REGISTERED NUMBER: 16118029 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD

4 DECEMBER 2024 TO 31 DECEMBER 2024

FOR

PROJECT VOLTA TOPCO LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

D J Bains

T Cummins

M A Marrison

A Richardson

REGISTERED OFFICE:

Units 1 - 7 Dukeries Court

Medenside

Meden Vale

Nottinghamshire

NG20 9QU

REGISTERED NUMBER:

16118029 (England and Wales)

AUDITORS:

Magma Audit LLP

16 Davy Court

Castle Mound Way

Rugby, CV23 0UZ

Magma Audit LLP is part

Of the Dains Group

The directors present their strategic report of the company and the group for the period 4 December 2024 to 31 December 2024.

Principal Activities

Project Volta Topco Limited is the ultimate holding company of Project Volta Bidco Limited, Powersaving (Holding) Limited, PR Powersaving Solutions Limited and AR Powersaving Solutions Limited (the Group). Its primary activity is to hold investments in subsidiary undertakings engaged in manufacture, hire, and sale of battery energy storage systems ("BESS"). The company also provides strategic oversight, financing, and governance support to its subsidiaries.

REVIEW OF BUSINESS

On 16 December 2024, the Company completed the acquisition of 100% of the issued share capital of Project Volta Bidco Limited, a transaction supported by Lloyds Development Capital plc (LDC). This strategic investment strengthens the Group's financial position and will provide additional funding to support product development and the expansion of the hire fleet.

During the period to 31st December 2024, the group generated turnover of £251k, and a loss before tax of £249k. Net Assets at 31st December 2024 were £276k.

The Group continues to be instrumental in the growing use of battery energy storage within the plant hire and construction industry, securing a significant number of new customers and continuing to enhance the design and performance of its BESS fleet, including the launch of our new High Voltage units The Directors are confident the group is well positioned to deliver further growth in turnover and profitability in 2025 despite the current uncertain economic environment which is creating some short term headwinds for the construction sector.

Key Performance Indicators

The Group monitors performance through several key measures, most notably:

2024

£'000

Revenue

251

EBITA

84

Capital expenditure

18

Hire Fleet NBV

7,709

Principal Risks and Uncertainties

Business Risk

The key risks facing the Group relate to general economic conditions and competitive pressures. While the industry currently has a limited number of competitors able to manufacture, sell, and hire BESS products, the competitive landscape is expanding. The Directors monitor market conditions closely and believe the Group holds a strong position through its established brand, Hussh Pod, which is widely recognised within the sector.

Financial Instruments and Financial Risk

The Group's principal financial instruments comprise cash balances, trade creditors, shareholder funding, and hire purchase arrangements, used primarily to finance ongoing operations.

Liquidity Risk is managed by maintaining a prudent balance between working capital elements, regularly monitored by the Directors.

Foreign Exchange Risk arises from some purchases in foreign currencies. This is managed through forward purchasing arrangements. The majority of the Group's operations are conducted in sterling.

Competitive Risk

Increasing numbers of new entrants could drive pricing pressure and margin compression. The Group mitigates this risk by maintaining strong customer relationships, continuing to invest in product development, and leveraging the Hussh Pod brand's market recognition.

Regulatory Risk

The Group operates within a regulatory environment covering health and safety, employment, and operational compliance. Significant investment has been made in support networks to ensure compliance. The Directors place strong emphasis on fostering a culture of responsibility, supported by clear policies and communication across the workforce.

Economic Risk

The market for BESS is expanding rapidly as customers increasingly recognise the economic and environmental benefits. However, global supply chain dependencies, particularly on China, pose risks relating to availability and cost of components. Tariff developments in the US and currency fluctuations also influence procurement costs. The Directors monitor these risks closely and believe the Group's strong supplier relationships, combined with the relative strength of sterling against the US dollar, provide a resilient position.

Credit Risk

The Group has no significant concentration of credit risk, with exposure spread across a wide customer base. Customer creditworthiness is reviewed regularly, with limits set and monitored to manage exposure.

Future Developments

The Group is proud of its Hussh Pod brand, which has become well established in the market. With continued reinvestment of profits, the support of recent investors, and a strong focus on research and development. Future growth is anticipated from the development of new products and diversification into new sectors, building on the brand's reputation for innovation and reliability.

Sustainability remains at the core of the Group's strategy. By enabling customers to replace traditional diesel generators with clean, silent battery alternatives, the Hussh Pod directly supports carbon reduction, improved air quality, and compliance with tightening environmental regulations. The Group is also committed to embedding ESG principles in its operations, including responsible sourcing of components, extending product lifecycles through refurbishment and redeployment of hire fleet units, and fostering a culture of health, safety, and employee wellbeing.

ON BEHALF OF THE BOARD:

A Richardson - Director

3 December 2025

The directors present their report with the financial statements of the company and the group for the period 4 December 2024 to 31 December 2024.

INCORPORATION

The group was incorporated on 4 December 2024 .

PRINCIPAL ACTIVITY

The principal activity of the group in the period under review was that of the design, manufacture, hire and sale of battery power units for commercial use.

The principal activity of the company in the period under review was that of a holding company.

DIVIDENDS

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

FUTURE DEVELOPMENTS

The Group is proud of its Hussh Pod brand, which has become well established in the market. With continued reinvestment of profits, the support of recent investors, and a strong focus on research and development. Future growth is anticipated from the development of new products and diversification into new sectors, building on the brand's reputation for innovation and reliability.

Sustainability remains at the core of the Group's strategy. By enabling customers to replace traditional diesel generators with clean, silent battery alternatives, the Hussh Pod directly supports carbon reduction, improved air quality, and compliance with tightening environmental regulations. The Group is also committed to embedding ESG principles in its operations, including responsible sourcing of components, extending product lifecycles through refurbishment and redeployment of hire fleet units, and fostering a culture of health, safety, and employee wellbeing.

DIRECTORS

The directors who have held office during the period from 4 December 2024 to the date of this report are as follows:

D J Bains - appointed 16 December 2024

T Cummins - appointed 16 December 2024

G T Jacobson - appointed 16 December 2024

M A Marrison - appointed 16 December 2024

G H Maxwell - appointed 16 December 2024

A Richardson - appointed 4 December 2024

N Y Wong - appointed 16 December 2024

G H Maxwell , G T Jacobson and N Y Wong ceased to be directors after 31 December 2024 but prior to the date of this report.

All the directors who are eligible offer themselves for election at the forthcoming first Annual General Meeting.

FINANCIAL INSTRUMENTS

The principal financial instruments of the Group comprise bank balances and borrowings, trade creditors, loan notes, trade debtors and hire purchase contracts. The main purpose of these instruments is to raise funds for the Group's operations and to finance its continuing operations. Liquidity risk is managed by the use of bank balances, overdraft facilities and selective use and active management of credit insurance along with efficient monitoring and forecasting of cash flow to ensure there are sufficient funds to meet liabilities. Trade debtors are managed in respect of credit and cash flow risk by policies monitoring the credit offered to customers, and regular monitoring of amounts outstanding for both time and credit limits.

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

AUDITORS

The auditors, Magma Audit LLP, were appointed on the 8 May 2025 and will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A Richardson - Director

3 December 2025

Opinion

We have audited the financial statements of Project Volta Topco Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 December 2024 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the 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 loss for the period 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 five, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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:

Based on our understanding of the group and the industry, we identified the principle risks of non-compliance with laws and regulations, and considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, health and safety regulations and employment law. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principle risks were related to posting inappropriate journal entries, and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

-

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

-

Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, or with unusual descriptions;

-

Challenging assumptions made by management in their significant accounting estimates, in particular in relation to the recoverability of debtors, carrying value of investments and impairment of intangible assets.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment.

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.

Victoria Craig (Senior Statutory Auditor)

for and on behalf of Magma Audit LLP

16 Davy Court

Castle Mound Way

Rugby, CV23 0UZ

Magma Audit LLP is part

Of the Dains Group

3 December 2025

TURNOVER

3

251

Cost of sales

(98

)

GROSS PROFIT

153

Administrative expenses

(211

)

OPERATING LOSS

5

(58

)

Interest payable and similar expenses

6

(192

)

LOSS BEFORE TAXATION

(250

)

Tax on loss

7

-

LOSS FOR THE FINANCIAL PERIOD

(250

)

OTHER COMPREHENSIVE INCOME

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

(250

)

Loss attributable to:

Owners of the parent

(250

)

Total comprehensive income attributable to:

Owners of the parent

(250

)

FIXED ASSETS

Intangible assets

9

21,070

Tangible assets

10

9,754

Investments

11

-

30,824

CURRENT ASSETS

Stocks

12

3,482

Debtors

13

2,018

Cash at bank

4,067

9,567

CREDITORS

Amounts falling due within one year

14

(6,384

)

NET CURRENT ASSETS

3,183

TOTAL ASSETS LESS CURRENT LIABILITIES

34,007

CREDITORS

Amounts falling due after more than one year

15

(32,355

)

PROVISIONS FOR LIABILITIES

19

(1,317

)

NET ASSETS

335

CAPITAL AND RESERVES

Called up share capital

20

15

Share premium

21

570

Retained earnings

21

(250

)

SHAREHOLDERS' FUNDS

335

The financial statements were approved by the Board of Directors and authorised for issue on 3 December 2025 and were signed on its behalf by:

A Richardson - Director

FIXED ASSETS

Intangible assets

9

-

Tangible assets

10

-

Investments

11

-

-

CURRENT ASSETS

Debtors

13

15,921

CREDITORS

Amounts falling due within one year

14

(89

)

NET CURRENT ASSETS

15,832

TOTAL ASSETS LESS CURRENT LIABILITIES

15,832

CREDITORS

Amounts falling due after more than one year

15

(15,337

)

NET ASSETS

495

CAPITAL AND RESERVES

Called up share capital

20

15

Share premium

21

570

Retained earnings

21

(90

)

SHAREHOLDERS' FUNDS

495

Company's loss for the financial year

(90

)

The financial statements were approved by the Board of Directors and authorised for issue on 3 December 2025 and were signed on its behalf by:

A Richardson - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£'000

£'000

£'000

£'000

Changes in equity

Issue of share capital

15

-

570

585

Total comprehensive income

-

(250

)

-

(250

)

Balance at 31 December 2024

15

(250

)

570

335

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£'000

£'000

£'000

£'000

Changes in equity

Issue of share capital

15

-

570

585

Total comprehensive income

-

(90

)

-

(90

)

Balance at 31 December 2024

15

(90

)

570

495

Cash flows from operating activities

Cash generated from operations

1

419

Net cash from operating activities

419

Cash flows from investing activities

Acquisition of subsidiary

(14,599

)

Net cash from investing activities

(14,599

)

Cash flows from financing activities

Share issue

403

Preference shares issued

2,309

Loan notes issued

15,535

Net cash from financing activities

18,247

Increase in cash and cash equivalents

4,067

Cash and cash equivalents at beginning of period

2

-

Cash and cash equivalents at end of period

2

4,067

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

£'000

Loss before taxation

(250

)

Depreciation charges

106

Finance costs

192

48

Increase in stocks

(64

)

Decrease in trade and other debtors

114

Increase in trade and other creditors

321

Cash generated from operations

419

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:

Period ended 31 December 2024

31/12/24

4/12/24

£'000

£'000

Cash and cash equivalents

4,067

-

3.	ANALYSIS OF CHANGES IN NET DEBT

At 4/12/24

Cash flow

At 31/12/24

£'000

£'000

£'000

Net cash

Cash at bank

-

4,067

4,067

-

4,067

4,067

Debt

Finance leases

-

(3,636

)

(3,636

)

Debts falling due within 1 year

-

(71

)

(71

)

Debts falling due after 1 year

-

(15,621

)

(15,621

)

-

(19,328

)

(19,328

)

Total

-

(15,261

)

(15,261

)

1.	STATUTORY INFORMATION

Project Volta Topco Limited is a group, registered in England and Wales. Its registered office address is Units 1 To 7 Dukeries Court, Medenside, Meden Vale, Mansfield, Nottinghamshire, England, NG20 9QU and the registered number is 16118029.

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.

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

The group and company's functional currency and presentational currency is Sterling (£). The financial statements have been rounded to the nearest thousand.

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 group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at the fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss from the date on which control is obtained. They are deconsolidated from the date control ceases.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

Critical accounting judgements and key sources of estimation uncertainty

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(i) Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.

(ii) Impairment of debtors

The group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience.

(iii) Stock provisioning

The group assembles and sells battery pods. As a result it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. When calculating the stock provision, management considers the nature and condition of the stock as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials.

(iv) Carrying value of investments

The investment is held at cost and when assessing annually for impairment management consider factors including but not limited to the cash flows expected to arise from the investments.

(v) Impairment of goodwill

The group considers whether goodwill is impaired. Where an indication of impairment is identified the estimation of recoverable value requires estimation of the recoverable value of the cash generating units (CGUs). This requires estimation of the future cash flows from the CGUs and also selection of appropriate discount rates in order to calculate the net present value of those cash flows.

Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from the rendering of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials. as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

Goodwill

Goodwill represents the excess of the cost of acquisition of 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 five years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Computer software is being amortised evenly over its estimated useful life of nil years.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights: and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Software

- 6 years

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements

- Over the term of the lease

Plant and equipment

- 10 years

Fixtures and fittings

- 3 years

Computer equipment

- 3 years

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Investment in subdiaries

Investment in the subsidiary company is held at cost less accumulated impairment losses.

Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks

Stocks comprise raw materials, work in progress and finished goods.

Raw materials

Raw materials are stated at the lower of cost and estimated selling price less costs to complete and sell. Stocks are recognised as an expense in the period in which the related revenue is recognised. Cost is determined on the first-in, first-out (FIFO) method.

Work in progress

Work in progress is valued on the basis of direct costs plus attributable labour time and overheads. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of work in progress.

Finished goods

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At the end of each reporting period stocks are assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and recognised as a credit on the profit and loss.

Financial instruments

The group has chosen to adopt the 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 investments 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.

(ii) Financial liabilities

Basic financial liabilities, including trade and other payables, bank loans, other loans and loans from fellow group companies 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 payments discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

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.

Taxation

The tax expense for the year comprises current and deferred tax.

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:

- The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

- Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Both current and deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

At each year end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at the year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance (expense)/income'. All other foreign exchange gains and losses are presented in the income statement within administrative expenses.