REGISTERED NUMBER: NI616068 (Northern Ireland)

TERMON HOLDINGS LTD

Group Strategic Report, Directors' Report and

Consolidated Financial Statements for the Year Ended 31 March 2025

Page

Company Information

1

Group Strategic Report

2

Directors' Report

4

Independent Auditors' Report

6

Consolidated Income Statement

10

Consolidated Statement of Financial Position

11

Company Statement of Financial Position

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Consolidated Statement of Cash Flows

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

Patrick Kieran Murphy

Michelle McCrory

Barry Murphy

Niall Murphy

Paul Murphy

Ryan Murphy

REGISTERED OFFICE:

203 Termon Road

Pomeroy

Dungannon

Co. Tyrone

BT70 2TA

REGISTERED NUMBER:

NI616068 (Northern Ireland)

INDEPENDENT AUDITORS:

Cooper Parry Audit (Ireland) Limited

Statutory Auditor

36-38 Northland Row

Dungannon

Co. Tyrone

BT71 6AP

BANKERS:

Bank of Ireland

11 Market Street

Magherafelt

Derry

BT45 6EE

SOLICITORS:

Miller Shearer & Black

40 Molesworth Street

Cookstown

BT80 8PH

The directors present their strategic report of the Company and the Group for the year ended 31 March 2025.

REVIEW OF BUSINESS

The directors are satisfied with the trading performance for the year ended 31 March 2025 and the business remains in sound financial position at the year end.

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 Key performance indicators during the year were as follows:

2025

2024

£

£

Revenue

41,745,909

28,012,287

Gross Profit

5,614,411

5,269,845

Operating profit

2,976,616

2,724,271

PRINCIPAL RISKS AND UNCERTAINTIES

The group's directors recognise the key business risks and uncertainties to be competition within the industry, customers, pricing and profitability. The directors continue to work with customers, suppliers and staff to carefully manage the group's operations. The group operations expose it to a variety of risks that include competition risk, economic risk, credit risk, liquidity risk and interest rate cash flow risk risk. The group has in place a risk management programme that seeks to limit any adverse effects on the financial performance of the group.

Competition Risk:

Competition risk comes from other building contractors and developers. The directors manage this risk by ensuring a quality service is offered to all customers.

Economic Risk:

Economic risk is inherent in the industry in which the group operates. The directors manage this risk by ensuring relationships with suppliers and subcontractors are maintained with the group having long standing relationships with such entities.

Liquidity Risk:

The group generates sufficient cashflow to ensure it has adequate available funds for operations.

Interest Rate Cash Flow Risk:

The group has both interest bearing assets and interest bearing liabilities. Interest bearing assets include cash balances which earn interest as variable rates. Interest bearing liabilities include bank overdrafts and hire purchase contracts. The directors monitor interest rates on an ongoing basis.

Business Risk:

Business operations and execution of the group's strategic plan are subject to several risks and uncertainties:

-Inflationary cost pressures: manufacturers continue to be exposed to pressures caused by Brexit, rising energy costs, supply chain disruption and the war in Ukraine. The business remains vigilant to the potential headwinds experienced by all aspects of the project cycle and seeks to mitigate these risks through robust commercial and risk management, on-going dialogue with key stakeholders, including customers and supply chain.

-Project timing/delivery: macroeconomics uncertainty and geopolitical tensions may result in delays to the commencement of secured projects. Tendered projects are often complex in nature and delivered over a period of many months with significant risks including procurement and delivery aspects. Tender assumptions and underlying risks inherent in same may not be fully developed or appreciated. Robust internal control mechanisms and supply chain management have been introduced to avoid the pitfalls of substandard performance.

BUSINESS ENVIRONMENT

The Northern Ireland construction industry is highly competitive, particularly in the public sector where the majority of our business is focused. The group continues to tender for work competitively and has also established private sector development works.

STRATEGY

The group's success is dependent on the ongoing management of business risk and uncertainties it faces.

FUTURE DEVELOPMENTS

The group is committed to long term creation of shareholder value. The economic environment continues to evolve and is making a return to relative stability. In the coming years the group aims to increase revenue and profitability. The group will continue to develop relationships with customers and suppliers and generate new work where possible while remaining highly competitive.

EMPLOYEES

The group depends on the skills and commitment of its employees in order to achieve its objectives. Group staff at every level are encouraged to make their fullest possible contribution to the group's success. The group's selection, training, development and promotion policies ensure equal opportunities for all employees, regardless of gender, marital status, race, age or disability.

ON BEHALF OF THE BOARD:

Patrick Kieran Murphy - Director

28 November 2025

The directors present their report with the audited financial statements of the Company and the Group for the year ended 31 March 2025.

PRINCIPAL ACTIVITY

The principal activity of the group is construction and property development. The principal activity of the company is that of a holding company.

DIVIDENDS

The total distribution of dividends for the year ended 31 March 2025 will be £ 340,000 .

Interim dividends paid in the year were £340,000 (2024: £80,000). The directors do not recommend the payment of a final dividend (2024: Nil).

DIRECTORS

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

Patrick Kieran Murphy

Michelle McCrory

Barry Murphy

Niall Murphy

Paul Murphy

Ryan Murphy

POLITICAL AND CHARITABLE DONATIONS AND EXPENDITURE

The Group made no charitable political donations during the current year (2024: £Nil).

DISCLOSURES REQUIRED UNDER SCHEDULE 7

In accordance with Section 414C (11) of Companies Act 2006, the directors have elected to disclose details of the business review, principal risks and uncertainties, employment policy and future developments in the Group's Strategic Report which would otherwise be required to be disclosed in the Directors' Report.

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 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 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 provisions of Section 485 of the Companies Act 2006.

ON BEHALF OF THE BOARD:

Patrick Kieran Murphy - Director

28 November 2025

Opinion

We have audited the financial statements of Termon Holdings Ltd (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2025 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 March 2025 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.

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

28 November 2025

REVENUE

4

41,745,909

28,012,287

Cost of sales

(36,131,498

)

(22,742,442

)

GROSS PROFIT

5,614,411

5,269,845

Administrative expenses

(2,682,197

)

(2,586,580

)

2,932,214

2,683,265

Other operating income

49,141

44,726

OPERATING PROFIT

7

2,981,355

2,727,991

Finance income

590,537

344,139

3,571,892

3,072,130

Finance costs

8

(101,802

)

(121,736

)

PROFIT BEFORE TAXATION

3,470,090

2,950,394

Tax on profit

9

(793,452

)

(723,121

)

PROFIT FOR THE FINANCIAL YEAR

2,676,638

2,227,273

OTHER COMPREHENSIVE INCOME

FX Translation Differences

(1,437

)

(2,432

)

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

(1,437

)

(2,432

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,675,201

2,224,841

Profit attributable to:

Owners of the parent

2,676,638

2,227,273

Total comprehensive income attributable to:

Owners of the parent

2,675,201

2,224,841

NON-CURRENT ASSETS

Intangible assets

12

-

-

Property, plant and equipment

13

1,796,542

1,972,821

Investments

14

-

-

1,796,542

1,972,821

CURRENT ASSETS

Inventories

15

13,491,903

10,013,744

Receivables: amounts falling due within one year

16

4,393,304

3,863,095

Debtors: amounts falling due after more than one year

16

250,109

253,419

Investments

17

4,309,380

3,121,910

Cash at bank and in hand

9,153,776

9,363,343

31,598,472

26,615,511

PAYABLES

Amounts falling due within one year

18

(9,717,619

)

(7,191,570

)

NET CURRENT ASSETS

21,880,853

19,423,941

TOTAL ASSETS LESS CURRENT LIABILITIES

23,677,395

21,396,762

PROVISIONS FOR LIABILITIES

20

(705,251

)

(759,819

)

NET ASSETS

22,972,144

20,636,943

CAPITAL AND RESERVES

Called up share capital

21

7,989,701

7,989,701

Capital redemption reserve

3,439,791

3,439,791

Retained earnings

11,542,652

9,207,451

SHAREHOLDERS' FUNDS

22,972,144

20,636,943

The financial statements were approved by the Board of Directors and authorised for issue on 28 November 2025 and were signed on its behalf by:

Patrick Kieran Murphy - Director

NON-CURRENT ASSETS

Intangible assets

12

-

-

Property, plant and equipment

13

-

-

Investments

14

6,989,601

6,989,601

6,989,601

6,989,601

CURRENT ASSETS

Receivables: amounts falling due within one year

16

10,080,314

9,580,314

Investments

17

4,309,380

3,121,910

Cash at bank

4,928,251

4,324,021

19,317,945

17,026,245

PAYABLES

Amounts falling due within one year

18

(339,853

)

(402,130

)

NET CURRENT ASSETS

18,978,092

16,624,115

TOTAL ASSETS LESS CURRENT LIABILITIES

25,967,693

23,613,716

CAPITAL AND RESERVES

Called up share capital

21

7,989,701

7,989,701

Capital redemption reserve

3,439,791

3,439,791

Retained earnings

14,538,201

12,184,224

SHAREHOLDERS' FUNDS

25,967,693

23,613,716

Company's profit for the financial year

2,353,977

2,186,875

The financial statements were approved by the Board of Directors and authorised for issue on 28 November 2025 and were signed on its behalf by:

Patrick Kieran Murphy - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2023

7,989,701

7,062,610

3,439,791

18,492,102

Changes in equity

Dividends

-

(80,000

)

-

(80,000

)

Total comprehensive income

-

2,224,841

-

2,224,841

Balance at 31 March 2024

7,989,701

9,207,451

3,439,791

20,636,943

Changes in equity

Dividends

-

(340,000

)

-

(340,000

)

Total comprehensive income

-

2,675,201

-

2,675,201

Balance at 31 March 2025

7,989,701

11,542,652

3,439,791

22,972,144

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2023

7,989,701

9,997,349

3,439,791

21,426,841

Changes in equity

Total comprehensive income

-

2,186,875

-

2,186,875

Balance at 31 March 2024

7,989,701

12,184,224

3,439,791

23,613,716

Changes in equity

Total comprehensive income

-

2,353,977

-

2,353,977

Balance at 31 March 2025

7,989,701

14,538,201

3,439,791

25,967,693

Cash flows from operating activities

Cash generated from operations

1

2,486,964

3,762,885

Interest paid

(97,064

)

(118,016

)

Finance costs paid

(4,738

)

(3,720

)

Tax paid

(1,115,881

)

(945,379

)

Net cash from operating activities

1,269,281

2,695,770

Cash flows from investing activities

Purchase of tangible fixed assets

(632,971

)

(1,022,515

)

Sale of tangible fixed assets

81,088

82,528

Purchase of listed investments

(1,000,000

)

(3,000,000

)

Interest received

403,067

222,229

Net cash from investing activities

(1,148,816

)

(3,717,758

)

Cash flows from financing activities

New loans in year

1,075,060

893,583

Loan repayments in year

(1,065,092

)

(982,809

)

Equity dividends paid

(340,000

)

(80,000

)

Net cash from financing activities

(330,032

)

(169,226

)

Decrease in cash and cash equivalents

(209,567

)

(1,191,214

)

Cash and cash equivalents at beginning of year

2

9,363,343

10,554,557

Cash and cash equivalents at end of year

2

9,153,776

9,363,343

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

2025

2024

£

£

Profit before taxation

3,470,090

2,950,394

Depreciation charges

761,694

514,500

Profit on disposal of fixed assets

(33,532

)

(43,044

)

Finance costs

101,802

121,736

Finance income

(590,537

)

(344,139

)

3,709,517

3,199,447

Increase in inventories

(3,478,159

)

(395,354

)

(Increase)/decrease in trade and other debtors

(426,484

)

1,915,733

Increase/(decrease) in trade and other creditors

2,682,090

(956,941

)

Cash generated from operations

2,486,964

3,762,885

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 March 2025

31/3/25

1/4/24

£

£

Cash and cash equivalents

9,153,776

9,363,343

Year ended 31 March 2024

31/3/24

1/4/23

£

£

Cash and cash equivalents

9,363,343

10,554,557

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1/4/24

Cash flow

At 31/3/25

£

£

£

Net cash

Cash at bank and in hand

9,363,343

(209,567

)

9,153,776

9,363,343

(209,567

)

9,153,776

Liquid resources

Current asset investments

3,121,910

1,187,470

4,309,380

3,121,910

1,187,470

4,309,380

Total

12,485,253

977,903

13,463,156

1.	STATUTORY INFORMATION

Termon Holdings Ltd is a private company, limited by shares, registered in Northern Ireland within the United Kingdom. The company's registered number and registered office address can be found on the General Information page.

The presentational currency of the financial statements in Pound Sterling (£).

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 the going concern basis and in accordance with the historical cost convention as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the group financial statements.

Basis of consolidation

The group financial statements consolidate the financial statements of its subsidiary undertakings

drawn up to 31 March 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 Termon

Holdings Ltd 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:

Critical accounting judgements and key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experiences and

other factors, including expectations of future events that are believed to be reasonable under the

circumstances.

a) Critical judgements in applying the entity's accounting policies

There are no critical judgements in applying the entity's accounting policies.

b) Key accounting estimates and assumptions

There are no critical accounting estimates and assumptions

Revenue

Turnover represents net invoices sales of goods and services , excluding value added tax. The majority of turnover is on long term contracts. These contracts are assessed on a contract by contract basis and are reflected in the profit and loss account by recording turnover and related costs by reference to the stage of completion at the reporting date. Where the outcome of each long-term contract can be assessed with reasonable certainty before its conclusion, the attributable profit is recognised in the profits and loss account as the difference between the reported turnover and related costs for that contract. Provision is made for all known or expected losses.

Goodwill

Goodwill represents the difference between the cost of a business combination and the company's interest in the fair value of the identifiable assets and liabilities of the acquiree at the acquisition date. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses (which are not reversed). Goodwill can be subsequently adjusted for changes to estimates of contingent considerations given in a business combination. Goodwill is amortised on a straight-line basis over its useful economic life. This is assessed individually for each acquisition taking into account the period over which the company expects to realise the synergies from the combination. The useful life of goodwill on the balance sheet has been set to ten years.

Investments

Investments in subsidiaries are stated at cost less provision for any permanent diminution in value. Income from investments together with any related tax credit is recognised in the Income Statement in the year in which it is receivable.

Current asset investments are stated at the lower of cost and net realisable value.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at historical cost, less accumulated depreciation. 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:

Freehold Property

- 4% Straight line

Plant and machinery

- 15% Straight line

Fixtures, fittings and equipment

- 25% Straight line

Motor vehicles

- 25% Straight line

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.

Stocks and work in progress

Stocks and work in progress are stated at the lower of cost and fair value less costs to sell. In the case of finished goods and work in progress, cost is defined as the aggregate cost of raw material, direct labour and the attributable proportion of the direct production overheads based on a normal level of activity. Fair value less costs to sell is based on normal selling price, less further costs expected to be incurred to completion and disposal. Long term contracting work in progress is stated at net cost, less foreseeable losses and payments on account. Profits are not taken into account until such times as the outcome of a particular contract can be assessed.

At each balance sheet date, stocks are assessed from impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Income Statement.