REGISTERED NUMBER: 09404366 (England and Wales)

GROUP STRATEGIC REPORT, DIRECTOR'S REPORT AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2024

FOR

FOWLES HOLDINGS LIMITED

Page

Company Information

1

Group Strategic Report

2

Director's Report

4

Independent Auditors' Report

6

Consolidated Statement of Comprehensive Income

8

Consolidated Balance Sheet

9

Company Balance Sheet

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

14

DIRECTOR:

Mr W T Fowles

REGISTERED OFFICE:

Hythe End Farm

Hythe End Road

Wraysbury

Middlesex

TW19 5AW

REGISTERED NUMBER:

09404366 (England and Wales)

SENIOR STATUTORY AUDITOR:

Mr Jeremy Laurence Hyde FCCA

AUDITORS:

CG LEE Limited

Chartered Certified Accountants

Statutory Auditors

Ingram House

Meridian Way

Norwich

Norfolk

NR7 0TA

BANKERS:

NatWest Bank plc

135 Bishopsgate

London

EC2M 3UR

SOLICITORS:

Geoffrey Bryant & Company LLP

54 High Street

Eton

Windsor

SL4 6BL

The director presents the Strategic Report on the group for the year ended 30 September 2024.

REVIEW OF THE BUSINESS

The principal activities of the group were the provision of skip hire, waste processing, recycling and haulage. The group processes waste material from sites throughout London and the Home Counties.

Turnover in 2023 and 2024 has reduced by approximately £9m compared with 2022 as the director has taken the decision to focus on building the group's own private customer base on which a higher margin can be achieved, rather than processing third party recycling waste. This has resulted in an increased gross margin to 30% (2023: 28%).

The director is satisfied with the activity levels, performance and return to profit, achieved during the year under review in the context of the waste recycling and haulage sectors, given the market conditions prevalent in that sector during the period.

FINANCIAL HIGHLIGHTS

The key performance indicators for the group are turnover, gross profit and operating profit. The relevant indicators are shown below and they are subject to regular review.

2024

2023

2022

Turnover £'000

14,655

16,207

23,445

Gross profit £'000

4,365

4,554

3,350

Gross margin %

29.8

28.1

14.3

Operating profit/(loss) £'000 (excluding revaluation)

1,030

952

(315

)

Operating profit/(loss) margin % (excluding revaluation)

7.0

5.9

(1.3

)

FUTURE OUTLOOK

The waste processing, recycling and haulage sectors continue to be robust and the director is taking positive steps to consolidate the group's position in the market in the current areas of operation. The director will continue to look at ways to improve profitability despite nationwide cost price and fuel increases across the UK.

FINANCIAL RISK MANAGEMENT

The group is exposed to a variety of financial risks resulting from its operational activities. The group's risk management is coordinated with key management personnel, focusing on actively securing the group's short to medium term cash flows.

Liquidity and credit risk

At 30 September 2024, the group had a cash balance which the director believes is sufficient to maintain robust liquidity should the company have a sudden downturn in sales. The group reviews its working capital requirement on a regular basis to ensure it meets the needs of the growing business.

The group sells to most of its customers on customary credit terms and is, as a result, exposed to the usual credit risk and cash flow risk associated with this form of trading.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks facing the group are:

Environmental issues and regulatory controls

The most significant risks facing the group have been defending its ability to trade fully from its recycling site.

PRINCIPAL RISKS AND UNCERTAINTIES - continued

Operational health and safety

Failure to maintain a trained workforce could adversely affect the group, and health and safety is reviewed on a regular basis.

Interest risk

Interest rate risk reflects the group's exposure to fluctuations in interest rates. The risk arises because the group's floating rate bank loan bears interest based on LIBOR.

ON BEHALF OF THE BOARD:

Mr W T Fowles - Director

25 September 2025

The director presents his report with the financial statements of the company and the group for the year ended 30 September 2024.

DIVIDENDS

No dividends will be distributed for the year ended 30 September 2024.

DIRECTOR

Mr W T Fowles held office during the whole of the period from 1 October 2023 to the date of this report.

GOING CONCERN

The director has continued to take positive steps to return the group to profitability and this is demonstrated in improved margins and a reduction in net debt of £1,053,430 during the year. This trend has continued into the 2024/25 financial year.

At the date of signing the accounts, with strong group cash balances and the processes implemented to reduce costs and improve margins in place, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The director has therefore prepared the consolidated financial statements on a going concern basis.

In considering whether the financial statements can be prepared on a going concern basis, the director has assessed the expected business activity level of the group together with factors likely to affect its performance, financial position and the capacity to raise funds.

MATTERS INCLUDED IN THE GROUP STRATEGIC REPORT

Details regarding a review of the business, including future developments, principal risk and uncertainties are provided in the Group Strategic Report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Group Strategic Report, the Director's Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has prepared the group and company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group and company for that period. In preparing the financial statements, the director is required to:

-

select suitable accounting policies and then apply them consistently;

-

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

-

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

-

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

The director is also responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006.

The director is responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and he 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 group's auditors are aware of that information.

AUDITORS

CG LEE Limited, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with Section 487(2) of the Companies Act 2006 unless the company receives notice under Section 488(1) of the Act.

ON BEHALF OF THE BOARD:

Mr W T Fowles - Director

25 September 2025

Opinion

We have audited the financial statements of Fowles Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2024 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 30 September 2024 and of the group's profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 director's 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 group's and the parent 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 director with respect to going concern are described in the relevant sections of this report.

Other information

The director is responsible for the other information. The other information comprises the information in the Group Strategic Report and the Director's Report, but does not include the financial statements and our Auditors' Report 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 Group Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Director's Report 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Director's Report.

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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page four, the director is 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 director determines 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 director is responsible for assessing the group's and the parent 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 director either intends to liquidate the group or the parent company or to cease operations, or has 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 an Auditors' 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to employment laws and tax legislation, and we considered the extent to which non­ compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:

-

discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation;

-

evaluating management's controls designed to prevent and detect irregularities;

-

identifying and testing of journal entries for appropriateness and evaluating the business rationale of significant transactions outside the normal course of business; and

-

reviewing significant accounting estimates for management bias.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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 Auditors' 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 Auditors' 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.

Mr Jeremy Laurence Hyde FCCA (Senior Statutory Auditor)

for and on behalf of CG LEE Limited

Chartered Certified Accountants

Statutory Auditors

Ingram House

Meridian Way

Norwich

Norfolk

NR7 0TA

26 September 2025

TURNOVER

5

14,654,830

16,206,745

Cost of sales

10,290,206

11,652,916

GROSS PROFIT

4,364,624

4,553,829

Administrative expenses

3,334,580

3,602,060

1,030,044

951,769

Gain/loss on revaluation of investment property

4,086,494

-

OPERATING PROFIT

8

5,116,538

951,769

Interest receivable and similar income

15,885

12,163

5,132,423

963,932

Interest payable and similar expenses

9

570,658

509,936

PROFIT BEFORE TAXATION

4,561,765

453,996

Tax on profit

10

1,127,151

115,418

PROFIT FOR THE FINANCIAL YEAR

3,434,614

338,578

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

3,434,614

338,578

Profit attributable to:

Owners of the parent

3,434,614

338,578

Total comprehensive income attributable to:

Owners of the parent

3,434,614

338,578

FIXED ASSETS

Intangible assets

13

862,500

1,092,500

Tangible assets

14

23,267,398

24,019,466

Investments

15

-

-

Investment property

16

7,639,221

2,879,685

31,769,119

27,991,651

CURRENT ASSETS

Debtors

17

1,471,062

1,757,082

Cash at bank and in hand

1,245,209

1,178,836

2,716,271

2,935,918

CREDITORS

Amounts falling due within one year

18

2,823,814

2,538,456

NET CURRENT (LIABILITIES)/ASSETS

(107,543

)

397,462

TOTAL ASSETS LESS CURRENT LIABILITIES

31,661,576

28,389,113

CREDITORS

Amounts falling due after more than one year

19

(6,498,005

)

(7,662,307

)

PROVISIONS FOR LIABILITIES

22

(2,600,329

)

(1,473,178

)

NET ASSETS

22,563,242

19,253,628

CAPITAL AND RESERVES

Called up share capital

23

1,136,002

1,261,002

Revaluation reserve

24

5,982,430

2,924,676

Capital redemption reserve

24

729,000

604,000

Merger reserve

24

4,013,518

4,013,518

Retained earnings

24

10,702,292

10,450,432

SHAREHOLDERS' FUNDS

22,563,242

19,253,628

The financial statements were approved by the director and authorised for issue on 25 September 2025 and were signed by:

Mr W T Fowles - Director

FIXED ASSETS

Intangible assets

13

-

-

Tangible assets

14

-

-

Investments

15

202

202

Investment property

16

-

-

202

202

CURRENT ASSETS

Debtors

17

1,938,543

1,921,333

CREDITORS

Amounts falling due within one year

18

2,943

2,899

NET CURRENT ASSETS

1,935,600

1,918,434

TOTAL ASSETS LESS CURRENT LIABILITIES

1,935,802

1,918,636

CAPITAL AND RESERVES

Called up share capital

23

1,136,002

1,261,002

Capital redemption reserve

24

729,000

604,000

Retained earnings

24

70,800

53,634

SHAREHOLDERS' FUNDS

1,935,802

1,918,636

Company's profit for the financial year

142,166

32,214

The financial statements were approved by the director and authorised for issue on 25 September 2025 and were signed by:

Mr W T Fowles - Director

Called up

share

Retained

Revaluation

capital

earnings

reserve

£

£

£

Balance at 1 October 2022

1,261,002

10,141,209

2,924,676

Changes in equity

Total comprehensive income

-

338,578

-

Dividends

-

(29,355

)

-

Balance at 30 September 2023

1,261,002

10,450,432

2,924,676

Changes in equity

Redemption of preference shares

(125,000

)

(125,000

)

-

Total comprehensive income

-

3,434,614

-

Transfer fair value movement on investment property

-

(4,086,494

)

4,086,494

Transfer deferred tax on fair value movement

-

1,028,740

(1,028,740

)

Balance at 30 September 2024

1,136,002

10,702,292

5,982,430

Capital

redemption

Merger

Total

reserve

reserve

equity

£

£

£

Balance at 1 October 2022

604,000

4,013,518

18,944,405

Changes in equity

Total comprehensive income

-

-

338,578

Dividends

-

-

(29,355

)

Balance at 30 September 2023

604,000

4,013,518

19,253,628

Changes in equity

Redemption of preference shares

125,000

-

(125,000

)

Total comprehensive income

-

-

3,434,614

Balance at 30 September 2024

729,000

4,013,518

22,563,242

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 October 2022

1,261,002

50,775

604,000

1,915,777

Changes in equity

Total comprehensive income

-

32,214

-

32,214

Dividends

-

(29,355

)

-

(29,355

)

Balance at 30 September 2023

1,261,002

53,634

604,000

1,918,636

Changes in equity

Redemption of preference shares

(125,000

)

(125,000

)

125,000

(125,000

)

Total comprehensive income

-

142,166

-

142,166

Balance at 30 September 2024

1,136,002

70,800

729,000

1,935,802

Cash flows from operating activities

Cash generated from operations

28

2,180,312

2,546,170

Interest paid

(497,152

)

(428,786

)

Interest element of hire purchase payments paid

(73,506

)

(81,150

)

Tax paid

216,996

126,205

Net cash from operating activities

1,826,650

2,162,439

Cash flows from investing activities

Purchase of tangible assets

(588,696

)

(1,280,868

)

Purchase of investment property

(46,770

)

(7,943

)

Sale of tangible assets

354,000

553,077

Sale of investment property

-

385,000

Interest received

15,885

12,163

Net cash from investing activities

(265,581

)

(338,571

)

Cash flows from financing activities

Bank loan repayments in year

(709,725

)

(574,485

)

HP capital repayments in year

(757,440

)

(184,673

)

Net amount introduced by directors

14,337

16,505

Net amount withdrawn by directors

3,024

-

Redemption of preference shares

(125,000

)

-

Equity dividends paid

-

(29,355

)

Net cash from financing activities

(1,574,804

)

(772,008

)

(Decrease)/increase in cash and cash equivalents

(13,735

)

1,051,860

Cash and cash equivalents at beginning of year

29

1,178,836

126,976

Cash and cash equivalents at end of year

29

1,165,101

1,178,836

1.	STATUTORY INFORMATION

Fowles Holdings 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.

The principal activities of the group are set out in the Group Strategic Report on page 2.

2.	STATEMENT OF COMPLIANCE

The group and individual financial statements of Fowles Holdings Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland" ("FRS 102") and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Basis of preparation

These consolidated and company financial statements are prepared on a going concern basis, under the historic cost convention, as modified by the recognition of certain financial assets and liabilities measured at fair value. The functional and presentation currency of these financial statements is pound sterling.

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group and company accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.

The principal accounting policies of the group applied in the preparation of these consolidated and separate financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

At 30 September 2024 the group had net current liabilities of £107,543. The group meets its day to day working capital commitments through the use of bank loans and overdrafts. On the basis of the anticipated cashflows the director considers that the group will continue to trade successfully and has agreed to continue to support the group for the foreseeable future. The director considers it appropriate to prepare the financial statements on a going concern basis. The financial statements do not included any adjustment that would result from the withdrawal of this support.

Going concern

The financial statements have been prepared on a going concern basis as the director has a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future.

In considering whether the company and group financial statements can be prepared on a going concern basis, the director has assessed the expected business activity of the group together with factors likely to affect its performance, financial position and capacity to raise funds.

Exemptions for qualifying entities under FRS 102

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102:

(i)

from preparing a statement of cash flows, on the basis that it is a qualifying entity and the consolidated statement of cash flows, included in these financial statements, includes the company's cash flows;

(ii)

from disclosing the company key management personnel compensation, as required by FRS 102 paragraph 33.7.

(iii)

from disclosing the related party transactions between the company and its wholly owned subsidiaries within the Fowles Holdings Limited group.

Basis of consolidation

The group financial statements consolidate the financial statements of Fowles Holdings Limited and all of its subsidiary undertakings drawn up to 30 September each year.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the group obtains control and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Revenue recognition

Revenue is measured at fair value of the consideration received or receivable and represents the amount receivable for goods supplied or services rendered, net of value added tax and trade discounts.

Income from waste processing and haulage is recognised when the services are provided.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless the lease payments are structured to increase with general inflation in which case the income is recognised as revenue in accordance with the expected payments.

Employee benefits

Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

Defined contribution pension schemes

The group operates defined contribution pension schemes for its employees. Contributions are recognised as an expense when they are due. Amounts not paid are included in other creditors in the balance sheet.

Business combinations and goodwill

Purchased goodwill arising on the acquisition of businesses, represents any excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired. Goodwill is capitalised and stated at cost less accumulated amortisation and provisions for impairment.

For the goodwill relating to the acquisition of Fowles Haulage, amortisation is calculated on a straight line basis over a period of 10 years from the date of acquisition, such number being the period that the director estimates benefits may reasonably be expected to accrue from the acquisition.

Tangible assets

Revaluations of classes of fixed assets measured at fair value are carried out regularly so that the carrying amounts do not materially differ from using the fair value at the balance sheet date.

Tangible assets are recorded at cost less accumulated depreciation. Cost includes the original purchase price of the asset plus costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged from the time when tangible assets are brought into use and is calculated so as to write off the cost of fixed assets, less their estimated residual values, over the expected useful economic lives of the assets concerned The principal annual rates used for this purpose are as follows:

Freehold property

- 4% straight line

Plant and machinery

- 15% on reducing balance

Fixtures and fittings

- 25% on reducing balance

No depreciation is provided on freehold land.

Investments in subsidiary undertakings

Investments in subsidiary undertakings are recorded at cost less any provision for impairment. Impairment reviews are performed by the company when there has been an indication of potential impairment.

Impairment of non-financial assets

At each balance sheet date non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset (or asset's cash generating unit) may be impaired. If there is such an indication the recoverable amount of the asset (or asset's cash generating unit) is compared to the carrying amount of the asset (or asset's cash generating unit).

The recoverable amount of the asset (or asset's cash generating unit) is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset's (or asset's cash generating unit) continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the asset.

If the recoverable amount of the asset (or asset's cash generating unit) is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in profit or loss, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter any excess is recognised in profit or loss.

If an impairment loss is subsequently reversed, the carrying amount of the asset (or asset's cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in profit or loss.

Goodwill is allocated on acquisition to the cash generating unit expected to benefit from the synergies of the combination. Goodwill is included in the carrying value of cash generating units for impairment testing.

Investment property

Investment properties are initially recorded at cost which includes purchase cost and any directly attributable expenditure.

Investment properties whose fair value can be measured reliably are measured at fair value. The gain or loss on revaluation is recognised in profit or loss in the period in which it arises. Such gains or losses are transferred from retained earnings to a non-distributable reserve.

Taxation

The tax charge represents the aggregate amount of current tax and deferred tax recognised in the reporting period.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.

A deferred tax asset or liability is recognised for tax recoverable or payable in future periods in respect of transactions and events recognised in the financial statements of current and previous periods.

Deferred tax arises from timing differences that are differences between taxable profits and the company's results as stated in the financial statements. Timing differences result from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is recognised on all timing differences at the reporting date apart from certain exceptions. Unrelieved tax losses and other deferred tax assets are only 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.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing differences. Deferred tax relating to land and investment properties that is measured at fair value is measured using the tax rates and allowances that apply to the sale of the asset.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

Operating leases

Rentals payable under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Trade and other debtors

Trade and other debtors that are receivable within one year and do not constitute a financing transaction are recorded at the undiscounted amount expected to be received, net of impairment. Those that are receivable after more than one year or that constitute a financing transaction are recorded initially at fair value less transaction costs and subsequently at amortised cost, net of impairment.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts, where applicable, are shown within borrowings in current liabilities.

Trade and other creditors

Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

Financial instruments

The group only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities such as trade and other debtors / creditors, loans from banks and other third parties and loans to related parties.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in profit or loss.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and the best estimate, which is an approximation, of the amount that the company would receive for the asset if it were to be sold at the reporting date.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an 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.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Redeemable preference shares are classified as equity. There is no fixed redemption date and shares are redeemable at the sole discretion of the company at the nominal value of each redeemable preference share. No dividends shall be paid unless expressly determined by the director of the company.