the impact of ongoing losses.

On the basis of the above factors, and after considering the cash flow forecasts and the parent company's continued financial support, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

Preparation of consolidated financial statements

The financial statements contain information about Jtekt Automotive UK Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, JTEKT Corporation, Osaka, Japan, Headquarters 1-1 Asahi-Cho, Kariya-Shi, Aichi.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company's accounting policies, which are described in below, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Management have not identified any critical accounting judgements.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below:

Warranty provision

Provisions for the expected cost of warranty obligations are recognised at the date of sale of the relevant products, warranty provision is included at a rate of 0.15% of income for that year, the directors have reviewed this policy and confirmed that it is still relevant to include.

Debtors provision

Provision for expected sales clawbacks are included based on material price variances and discounts for volumes sold as well as negotiations for changes in inflation. A provision is recognised for the difference between the price paid and the estimated final price which can be agreed at the end of production for the product. Provision's are netted off Trade debtors in the financial statements. The directors have reviewed this policy and confirmed that it is still relevant to include.

Inventory Impairment

Inventory shall be valued at the lower of cost and net realisable value in accordance with applicable accounting standards. Inventory is assessed for impairment based on its condition and market conditions at the reporting date.

If a halt in production is expected to be temporary and the inventory remains in a saleable condition, no impairment shall be recognised.

Changes in accounting policies

The International Accounting Standards Board has issued a number of amendments to IFRSs that become effective from 1 January 2024 or subsequent years. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated.

Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective 1 January 2024). This is not applicable to the company.

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and Non-Current liabilities with Covenants (effective 1 January 2024). This is not applicable to the company.

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures Supplier Finance Arrangements (effective 1 January 2024). This is not applicable to the company.

Revenue recognition

Core Principle: Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

Five-Step Model: The company follows the five-step model for revenue recognition as outlined in IFRS 15:

- Identify the contract(s) with a customer: A contract is an agreement between two or more parties that creates enforceable rights and obligations.

- Identify the performance obligations in the contract: Performance obligations are promises in a contract to transfer distinct goods or services to the customer.

- Determine the transaction price: The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer.

- Allocate the transaction price to the performance obligations in the contract: This allocation is based on the relative standalone selling prices of each distinct good or service promised in the contract.

- Recognize revenue when (or as) the entity satisfies a performance obligation: Revenue is recognized when control of the goods or services is transferred to the customer, either over time or at a point in time.

Contract Modifications: Any changes to the contract terms that create new or change existing enforceable rights and obligations are accounted for as contract modifications. These modifications are evaluated to determine whether they should be treated as a separate contract or as part of the existing contract.

Variable Consideration: If the consideration promised in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to the customer. This estimate is constrained to prevent the inclusion of amounts that are not probable of being received.

Finance income

Finance income is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Finance income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated

- future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Cash and cash equivalents

Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value.

In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts. Any such overdrafts are shown within borrowings under ‘current liabilities’ on the Statement of Financial Position.

Property, plant and equipment

Property, plant and equipment are shown in the statement of financial position at their historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the "acquisition and installation of the items. Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset as appropriate only when it is probable that future economic benefits associated with them will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement as incurred.

Depreciation is provided so as to write off the initial cost of each asset to its residual value on a straight-line basis over its estimated useful life as follows:

Land - not depreciated

Long leasehold buildings - 40 years

Fixtures and fittings - 3 to 6 years

Plant and machinery - 3 to 10 years

Motor vehicles - 3 to 5 years

No depreciation is provided on assets in the course of construction.

The assets' residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement.

Impairment of assets

Assets that have an indefinite life are not subject to amortisation and are tested at least annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the income statement for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Financial instruments

Financial assets and financial liabilities 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 financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) ate added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

All purchases or sales of financial assets are recognised and derecognised on a trade date basis.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or-convention in the marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are measured subsequently at amortised cost:

- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):

- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset:

- the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met (see (iii) below); and

- the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (see (iv) below).

(i) Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition.

For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition. The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance. Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at FVTOCI.

For financial assets other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below).

For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

For purchased or originated credit-impaired financial assets, the company recognises interest income by applying the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired. Interest income is recognised in profit or loss and is included in the "finance income" line item (note 9).

(ii) Debt instruments classified as at FVTOCI

Debt instruments held by the company are classified as at FVTOCI and are initially measured at fair value plus transaction costs. Subsequently, changes in the carrying amounts as a result of foreign exchange gains and losses (see below), impairment gains or losses (see below), and interest income calculated using the effective interest method are recognised in profit or loss. The amounts that are recognised in profit or loss are the same as the amounts that would have been recognised in profit or loss had they been measured at amortised cost. All other changes in the carrying amount are recognized other comprehensive income and accumulated under the heading of investments revaluation reserve. When they are derecognised, the cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.

(iii) Equity instruments designated as at FVTOCI

On initial recognition, the company may make an' irrevocable election (on an instrument-by-instrument.basis) to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognised by an acquirer in a business combination.

A financial asset is held for trading if:

- it has been acquired principally for the purpose of selling it in the near term; or

- on initial recognition it is part of a portfolio of identified financial instruments that the company manages together and has evidence of a recent actual pattern of short-term profit-taking; or

(iii) Equity instruments designated as at FVTOCI

- it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised . in other comprehensive income and accumulated in the investments revaluation reserve. The cumulative gain or loss is not be reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.

(iv) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI (see (i) to (iii) above)

- are measured at FVTPL, specifically:

- Investments in equity instruments are classified as at FVTPL, unless the company designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition (see (iii) above).

- Debt instruments that do not meet the amortised cost criteria or the FVTOCl criteria (see (i) and (ii) above) are classified as at FVTPL. In addition, debt instruments that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency (so called 'accounting mismatch') that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The company has not designated any debt instruments as at FVTPL.

Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period, specifically:

- for financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange differences are recognised in profit or loss in the 'other gains and losses' line item;

- for debt instruments measured at FVTOCI that are not part of a designated hedging relationship, exchange differences on the amortised cost of the debt instrument are recognised in profit or loss 'in the 'other gains and losses' line item (note II). Other exchange differences are recognised in other comprehensive income' in the investments revaluation reserve;

- for financial assets measured at FVTPL that are not part of a designated hedging relationship, exchange differences are recognised in profit or loss in the 'other gains and losses' line item (note 10); and

- for equity instruments measured at FVTOCI, exchange differences are recognised in other comprehensive income in the investments revaluation reserve. '

Impairment of financial assets

The company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well as on financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.