REGISTERED NUMBER: 13341371 (England and Wales)

KTN Group Limited

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 December 2024

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

T Nagendran

D Leonard

REGISTERED OFFICE:

61 Cambridge Park

Wanstead

London

E11 2PR

REGISTERED NUMBER:

13341371 (England and Wales)

AUDITORS:

SKS Audit LLP

3 Sheen Road

Richmond Upon Thames

TW9 1AD

The directors present their strategic report of the company and the group for the year ended 31 December 2024.

REVIEW OF BUSINESS

There were no acquisitions during the year. The business was consolidating after the acquisition took place in previous year and results of that business and its subsidiaries have been incorporated into these accounts.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the group are reviewed in detail by the directors and no material additional risk or uncertainty has been identified other than those detailed below. These risks are broadly accompanied with competitive, operational and financial risks. The directors risk management objectives consist of identifying and monitoring those risks which could have an adverse impact on the company assets, profitability or cash flows.

The group is exposed to financial risks including credit risk and liquidity risk, arising from the group's normal business activities. These risks and the group's approach to dealing with them are discussed below.

Competitive risk

The group operates in the providing nursing care services. The markets remain competitive with price and margin fluctuation, which are dependent on relationships with residents.

Operational risk

The main operational risk relating to the company's operations of nursing care services are through relationships with the customers and compliance with CQC regulations. The overall risk is mitigated by ensuring that better quality nursing care services are provided and in compliance to regulations in place, to enable operations to grow.

Price risk

The group faces uncertainties in relation to average weekly fee increases for the provision of care services in the care homes operated by Care Ltd and Cambridge nursing home Ltd. The average weekly fee rates are also given by the number of residence funded by local authorities and by private fees payers.

Credit risk

The group's principal financial assets are bank balances, trade and other receivables. The group's credit risk is primarily attributable to its trade receivables and balances from the related parties. The group gives significant attention to credit risk and manages the risk though credit control procedures to ensure that credit risk is at an acceptable level for its future operations.

Liquidity risk

Liquidity risk is the risk that insufficient working capital will be generated by the group's business activities and that in this event suitable sources of funding may not be available. The group has a facility arrangement which is secured and guaranteed against the assets of the subsidiaries. The group ensures that sufficient cash is available to fund on- going operations and has sufficient cash reserves for its operations. The group controls this risk by maintaining prudent liquidity management policies that include regular cash flow forecasts to monitor liquidity and compliance to the facility. Strong working relationships are maintained with a banking partner to facility the regular provision of compliance, reporting and oversight of key issues impacting the business.

FINANCIAL INSTRUMENTS

The group only has basic financial instruments and does not enter into any foreign currency forward contracts or formal hedging activities.

KEY PERFORMANCE INDICATORS

The directors of the group use a variety of financial performance indicators, including turnover, total operating profit, profit/(loss) after tax and shareholders funds. These are reviewed and assessed quarterly by the board and appropriate action taken to ensure growth targets are being achieved. The group's key financial and non-performance indicator for the year are as follows:

2024

2023

£

£

Turnover

6,609,271

6,243,340

Operating profit

1,272,558

1,239,069

Profit/(loss) after tax

449,633

347,878

Shareholders funds

1,918,628

1,468,995

ON BEHALF OF THE BOARD:

T Nagendran - Director

25 September 2025

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2024.

PRINCIPAL ACTIVITY

The company's principal activity during the year is that of running a Care Home.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2024.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2024 to the date of this report.

T Nagendran

D Leonard

Other changes in directors holding office are as follows:

J Leonard - resigned 22 January 2024

GOING CONCERN

The directors have, at the time of approving the financial statements, reasonable expectation that the company has adequate resources to continue operational existence for the foreseeable future. The directors have made this assessment for a period at least one year from the date of approving of these financial statements. In particular, the directors have considered, the companies forecast and projections and accordingly they continue to adopt the going concern basis in preparing annual report and financial statement.

DISCLOSURE IN THE STRATEGIC REPORT

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors ' report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group'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 group's auditors are aware of that information.

AUDITORS

The auditors, SKS Audit LLP, were appointed auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed has been approved by the Board.

ON BEHALF OF THE BOARD:

T Nagendran - Director

25 September 2025

Opinion

We have audited the financial statements of KTN Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the Consolidated Income Statement, Consolidated Other 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 Consolidated Cash Flow Statement, 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 31 December 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 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 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 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 Group 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 Group 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 Group 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 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 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 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 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 four, 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 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 directors either intend to liquidate the group or the parent 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.

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:

Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.

The following laws and regulations were identified as being of significance to the entity:

-Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation.

-It is considered that non-compliance of Health & Safety laws and Care Quality Commission regulations may be fundamental to the operating aspects of the business.

Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

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.

Paul Craggs (Senior Statutory Auditor)

for and on behalf of SKS Audit LLP

3 Sheen Road

Richmond Upon Thames

TW9 1AD

26 September 2025

TURNOVER

2

6,609,271

6,243,340

Cost of sales

(3,700,793

)

(3,302,910

)

GROSS PROFIT

2,908,478

2,940,430

Administrative expenses

(1,828,544

)

(1,732,326

)

1,079,934

1,208,104

Other operating income

192,624

30,965

OPERATING PROFIT

4

1,272,558

1,239,069

Interest payable and similar expenses

5

(591,005

)

(606,624

)

PROFIT BEFORE TAXATION

681,553

632,445

Tax on profit

6

(231,920

)

(284,567

)

PROFIT FOR THE FINANCIAL YEAR

449,633

347,878

Profit attributable to:

Owners of the parent

449,633

347,878

PROFIT FOR THE YEAR

449,633

347,878

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

449,633

347,878

Total comprehensive income attributable to:

Owners of the parent

449,633

347,878

FIXED ASSETS

Intangible assets

9

100,470

106,380

Tangible assets

10

8,899,813

9,117,308

Investments

11

-

-

9,000,283

9,223,688

CURRENT ASSETS

Stocks

12

12,440

9,500

Debtors

13

317,985

607,460

Cash at bank and in hand

1,002,312

1,350,765

1,332,737

1,967,725

CREDITORS

Amounts falling due within one year

14

(1,603,608

)

(2,222,664

)

NET CURRENT LIABILITIES

(270,871

)

(254,939

)

TOTAL ASSETS LESS CURRENT LIABILITIES

8,729,412

8,968,749

CREDITORS

Amounts falling due after more than one year

15

(6,729,866

)

(7,401,006

)

PROVISIONS FOR LIABILITIES

18

(80,918

)

(98,748

)

NET ASSETS

1,918,628

1,468,995

CAPITAL AND RESERVES

Called up share capital

19

200

200

Capital reserve

20

1,432,177

1,432,177

Merger relief reserve

20

552,266

552,266

Retained earnings

20

(66,015

)

(515,648

)

SHAREHOLDERS' FUNDS

1,918,628

1,468,995

The financial statements were approved by the Board of Directors and authorised for issue on 25 September 2025 and were signed on its behalf by:

T Nagendran - Director

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

7,960

20,985

Investments

11

552,464

552,464

560,424

573,449

CURRENT ASSETS

Debtors

13

6,899,695

8,379,658

Cash at bank

819,456

877,857

7,719,151

9,257,515

CREDITORS

Amounts falling due within one year

14

(962,915

)

(1,701,021

)

NET CURRENT ASSETS

6,756,236

7,556,494

TOTAL ASSETS LESS CURRENT LIABILITIES

7,316,660

8,129,943

CREDITORS

Amounts falling due after more than one year

15

(6,729,866

)

(7,401,006

)

PROVISIONS FOR LIABILITIES

18

(1,934

)

(5,191

)

NET ASSETS

584,860

723,746

CAPITAL AND RESERVES

Called up share capital

19

200

200

Merger relief reserve

20

552,266

552,266

Retained earnings

20

32,394

171,280

SHAREHOLDERS' FUNDS

584,860

723,746

Company's (loss)/profit for the financial year

(138,886

)

806,194

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors and authorised for issue on 25 September 2025 and were signed on its behalf by:

T Nagendran - Director

Called up

Merger

share

Retained

Capital

relief

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 January 2023

200

(783,526

)

1,432,177

552,266

1,201,117

Changes in equity

Dividends

-

(80,000

)

-

-

(80,000

)

Total comprehensive income

-

347,878

-

-

347,878

Balance at 31 December 2023

200

(515,648

)

1,432,177

552,266

1,468,995

Changes in equity

Total comprehensive income

-

449,633

-

-

449,633

Balance at 31 December 2024

200

(66,015

)

1,432,177

552,266

1,918,628

Called up

Merger

share

Retained

relief

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 January 2023

200

(554,914

)

552,266

(2,448

)

Changes in equity

Dividends

-

(80,000

)

-

(80,000

)

Total comprehensive income

-

806,194

-

806,194

Balance at 31 December 2023

200

171,280

552,266

723,746

Changes in equity

Total comprehensive income

-

(138,886

)

-

(138,886

)

Balance at 31 December 2024

200

32,394

552,266

584,860

Cash flows from operating activities

Cash generated from operations

1

894,325

2,440,112

Interest paid

(591,005

)

(606,624

)

Tax paid

(108,331

)

(206,480

)

Net cash from operating activities

194,989

1,627,008

Cash flows from investing activities

Purchase of tangible fixed assets

(110,109

)

(218,489

)

Net cash from investing activities

(110,109

)

(218,489

)

Cash flows from financing activities

Loan repayments in the year

(433,333

)

(533,333

)

Equity dividends paid

-

(80,000

)

Net cash from financing activities

(433,333

)

(613,333

)

(Decrease)/increase in cash and cash equivalents

(348,453

)

795,186

Cash and cash equivalents at beginning of year

2

1,350,765

555,579

Cash and cash equivalents at end of year

2

1,002,312

1,350,765

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2024

2023

£

£

Profit before taxation

681,553

632,445

Depreciation charges

333,514

320,455

Loss on disposal of fixed assets

-

6,322

Finance costs

591,005

606,624

1,606,072

1,565,846

Increase in stocks

(2,940

)

-

Decrease in trade and other debtors

216,352

23,668

(Decrease)/increase in trade and other creditors

(925,159

)

850,598

Cash generated from operations

894,325

2,440,112

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

1,002,312

1,350,765

Year ended 31 December 2023

31.12.23

1.1.23

£

£

Cash and cash equivalents

1,350,765

555,579

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.24

Cash flow

At 31.12.24

£

£

£

Net cash

Cash at bank and in hand

1,350,765

(348,453

)

1,002,312

1,350,765

(348,453

)

1,002,312

Debt

Debts falling due within 1 year

(533,333

)

133,333

(400,000

)

Debts falling due after 1 year

(6,400,000

)

300,000

(6,100,000

)

(6,933,333

)

433,333

(6,500,000

)

Total

(5,582,568

)

84,880

(5,497,688

)

1.	ACCOUNTING POLICIES

STATUTORY INFORMATION

KTN Group Limited is private company limited by shares incorporated in England and Wales. The registered office is 61 Cambridge Park, Wanstead, London, England, E11 2PR.

The group consists of KTN Group Limited and all of its subsidiaries.

BASIS OF PREPARING THE FINANCIAL STATEMENTS

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

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

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

Financial Reporting Standard 102 - reduced disclosure exemptions

The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS 102: (a) Disclosures in respect of each class of share capital have not been presented. (b) No cash flow statement has been presented for the company. (c) Disclosures in respect of financial instruments have not been presented. (d) No disclosure has been given for the aggregate remuneration of key management personnel.

BASIS OF CONSOLIDATION

The consolidated financial statements present the results of the company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between the group companies are therefore eliminated in full.

The consolidated financial statements incorporate those of KTN Group Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the acquisition method. Their results are incorporated from the date that control passes.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

TURNOVER

Turnover is measured at the fair value of the consideration received or receivable, net of discounts, in the normal course of business.

Turnover includes revenue earned from rendering of nursing care services and is recognised when the services have been provided.

INTANGIBLE FIXED ASSET

Intangible fixed assets are measured at cost less accumulative amortisation and any accumulative impairment losses.

Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.

TANGIBLE FIXED ASSET

Tangible fixed assets are measured at cost less accumulative depreciation and any accumulative impairment losses. Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:

Land and building

2% Straight line method

Plant and machinery

25% Reducing balance

Motor vehicle

25% Reducing balance

Fixtures, fittings, tools and equipment

33% Straight line method

Computer equipment

33% Straight line method

FIXED ASSET INVESTMENTS

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

IMPAIRMENT OF FIXED ASSETS

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

STOCKS

Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised.

CASH AND CASH EQUIVALENTS

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

TRADE AND OTHER DEBTORS

Trade and other debtors are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

FINANCIAL INSTRUMENTS

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments. Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.