REGISTERED NUMBER: NI648008 (Northern Ireland)

J & J NI HOLDINGS LIMITED

Group Strategic Report, Directors' Report and

Consolidated Financial Statements for the Year Ended 31 December 2024

Page

Company Information

1

Group Strategic Report

2

Directors' Report

4

Independent Auditors' Report

6

Consolidated Income Statement

9

Consolidated Statement of Financial Position

10

Company Statement of Financial Position

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Consolidated Statement of Cash Flows

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

James Irwin

Jennifer Anne Irwin

REGISTERED OFFICE:

52 Maydown Road

Benburb

Dungannon

BT71 7LN

REGISTERED NUMBER:

NI648008 (Northern Ireland)

INDEPENDENT AUDITORS:

Cooper Parry Audit (Ireland) Limited

Statutory Auditor

36-38 Northland Row

Dungannon

Co. Tyrone

BT71 6AP

BANKERS:

Danske Bank

Donegall Square West

Belfast

BT1 6JS

SOLICITORS:

Davidson McDonnell

Longbridge House

24 Waring Street

Belfast

BT1 2DX

The directors present their strategic report for the year ended 31 December 2023.

REVIEW OF BUSINESS

The principal activities of the group are the supply and servicing of automated feed and barn equipment for use within the agricultural sector.

J & J NI Holdings Limited ("the group") continues to deliver a strong trading performance in respect of the year ended 31 December 2024 and the business remains in a sound financial position at the year end. The group returned a profit for the financial year of £1,253,959 (2023: £2,004,911) on a turnover base of £10,026,100 (2023: £13,643,522). The group has net assets of £10,781,619 (2023: £9,727,660). The directors consider the results for the year to be satisfactory.

FINANCIAL KEY PERFORMANCE INDICATORS

The directors consider the key performance indicators are those that communicate the financial performance and strengths as a whole, being revenue, gross profit margin and operating profit.

The directors have provided an analysis of the key performance indicators of the business below. The directors continue to monitor revenue and costs to ensure the group remains profitable. The group continues to maintain a strong net asset position.

2024

2023

Revenue

£10,026,100

£13,643,522

Gross profit margin

23.63%

27.02%

Operating profit

1,435,720

2,535,320

PRINCIPAL RISKS AND UNCERTAINTIES

The group operations expose it to a variety of risks that include economic risk, competition risk and financial risk. The group has in place a risk management programme that seeks to limit and adverse effects on the financial performance of the group.

Economic Risk:

The economic risks facing the group include wages inflation and fall in demand for products. The directors work closely with employees, customers, suppliers and the group's financial institutions to carefully manage such risks.

Competition Risk:

Competition risk is managed through close attention to product quality, customer service and sustainable markets.

Financial Risk:

The group has exposure to financial risks through interest rates applied to its bank borrowings. These risks are managed by budgetary control and maintaining a close working relationship with its bankers.

STRATEGY & DEVELOPMENT

The group's success is dependent on understanding and meeting the developing needs of customers and developing innovative solutions for their needs. The group will continue to improve upon its position and concentrate on achieving maximum growth in its market sector while at the same time continuing to improve efficiency in all areas of its operations. With its proven track record the company believes it will be well placed to retain existing customers and generate new business.

FUTURE DEVELOPMENTS

The group is committed to long term creation of shareholder value by increasing the group's market share. The group aims to increase revenue and operating profits. The group will continue to meet the needs of the customers and develop innovative solutions for their needs while remaining highly competitive.

ON BEHALF OF THE BOARD:

James Irwin - Director

30 September 2025

The directors present their report with the audited financial statements for the year ended 31 December 2024.

DIVIDENDS

Interim dividend of £200,000 (2023: £140,000) were paid during the year. The directors do not recommend payment of a final dividend (2023: Nil).

RESEARCH AND DEVELOPMENT

The group continues to recognise the importance of its research and development programme, which it believes is essential to ensure that the business continues to develop new products and remain competitive in the market.

POST BALANCE SHEET EVENTS

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

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

James Irwin

Jennifer Anne Irwin

DISCLOSURE IN THE STRATEGIC REPORT

Under Schedule 7.1A of "Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008" the company has elected to disclose the following directors report information in the strategic report:

- Financial performance indicators;

- Principal risks and uncertainties;

- Principal activity and business review; and

- Future developments.

DIRECTORS' RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Group Strategic Report, the Directors' Report 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 audit business of CavanaghKelly was acquired by Cooper Parry Audit (Ireland) Limited on 24th July 2025. CavanaghKelly has resigned as auditor and Cooper Parry Audit (Ireland) Limited has been appointed in its place.

The auditors, Cooper Parry Audit (Ireland) Limited, have indicated their willingness to continue in office in accordance with the provision of Section 485 of the Companies Act 2006.

ON BEHALF OF THE BOARD:

James Irwin - Director

30 September 2025

Opinion

We have audited the financial statements of J & J NI Holdings Limited (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024 which comprise the Consolidated Income Statement, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and 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 Directors' 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 Directors' 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 Directors' 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 Directors' 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 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 Directors' Responsibilities Statement 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 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.

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

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The objectives of our audit in respect of fraud are to assess the risk of material misstatement due to fraud, design and implement appropriate responses to those assessed risks and to respond appropriately to instances of fraud or suspected fraud identified during the course of our audit. However, the primary responsibility for the prevention and detection of fraud rests with management and those charged with governance of the company.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud - continued

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

-

We obtained understanding of the legal and regulatory requirements applicable to the company’s financial statements and considered the most significant are the Companies Act 2006, Financial Reporting Standards (FRS102) and UK taxation legislation;

-

We have assessed the risk of material misstatement of the financial statements, including risk of material misstatement due to fraud and how it might occur by holding discussions with management and those charged with governance;

-

We enquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations;

-

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

-

Discussions amongst the audit engagement team regarding how fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion we identified the following potential areas where fraud may occur: timing of revenue recognition and management override.

The audit response to risks identified included:

-

Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the relevant laws and regulations above;

-

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

In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments, assessing whether the judgements made in making accounting estimates are reasonable and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

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. Desmond Kelly (F.C.A) (Senior Statutory Auditor)

for and on behalf of Cooper Parry Audit (Ireland) Limited

Statutory Auditor

36-38 Northland Row

Dungannon

Co. Tyrone

BT71 6AP

30 September 2025

TURNOVER

4

10,026,100

13,643,522

Cost of sales

(7,657,177

)

(9,956,909

)

GROSS PROFIT

2,368,923

3,686,613

Administrative expenses

(1,011,755

)

(1,154,084

)

1,357,168

2,532,529

Other operating income

78,552

2,791

OPERATING PROFIT

6

1,435,720

2,535,320

Finance income

82,572

103,107

1,518,292

2,638,427

Finance costs

7

(2,406

)

(1,061

)

PROFIT BEFORE TAXATION

1,515,886

2,637,366

Tax on profit

8

(261,927

)

(632,455

)

PROFIT FOR THE FINANCIAL YEAR

1,253,959

2,004,911

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,253,959

2,004,911

Profit attributable to:

Owners of the parent

1,253,959

2,004,911

Total comprehensive income attributable to:

Owners of the parent

1,253,959

2,004,911

NON-CURRENT ASSETS

Tangible assets

11

1,566,657

1,116,727

Investments

12

-

-

1,566,657

1,116,727

CURRENT ASSETS

Stocks

13

3,556,762

4,284,411

Receivables: amounts falling due within one year

14

2,468,738

4,014,040

Cash at bank

4,837,902

3,166,025

10,863,402

11,464,476

PAYABLES

Amounts falling due within one year

15

(1,416,576

)

(2,655,835

)

NET CURRENT ASSETS

9,446,826

8,808,641

TOTAL ASSETS LESS CURRENT LIABILITIES

11,013,483

9,925,368

PAYABLES

Amounts falling due after more than one year

16

(14,853

)

(27,745

)

PROVISIONS FOR LIABILITIES

19

(217,011

)

(169,963

)

NET ASSETS

10,781,619

9,727,660

CAPITAL AND RESERVES

Called up share capital

20

200

200

Retained earnings

21

10,781,419

9,727,460

SHAREHOLDERS' FUNDS

10,781,619

9,727,660

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:

James Irwin - Director

NON-CURRENT ASSETS

Tangible assets

11

1,169,800

638,253

Investments

12

2

2

1,169,802

638,255

CURRENT ASSETS

Receivables: amounts falling due within one year

14

1,276,115

2,034,467

Cash at bank

3,477,177

2,525,673

4,753,292

4,560,140

PAYABLES

Amounts falling due within one year

15

(80,696

)

(145,875

)

NET CURRENT ASSETS

4,672,596

4,414,265

TOTAL ASSETS LESS CURRENT LIABILITIES

5,842,398

5,052,520

PROVISIONS FOR LIABILITIES

19

(66,166

)

-

NET ASSETS

5,776,232

5,052,520

CAPITAL AND RESERVES

Called up share capital

20

200

200

Retained earnings

21

5,776,032

5,052,320

SHAREHOLDERS' FUNDS

5,776,232

5,052,520

Company's profit for the financial year

923,712

903,484

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:

James Irwin - Director

Jennifer Anne Irwin - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2023

200

7,862,549

7,862,749

Changes in equity

Dividends

-

(140,000

)

(140,000

)

Total comprehensive income

-

2,004,911

2,004,911

Balance at 31 December 2023

200

9,727,460

9,727,660

Changes in equity

Dividends

-

(200,000

)

(200,000

)

Total comprehensive income

-

1,253,959

1,253,959

Balance at 31 December 2024

200

10,781,419

10,781,619

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2023

200

4,288,836

4,289,036

Changes in equity

Dividends

-

(140,000

)

(140,000

)

Total comprehensive income

-

903,484

903,484

Balance at 31 December 2023

200

5,052,320

5,052,520

Changes in equity

Dividends

-

(200,000

)

(200,000

)

Total comprehensive income

-

923,712

923,712

Balance at 31 December 2024

200

5,776,032

5,776,232

Cash flows from operating activities

Cash generated from operations

1

2,991,575

(1,315,699

)

Interest element of hire purchase payments paid

(2,406

)

(1,061

)

Finance costs paid

-

(10,277

)

Tax paid

(626,773

)

(762,925

)

Net cash from operating activities

2,362,396

(2,089,962

)

Cash flows from investing activities

Purchase of tangible fixed assets

(560,237

)

(65,610

)

Sale of tangible fixed assets

2,500

2,500

Interest received

82,572

103,107

Net cash from investing activities

(475,165

)

39,997

Cash flows from financing activities

Capital repayments in year

(15,354

)

(23,505

)

Amount withdrawn by directors

-

72

Equity dividends paid

(200,000

)

(140,000

)

Net cash from financing activities

(215,354

)

(163,433

)

Increase/(decrease) in cash and cash equivalents

1,671,877

(2,213,398

)

Cash and cash equivalents at beginning of year

2

3,166,025

5,379,423

Cash and cash equivalents at end of year

2

4,837,902

3,166,025

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

2024

2023

£

£

Profit before taxation

1,515,886

2,637,366

Depreciation charges

107,018

114,408

Loss/(profit) on disposal of fixed assets

789

(1,048

)

Finance costs

-

10,277

Finance costs

2,406

1,061

Finance income

(82,572

)

(103,107

)

1,543,527

2,658,957

Decrease/(increase) in stocks

727,649

(1,886,730

)

Decrease/(increase) in trade and other debtors

1,672,517

(2,641,326

)

(Decrease)/increase in trade and other creditors

(952,118

)

553,400

Cash generated from operations

2,991,575

(1,315,699

)

2.	CASH AND CASH EQUIVALENTS

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

Year ended 31 December 2024

31/12/24

1/1/24

£

£

Cash and cash equivalents

4,837,902

3,166,025

Year ended 31 December 2023

31/12/23

1/1/23

£

£

Cash and cash equivalents

3,166,025

5,379,423

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/1/24

Cash flow

At 31/12/24

£

£

£

Net cash

Cash at bank

3,166,025

1,671,877

4,837,902

3,166,025

1,671,877

4,837,902

Debt

Finance leases

(45,561

)

15,354

(30,207

)

(45,561

)

15,354

(30,207

)

Total

3,120,464

1,687,231

4,807,695

1.	STATUTORY INFORMATION

J & J NI Holdings Limited is a private company limited by shares, registered in Northern Ireland. The company's registered number is NI648008 and the registered office address is 52 Maydown Road, Benburb, County Tyrone.

2.	STATEMENT OF COMPLIANCE

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.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared on a going concern basis and in accordance with the historical cost convention. The financial reporting framework that has been applied in their preparation is the Companies Act 2006 (the "Act") and FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" issued by the Financial Reporting Council.

The financial statements are prepared in sterling, which is the functional currency of the entity.

Basis of consolidation

The group financial statements consolidate the financial statements of its subsidiary undertakings drawn up to 31 December each year. Consistent accounting policies are applied across companies within the group. The results of subsidiary undertakings sold or acquired are included in the consolidated income statement up to or from the date control passes. Intra-group sales, profits and balances are eliminated fully on consolidation. No income statement is presented for J & J NI Holdings Limited as permitted by section 408 of the Companies Act 2006.

Significant judgements and estimates

The preparation of the financial statements in accordance with generally accepted accounting principles requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, income and expenditure in the reporting period. Actual results could differ from those estimates. Therefore, management believe the critical accounting policies where estimates, judgements and assumptions are necessarily applied are summarised below:

Warranty Provision

The Group offers a warranty for any breakdowns within warranty terms. Provision is made for potential claims under warranty for goods which have malfunctioned. Management review the level of sales and the number of warranty claims made on a regular basis in order to calculate the provision for future claims for goods sold.

Revenue

Turnover represents sales to external customers at invoiced amounts exclusive of value added tax. Turnover is recognised when the risks and rewards of owning the goods has passed to the customer.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The charge to depreciation is calculated to write off the original cost or valuation of property, plant and equipment, less their estimated residual value, over their expected useful lives as follows:

Leasehold improvements

- 5% Straight Line

Plant and machinery

- 25% Reducing Balance

Fixtures, fittings and equipment

- 25% Reducing Balance

Motor vehicles

- 25% Reducing Balance

The carrying values of property, plant and equipment are reviewed annually for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable.

Inventories

Stocks are valued at the lower of cost and net realisable value. Cost comprises expenditure incurred in the normal course of business in bringing stocks to their present location and condition. Full provision is made for obsolete and slow moving items. Net realisable value comprises actual or estimated selling price (net of trade discounts) less all further costs to completion or to be incurred in marketing and selling.

Financial instruments

The group has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

(i) Financial assets

Basic financial assets, including trade and other receivables, cash and bank balances and amounts owed by group and related parties and are initially recognised at transaction price, 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. Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.

If there is decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

(ii) Financial liabilities

Basic financial liabilities, including trade and other payables, bank loans and overdrafts and amounts owed to group and related parties are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.

(iii) Offsetting

Financial assets and liabilities are offset and 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.

Taxation

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

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 statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position 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.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position 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

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

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate.

Cash and cash equivalents

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

Provision for liabilities

Provisions are made where an event has taken place that gives the company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to in the income statement in the year that the company becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.

Impairment of non-financial assets

The group assesses at each reporting date whether an asset may be impaired. If any such indication exists the company estimates recoverable amount of the asset. If it is not possible to estimate the recoverable amount of the individual asset, the company estimates, the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. If the recoverable amount is less than its carrying amount, the carrying amount of the asset is impaired and it is reduced to its recoverable amount through an impairment in profit and loss unless the asset is carried at a revalued amount where the impairment loss of a revalued asset is a revaluation decrease.

An impairment loss recognised for all assets, including goodwill, is reversed in a subsequent period if and only if the reasons for the impairment loss have ceased to apply.