REGISTERED NUMBER: 02736885 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2024

FOR

ALUMET SYSTEMS (UK) LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Consolidated Statement of Income and Retained Earnings

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Cash Flow Statement

12

Notes to the Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

15

DIRECTORS:

G Summers

D Hayward-Bradley

L McBeth

B S Summers

L Summers

REGISTERED OFFICE:

Senator House

Bourne End

Southam

Warwickshire

CV47 0NA

REGISTERED NUMBER:

02736885 (England and Wales)

AUDITORS:

TGFP

Chartered Accountants & Statutory Auditors

Fulford House

Newbold Terrace

Leamington Spa

Warwickshire

CV32 4EA

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

REVIEW OF BUSINESS

The Directors are satisfied with the performance of the group in the period under review, with turnover increasing as forecast.

This has been achieved through the stability of the Management Team who continue to implement the company's strategies and monitor the company's performance against its stringent Key Performance Indicators (KPI's) to continue delivering positive results.

The group is a strong advocator of KPI's which are deployed to monitor and manage the daily operations, as well as provide the business with clear direction and benchmarks when assessing annual performance, growth, profitability, debts and returns on investments. Non-financial performance indicators are percentage measures for customer growth, movements in customer accounts and daily spend.

Turnover increased by 24.9% on 2023 levels.Turnover increased largely due to early procurement on some projects to ensure cost certainty. As a result we expect 2025 to reduce to around the £36m level

Effective cost control by the management team, despite general increases in operating costs, underpinned a strong financial performance, resulting in a pre tax profit for the year of £504,068.

PRINCIPAL RISKS AND UNCERTAINTIES

The current economic climate creates uncertainty that could potentially impact on the level of demand and global raw material costs. Whilst this presents a risk to the business, the directors will continue to closely monitor the position as the implications become more known in order to ensure that the group is well placed to continue to trade successfully.

The group is exposed to credit risk, liquidity risk and cash flow risk. The company manages these risks by trading with creditworthy customers, and financing its operations through retained profits, supplemented by bank borrowings where necessary to fund expansion or capital projects.

ON BEHALF OF THE BOARD:

D Hayward-Bradley - Director

30 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 principal activity of the group in the year under review was that of design, manufacturing and construction of premium building envelope solutions including rainscreen cladding, curtain walling, and aluminium window systems.

DIVIDENDS

The directors do not recommend payment of a dividend for the year.

DIRECTORS

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

G Summers

D Hayward-Bradley

L McBeth

B S Summers

L Summers

Other changes in directors holding office are as follows:

S J Smith ceased to be a director after 31 December 2024 but prior to the date of this report.

FINANCIAL INSTRUMENTS

The business' principal financial instruments comprise bank balances, trade debtors, amounts recoverable on contracts, other debtors, trade creditors and other creditors. The main purpose of these instruments is to finance the business' operations.

Debtors are managed in respect of credit risk by ensuring exposure is not concentrated in a few customers, ensuring contractors have an insurance bond and the regular monitoring of amounts outstanding.

Creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

STRATEGIC REPORT

In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors Report)

Regulations 2013, the Group has prepared a Strategic Report, which includes information that would have previously been included 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, TGFP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

D Hayward-Bradley - Director

30 September 2025

Opinion

We have audited the financial statements of Alumet Systems (UK) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the Consolidated Statement of Income and Retained Earnings, Consolidated Balance Sheet, Company Balance Sheet, 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 pages three and 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We have considered how irregularities, including fraud, can be detected in this business and how they may occur.

To mitigate these risks we have carried out the following risk assessment procedures:

- Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;

- Performing analytical review procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

- Testing of journal entries throughout the year and post year end which met a defined risk criteria.

In respect of non- compliance with laws and regulations we have carried out the following enquiries:

- Review of correspondence with tax authorities for any instances of non-compliance with tax laws and regulations;

- Reviewing the financial statements disclosures and agreeing to supporting documentation

- Review of legal expenditure and understanding the nature of expenditure incurred.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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.

BENJAMIN REYNOLDS BSc(Hons) FCA (Senior Statutory Auditor)

for and on behalf of TGFP

Chartered Accountants & Statutory Auditors

Fulford House

Newbold Terrace

Leamington Spa

Warwickshire

CV32 4EA

30 September 2025

TURNOVER

41,169,488

32,954,763

Cost of sales

31,283,573

24,577,950

GROSS PROFIT

9,885,915

8,376,813

Administrative expenses

9,301,425

8,540,277

584,490

(163,464

)

Other operating income

-

8,124

OPERATING PROFIT/(LOSS)

4

584,490

(155,340

)

Interest receivable and similar income

10,769

6,725

595,259

(148,615

)

Interest payable and similar expenses

5

91,191

90,328

PROFIT/(LOSS) BEFORE TAXATION

504,068

(238,943

)

Tax on profit/(loss)

6

152,452

(702,117

)

PROFIT FOR THE FINANCIAL YEAR

351,616

463,174

Retained earnings at beginning of year

4,972,657

4,509,483

RETAINED EARNINGS FOR THE GROUP AT END OF YEAR

5,324,273

4,972,657

Profit attributable to:

Owners of the parent

351,616

463,174

FIXED ASSETS

Intangible assets

8

427,868

481,352

Tangible assets

9

140,646

159,164

Investments

10

7,242

7,242

575,756

647,758

CURRENT ASSETS

Stocks

11

1,884,292

2,391,653

Debtors

12

17,109,037

12,653,675

Cash at bank and in hand

2,263,273

1,328,168

21,256,602

16,373,496

CREDITORS

Amounts falling due within one year

13

16,176,944

11,565,153

NET CURRENT ASSETS

5,079,658

4,808,343

TOTAL ASSETS LESS CURRENT LIABILITIES

5,655,414

5,456,101

CREDITORS

Amounts falling due after more than one year

14

-

(148,128

)

PROVISIONS FOR LIABILITIES

19

(31,141

)

(35,316

)

NET ASSETS

5,624,273

5,272,657

CAPITAL AND RESERVES

Called up and paid share capital

20

100,000

100,000

Capital redemption reserve

21

200,000

200,000

Retained earnings

21

5,324,273

4,972,657

SHAREHOLDERS' FUNDS

5,624,273

5,272,657

The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2025 and were signed on its behalf by:

D Hayward-Bradley - Director

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

140,459

158,977

Investments

10

607,242

607,242

747,701

766,219

CURRENT ASSETS

Stocks

11

1,884,292

2,391,653

Debtors

12

16,930,818

12,475,271

Cash at bank and in hand

2,253,848

1,301,573

21,068,958

16,168,497

CREDITORS

Amounts falling due within one year

13

16,101,234

11,473,438

NET CURRENT ASSETS

4,967,724

4,695,059

TOTAL ASSETS LESS CURRENT LIABILITIES

5,715,425

5,461,278

CREDITORS

Amounts falling due after more than one year

14

-

(148,128

)

PROVISIONS FOR LIABILITIES

19

(31,141

)

(35,316

)

NET ASSETS

5,684,284

5,277,834

CAPITAL AND RESERVES

Called up and paid share capital

20

100,000

100,000

Capital redemption reserve

21

200,000

200,000

Retained earnings

21

5,384,284

4,977,834

SHAREHOLDERS' FUNDS

5,684,284

5,277,834

Company's profit for the financial year

406,450

468,350

The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2025 and were signed on its behalf by:

D Hayward-Bradley - Director

Cash flows from operating activities

Cash generated from operations

1

1,058,050

603,524

Interest paid

(85,796

)

(88,395

)

Interest element of hire purchase payments paid

(3,405

)

-

Tax paid

(60,170

)

-

Taxation refund

262,399

154,904

Net cash from operating activities

1,171,078

670,033

Cash flows from investing activities

Purchase of tangible fixed assets

(38,276

)

(23,765

)

Sale of tangible fixed assets

-

3,599

Acquisition of subsidiary

-

(600,000

)

Cash acquired on acquisition

-

84,632

Interest received

10,769

6,725

Net cash from investing activities

(27,507

)

(528,809

)

Cash flows from financing activities

Loan repayments in year

(125,000

)

(125,000

)

Capital repayments in year

(34,327

)

(29,871

)

Amount introduced by directors

-

287,492

Amount withdrawn by directors

(49,139

)

-

Net cash from financing activities

(208,466

)

132,621

Increase in cash and cash equivalents

935,105

273,845

Cash and cash equivalents at beginning of year

2

1,328,168

1,054,323

Cash and cash equivalents at end of year

2

2,263,273

1,328,168

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2024

2023

£

£

Profit/(loss) before taxation

504,068

(238,943

)

Depreciation charges

110,278

109,419

Loss on disposal of fixed assets

-

66,555

Finance costs

91,191

90,328

Finance income

(10,769

)

(6,725

)

694,768

20,634

Decrease/(increase) in stocks

192,220

(987,792

)

Increase in trade and other debtors

(3,350,793

)

(2,550,199

)

Increase in trade and other creditors

3,521,855

4,120,881

Cash generated from operations

1,058,050

603,524

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

2,263,273

1,328,168

Year ended 31 December 2023

31.12.23

1.1.23

£

£

Cash and cash equivalents

1,328,168

1,054,365

Bank overdrafts

-

(42

)

1,328,168

1,054,323

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.24

Cash flow

At 31.12.24

£

£

£

Net cash

Cash at bank and in hand

1,328,168

935,105

2,263,273

1,328,168

935,105

2,263,273

Debt

Finance leases

(54,776

)

34,327

(20,449

)

Debts falling due within 1 year

(125,000

)

-

(125,000

)

Debts falling due after 1 year

(125,000

)

125,000

-

(304,776

)

159,327

(145,449

)

Total

1,023,392

1,094,432

2,117,824

1.	STATUTORY INFORMATION

Alumet Systems (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 General Information page.

The presentational currency of the financial statements is the Pound Sterling (£) which is the functional currency of the group, and rounded to the nearest £1.

2.	ACCOUNTING POLICIES

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 have been prepared under the historical cost convention.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2024.

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

The results of subsidiaries acquired or disposed of during the year are included in profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirers interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

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

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interest in the net assets of consolidated subsidiaries are identified separately from the group's equity therein.

The company's subsidiary Built Environment Efficiency Systems Limited are not included in these group financial statements as the exemption relating to the exclusion of dormant companies claimed under S477 and S479A of the Companies Act 2006.

Critical accounting judgements and key sources of estimation uncertainty

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 company's accounting policies. The following discusses the most significant areas.

Significant Accounting Judgements

In the application of the Company's accounting policies, management has made the following judgements, apart from those involving estimates, that have the most significant effect on the amounts recognised in the financial statements:

Recognition of Revenue and Costs on Construction Contracts:

Management exercises judgement in assessing whether the outcome of a contract can be measured reliably. Revenue is recognised by reference to the stage of completion, which is primarily based on applications for payment prepared by the Company's quantity surveyors and certified by customers. Management exercises judgement in concluding that these applications provide a sufficiently reliable measure of contract progress, after considering contract complexity, customer reliability, and historical experience of project outcomes.

Key Sources of Estimation Uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Amounts recoverable under contracts - The recoverability of contract balances is dependent on final agreement of variations, claims, and outstanding applications with customers. Judgement is required to assess the extent to which uncertified or disputed amounts will ultimately be collected.

Contract cost accruals - the estimation of total contract costs to complete requires assumptions on labour productivity, material costs, and sub-contractor performance. These estimates directly affect the measurement of contract liabilities and profit recognition.

Management's Approach to Estimation:

The calculations for both the amounts recoverable and contract cost accruals are initially undertaken by qualified surveyors using industry-standard methodologies and live project data. Management then critically reviews these estimates, making adjustments based on:

- Historical Performance: Specific past performance of similar projects, customers, and sub-contractors.

- Recoverability risk - consideration of the likelihood of agreement on variations and claims.

- External Factors: Industry knowledge and forecasts regarding potential supply chain disruption and cost inflation over the remaining contract term.

Turnover

Revenue Recognition - Long-Term Contracts

Revenue from long-term contracts is recognised using the percentage of completion method, based on surveys of work performed. The stage of completion is determined by valuations ("applications") prepared by the company’s quantity surveyors, reviewed internally, and submitted to the customer for certification.

Revenue is recognised based on these applications, which represent management’s best estimate of the value of work completed to date, in accordance with FRS 102 para 23.22(b). Certified amounts may differ due to customer disputes, with differences typically resolved in future valuations.

At the year-end, amounts recoverable on contracts, net of retentions, are included within receivables and are based on the company’s application values.

Goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Improvements to property

-

20% on cost and 10% on cost

Plant and machinery

-

25% on reducing balance and at variable rates on reducing balance

Fixtures and fittings

-

25% on reducing balance

Motor vehicles

-

33% on cost and 25% on reducing balance

Computer equipment

-

50% on reducing balance, 33% on cost and 25% on cost

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making dueallowance for obsolete and slow-moving items.

Cost is calculated using the first in, first out formula.

Financial instruments

Financial instruments are classified and accounted for as financial assets, financial liabilities or equity instruments, according to the substance of the contractual arrangement. Equity instruments are those that entitle the holder to a residual interest in the company's assets after deducting all of its liabilities.

Basic financial instruments are recognised at amortised cost. Derivative financial instruments are initially recorded at cost and thereafter at fair value with changes recognised in profit or loss.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

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.

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